How Boards Can Be Forces for Change Amid the COVID-19 Crisis
How could we have been better prepared? What are our immediate priorities? Can we—and how do we—keep our employees, customers, and suppliers safe and loyal? What will be the financial impact of this crisis, and do we need to make decisions that seem unbearable? Will we be able to survive?
How many times have these questions been asked around the world these last few weeks? Apart from intelligence planners and disaster preparedness organizations, not many had foreseen how the Coronavirus Disease 2019 (COVID-19) outbreak would disrupt—and existentially threaten—our businesses and everyday life.
We are all in crisis mode, and we are all in it together. There’s no doubt that unless governments and other organizations who can help do so, the crisis will have an impact on spending long after we are given the green light to once again attend social gatherings.
Some companies will have saved for a rainy day and can take extraordinary measures to safeguard employees, are able to pay suppliers ahead of time, or are able to start projects that were planned for 2021. But let’s face it, these cases are rare. In the main, no matter how much forward-planning has occurred, companies can always be caught off-guard in a crisis and will be forced to face the economic realities now and in the future.
A likely long-term consequence of this crisis will be a realignment of social, environmental, and cultural priorities as governments and actors in the health-care, education, and agricultural sectors step up to demand change. For example, in the European Union, the Green Deal is being considered a sort of new Marshall Plan for recovery after the COVID-19 crisis to protect the health and well-being of all citizens. In the United States, companies are evaluating the $2.2 trillion coronavirus stimulus package and determining how it can help keep the lights on. The sooner the money is distributed, the faster it can stimulate small as well as large businesses, and thereby the communities that rely on the survival of local companies.
Companies are accelerating their work-at-home policies and providing at-home technologies to anticipate long-term change in work practices. Farms that have been investing in technology are now less exposed by worker shortages. While it will take tremendous effort to overcome the nightmares we face, companies must apply the lessons of today in preparation for tomorrow’s tests. There are, perhaps, few more worthy ambitions in this moment.
For now, business leaders and consumers alike can only hope that we’ll weather the storm. But how do we take steps now for the longer term? How do we plan for the future? And how do we ensure that we don’t “waste” the crisis?
To get to the answer, organizations should first have a clear view of their immediate short-term business plans, while considering the secondary effects on the medium- and longer-term future of the enterprise.
The short-run view: Boards should help their companies put a resiliency plan in place to support and evaluate the needs of employees, customers, and suppliers and also to assess upcoming third-party risks concerning health and safety and financial and operational viability. Look at worst-case scenarios that may emerge from paying less attention to maintenance routines and investments such as those in cybersecurity that protect against operational, financial, and reputational risks.
Meanwhile, businesses should carry out simplified planning and backcasting from various possible future scenarios to have greater visibility on the interconnectivity between multiple risks. This will generate strategic and tactical options to aid immediate decision-making and to avoid backfires in the medium-term. We need peripheral vision in turbulent times, as many challenges will not be the ones immediately in front of us. Stakeholder analysis and relationship mapping of critical strategic and financial levers will make more visible the actions needed three, six, nine, and 12 months down the line.
And for the long term, what steps can be taken to reposition businesses for a very different future? It may be the right time to reimagine and redesign the business to meet future demands of 21st-century technologies, create and build out new products to respond to changing customer demands, or retrofit supply chains in the face of a new normal. And, at the same time, why not accelerate sustainability, circular economy initiatives, and energy and waste reduction plans to reduce costs, to serve the well-being of society at large, and to gain a competitive advantage?
Mindset matters. In times of crisis, it is imperative for boards to ask what will disrupt business as usual in the long term and what they can do about it. In that vein, below are questions for boards for short-term responsiveness, short- to medium-term repositioning, and long-term resilience:
1. Are we caring, as much as possible, for those who are part of our broader business ecosystem and corporate family? What more can we do? Are we reassuring our stakeholders yet being honest about the uncertainties and challenges ahead?
2. What is the necessary minimum cost of operating without diminishing the potential for a restart if employees are laid off or assets sold? How quickly can we get back to full operations?
3. Do we know where we can get help to weather the storm, both in financial and in human terms?
4. How do we utilize the stimulus packages from the United States and other countries? All over the world, governments have agreed to stimulus packages in the hope that spending now can avoid a meltdown later. Boards need to ensure that opportunities are evaluated and utilized.
Short- to Medium-Term Repositioning
5. How can we structure our supply chain, our distribution channels, our research and development, our technology systems, or our financial preparedness to serve our immediate challenges while preparing us for what is to come?
6. By diversifying our suppliers and customer base, can we reduce dependencies and create opportunities without jeopardizing our immediate needs—and while we’re at it, embed environmental, social, and governance (ESG) parameters to save costs and satisfy investors, customers, and employees?
7. What initiatives can we take on to develop new value-drivers for the business that are more socially inclusive, environmentally sound, and in line with next-generation technology developments, while meeting the needs of our stakeholders and consumers in this time of crisis?
8. As a consequence of this crisis, what can we imagine on the horizon or in our peripheral vision that may fundamentally change societal perceptions of and attitudes toward our business or our industry in the coming 3-10 years?
9. How can we adapt to and anticipate new trends? Once we imagine the dimensions of a different future, how do we connect the dots between that future and today? How do we empower and reposition our company to anticipate what is likely to happen?
10. How resilient can we become to anticipate future shocks? A vaccination gives enough of a disease to the body for it to learn how to buttress against future disease. Can we learn deeply from this experience and do the same?
C-suite executives and boards can make changes now that respond to immediate needs, reposition the business in the medium term for new pathways to success, and build resilience by mapping out long-term patterns and opportunities. Remember, as fiction writer William Gibson once said, the future is already here—it is just not evenly distributed.
Helle Bank Jorgensen is the CEO and founder of Competent Boards and is a renowned sustainability, climate change, and ESG advisor with 30 years of experience helping global companies and investors turn sustainability into strong financial results.
Tom Cummings, a governing board member of B Lab Europe and Tällberg Foundation, has served as a senior executive at Unilever and ABN AMRO Bank and is in the founder's circle of the Global Alliance for Banking on Values. As European partner of Competent Boards, he is a top adviser to leaders and teams on complex systemic change.