The current public health and economic crisis in connection with COVID-19 is all-consuming, and everyone is being stretched in new ways. Clearly, the health care professionals on the front lines are saving lives and dealing with human tragedy, but all of us are dealing with the crisis and entering uncharted waters. The human toll directly related to the virus continues to mount, and the economic impact has just begun to be felt. By some accounts, we will experience one of the worst recessions in history, and companies across the board will need to reset their businesses.
So, how should leaders think about leading their companies through this crisis? In the simplest of terms, nearly every company will experience a significant loss of revenue, and the near-term challenges require leaders to ensure their companies are adequately funded to stay in business. But as the impact of the recession and reduced revenue can be measured and understood, the companies that shift and prepare for the recovery will be the ones to survive and very likely thrive.
During the first phase of the reset, every company is in survival mode. While some companies are well-positioned by virtue of their products and services to grow and even prosper as we focus on essential services and activities, the vast majority of companies may lay off employees, cut costs, borrow money and watch revenue get crushed. During this time, customers, business partners and employees are watching, too, and the actions a leader takes to restore the company are critically important.
The very best leaders know how to lead people and companies through critical moments, but this time is particularly challenging because the magnitude and duration of the slowdown is hard to predict, and the requirements around social distancing are changing how leadership teams and employees interact. The old way of managing by walking around doesn't work, and huge shifts will fundamentally change a multitude of business models forever. So, in the phase of restoring your company, focus on driving these elements of effective communication:
• Remind your customers of what you do best.
• Emphasize your mission, vision and values.
• Embrace work-from-home technology and collaboration.
• Prepare your team for the battle of a lifetime.
• Lead by example, and energize a core team to do the same.
While many companies will get stuck in the restoration phase, a smaller number of companies will effectively reimagine their businesses. This is one of the key differentiators that will define the winners and losers in connection with the crisis. As with any recession, the economic slowdown requires sound financial management and a return to the core strengths of the company. As a company effectively restores its business, a CEO must shore up the balance sheet, streamline the cost structure, right-size and upgrade talent and exit noncore businesses. This is Management 101, and leaders know how to do this very well. However, the speed of the downturn and the potential severity of the upcoming recession may simply wash out a multitude of companies that will never have the chance to reimagine their futures.
So, for those companies that are fortunate enough to survive the crisis, the success of the company during the recovery will depend on reimagining the business. While many CEOs can successfully lead an existing business and execute the company's strategy, a subset is well-suited to reposition a company and has the experience of having done so. This will keep recruiters and coaches like me very busy during the recovery, and it will challenge nearly every CEO as they reset their businesses. Some of the keys in reimaging your company include:
• Clearly understanding and articulating your company's "special sauce."
• Not being afraid to let go of businesses on the margin.
• Engaging your team and the entire company in the exploration.
• Not being afraid to admit you may not have all the answers.
For the companies that take advantage of the opportunity to reimagine their businesses, they will not only survive but thrive in the recovery. This has happened time and time again during each and every economic shift and will most certainly happen again. This is where private equity investors make their money and where public companies outperform their peers by making the tough decisions to reposition their companies in the face of significant challenges and opposition.
But times have changed, and two major factors will impact how companies and their CEOs successfully reenergize their businesses: Companies must understand their "why" and how to align their people around one central mission. These two activities are inextricably linked, and the very best CEOs and companies have always done this well. But the stakes are higher now and most certainly will be in our post-coronavirus era. The best people will be in high demand, and they simply won't work for companies with a lack of vision and passion. So, think about these key elements of reenergizing your company:
• Understand the "Golden Circle" and align your company around the "why."
• Demonstrate gratitude and respect for how hard your people have worked.
• Hire and elevate great leaders as ambassadors of the company’s mission.
• Take bold action to engage your stakeholders and demonstrate your commitment.
These incredibly challenging times have been described as "unprecedented," and they most certainly are. But we've made it through major recessions, depressions, wars and incredible challenges before. And we've seen how leaders lead their companies through times of crisis and how they align their companies around the light at the end of the tunnel. As nearly every company fights through this time, the fortunate ones will move from restoration to reimagining and reenergizing their businesses. It's clearly an art form, and for the fortunate ones with the financial strength, market position and leadership talent, they will most certainly thrive in the future. And the future is right around the corner.