Faster and steeper
The path back to post pandemic operations
Let’s start with a simple question. Will it ever end? Yes.
Now a more difficult question. When? Don’t know.
But that is not an excuse. For some while, we have been helping a client to prepare for the impact of a deal, but we don’t know when the deal will close. The longer the delay, the better prepared we will be. Of course, there will be the last-minute scramble, but we will be ready.
And that’s how I see the challenge of our post pandemic recovery. It will end and when it does, we will be ready for it. The longer it takes to get back to normal the more prepared we will be. Yes, it will be a challenge, but matched by a real opportunity:
- to get set for the next stage of the organisation’s journey to continuing successful operations and
- to pull out of the crisis quicker than anyone else and with greater impact, a ‘faster and steeper’ exit, or better put, entry to the new world.
How can we best prepare for our future?
If you are lucky enough for circumstances to have made you a natural winner through the crisis, read no further! But then on the other hand, even winners may need to take stock to ensure their newly found competitive advantage is retained through an uncertain future.
In a previous article (Taking Control) we looked at a reflection that might add value and this is summarised here:
We suggested that most of the answers we will seek can be found in the past and present.
- What was happening in our sector before the pandemic, which features of the business do we want to keep and what do we know we have to change?
- What has surprised us, what new needs have become evident during the crisis and how has our culture coped?
Yes, there will be the great unknown around the business environment, likelihood of recession and similar, but I would argue there is more known than unknown.
Am I prepared for the new challenge?
I want to start with a more personal, but fundamental starting point for each of our leaders:
Am I ready to take the lead for what may be a new start for the organisation, facing new market challenges, a changed competitive environment and with a changed workforce? It will take personal resolve to deal with new circumstances, new pressures and new demands. With our people coming back from lockdown trying to deal with continuing uncertainty and a probable recession all eyes will be on the words and actions of each organisation’s leadership. If we are not up to it (and this has to be a personal choice), we need to make sure that we have someone with the ability and attitude to step in. Not ideal circumstances to deal with leadership succession, but better than kidding ourselves and our people that we still have the energy to lead.
There will be a premium on authentic communication, but there will be no point in using the words if the conviction is not there. And communicating when uncertainty is likely to continue, will require a significant level of openness and conviction.
A changed workforce?
A webinar hosted by Smith & Company (www.smithandcompany.com) and featuring speakers from Johns Hopkins University (www.centerforhealthsecurity.org) got me thinking. They observed that the people who will return to work will not be the same people that left the workplace before lockdown. They were referring, in particular, to a heightened risk awareness leading to a new emphasis on health and safety but I would add:
- The discovery of new flexible work patterns. Do I need to be in the office to create value?
- A different relationship with their managers and leaders. Do I need the supervision I had before the crisis? My productivity increased when I was away from the office. What do I now expect from my ‘boss’? How is s/he helping me to succeed?
I have a sense too that there will be more inquiry on the non-financial aspects of each organisation. Questions such as what it stands for, how it impacts on the environment, what value it provides for society?
This ‘new’, or at least renewed workforce will need a leader that will encourage their continuing learning and development and will be prepared to change the way they operate to get the best out of them. It will need personal resolve to accept the challenge.
There will be a further challenge as furloughed (or from similar job protection schemes) employees return to work. Financially they may have been well cared for, but what about the other social and psychological factors?
- Why was I furloughed (when others were not)?
- Am I expendable? Is my job under threat?
- How can I get back up to speed after a long lay-off?
- How can I stay safe (is the organisation helping to make me safe) back at work?
And then there is the possibility that being back at work they are less well off financially with travel and other work-related expenses kicking in.
If we are going to return to business success ‘faster and steeper’ we will need a well-prepared re-entry programme for our people, whether they continued in employment or furloughed. No assumptions about a return to the old, but a willingness to re-write the rule book.
Hang on, we’ve been in business for (insert number) of years successful trading. We’re not going to be deflected by a one-off incident. You might be right, but I wouldn’t want to take the risk.
Can we draw on our positive culture?
If there has been a track record of many years of success, it may be there is a strong sense of ‘how we do things around here’, our culture. If this is the case, I believe this will be at the heart of a successful recovery and a real enabler of high performance. So worth checking:
- Did we behave in line with our principles during the crisis?
- Are there features of our culture that might need strengthening?
- Is it still relevant to the way we will be expected to behave in the future?
If we have adhered to those principles that anchor our culture throughout the dark days of the crisis, then we will be able to draw on them as we move into better days. Too often we take our culture as a given and make the assumption that ‘it’s the same for all companies’ and that ‘people want the same thing irrespective of the type of company’. Not in our experience. Yes there may be similar words posted on the values section of the website, but in reality cultures develop to be unique to each organisation.
Taking time to honestly assess the corporate culture and ensuring it is expressed in a way that resonates with your post pandemic workforce will be a major factor in getting back to business ‘faster and steeper’. And addressing any flaws or inconsistencies that may have emerged during the crisis, will help to deal with the challenges ahead.
What about the outside world?
So far I have focused on the capacity and capability of the organisation, but only as a pre-cursor to an examination of the changes in the external world. Actually, addressing the external challenges as we prepare for our future, helps to release much more internal energy. Making a difference to others through our actions will continue to be a significant motivator of great performance.
In our advisory world, I worry about our capacity to meet client demands in the early post pandemic stage of recovery. What if they all want to explore their own strategic transformation and see it as urgent for the final quarter of this year? Will we have the capacity? But it is reasonably straightforward for us. With careful planning and deployment of our people we will be able to cope with a surge in demand. No complicated supply chains for us, and (probably) more flexibility now because of our enhanced capability to work remotely. But we will have something in common with those with more logistical challenges: prediction of client/customer demand.
I am going to draw on my brother’s experience as a speciality compound manufacturer. Back in business with everyone returning from furlough and coping with export demand from recovering markets is leading to delivery delays of an unprecedented eight to ten weeks. And this is still early days for a return of the domestic market. Safe distancing and uncertain supplies of raw materials adding to his challenges, he will be busy for the rest of the year, but with the potential to irritate a customer base that is used to three-week delivery. Careful communication during lockdown is not only helping to manage expectations but is also helping customers to plan for their return to normality. So early attention to his resourcing is enabling a relatively well-ordered prioritisation of customer demand.
So our ‘faster and steeper’ could well be determined by constant dialogue with clients while we are yet to get back to ‘normal’, to ensure we are prioritising effectively.
But what about new demands? Has the crisis revealed new needs and new responses? Our local brewery has started home deliveries and a new line in hand sanitiser. Will these new activities disappear in the new world? I can see new streams of business complementing many of the old with perhaps the demise of some businesses that, arguably, were past their ‘best by’ before the pandemic. Worth remembering that, while exploring new products and services to existing customers, and existing products and services to new customers may provide opportunity, it will take courage and energy from our leadership to make it happen.
What about our investors?
We have got this far without referring to our investors. Whether private or public, this important audience will need constant attention with their futures dependent on a well ordered and disciplined return to some sort of normal. There is little doubt that some patience will be needed from shareholders and others, but it will be the quality of information made available to them that will facilitate this patience.
I struggle with the attempts of business to describe the forthcoming period in terms of ‘sales will be down by 30%’ or ‘profits will be under pressure throughout this coming year’ and I accept the pressures to forecast by (in particular) public company shareholders. But surely the dialogue should be more about the phases that each business is going to experience:
- Survival stage. Probably over (or nearly over) for most and can be accurately reported. Impact on revenues (very likely to be significant, if not total) and costs (largely fixed) but taking account of furloughing/job protection schemes. Likely to be similar for all comparator businesses, or there will be identifiable reasons for any differences.
- Recovery stage. I think we are in the throes of this stage now and progress is likely to be predictable over the very short term. With a handle on probable revenues for the interim period (there will be evidence of order levels, customer sentiment) and as job protection subsidies are removed and costs return, it should be possible to report likely financial outcomes for the period that will take us back to viable operating levels
- New normal returns. You may have to be a real optimist to see activity levels climb back to pre-pandemic levels, but there will be some that will have to cope with a returning ‘bubble’ (my brother’s business included) and it may take a little while for the business to report sustainable results.
As an investor, I would prefer information to help me understand the length of the interim recovery period and a date for a resumption of sustainable profitable trading; I would certainly find this more helpful than, ‘profits will be down by x % for the next financial year’. But maybe that’s just me and my desire for longer term high performing stocks.
The crisis has brought our businesses in greater contact with the locations in which we operate. Laying off people has a dramatic impact on local communities and local economies. A factory closes and so does the café outside the factory gates, the transport companies getting people there and home again. I have observed more attention to ‘local’ during the pandemic and often this is positive: good (fair) employers recognised; poor behaviour exposed and opportunities as local businesses seek to meet the needs of local communities. Whether the butcher or baker, the local convenience store or the previously mentioned brewery, it might be that there will be competitive advantage purely from being geographically close to a market.
Will we need to take account of new regulations, new requirements from government and local councils? Time will tell, but it might be unwise to assume there won’t be more tax and regulatory burdens as the economy seeks to recover.
Back to ‘faster and steeper’
Whether it is for our people, our customers, our investors or any others with an interest in our organisation, the faster we can get back to some sort of normality and the steeper the recovery curve, the better. In the appendix I have outlined headline questions that will be helping me as we accelerate out of the pandemic. These are borrowed from our ‘Seven Elements of Sustainable Success’ which tracks the steps any organisation may need to follow if they are to establish longer term successful performance and have been adapted to suit a post pandemic ‘reset’.
I reckon there is another two months of ‘interim recovery’ period for most of us. Good to make use of it to plan carefully and have a great (even if different) final quarter of 2020.
This is the second of a series that will address the questions raised in a previous article ‘Back to Normal?’
- Will it be possible to repair the damage to our finances?
- How can we get back to viable operating levels quicker and steeper than others?
- Will the new world offer more challenges and opportunities than the old? Will there be a new normal?
- Do we need to review our business model to build in more resilience?
Twelve headline questions
- Am I ready to lead the organisation through the rest of the crisis and into the next phase?
- Have I got the backing of my leadership team and are they ready for the challenge?
- Are we clear about why we exist (our purpose) and is this still valid?
- Are we clear about the principles (values) that govern the way we operate?
- Have we adhered to these principles through the difficult time as we responded to the pandemic?
- Have we recalibrated our strategy to allow for delays as a result of the pandemic interruption and for the changed market conditions we are likely to face?
- Have we taken the opportunity to test the changing needs and success definition of our customers and other stakeholders?
- Have we kept our people informed throughout the crisis?
- Have we invested in engaging our people in the reset, post pandemic business?
- Are our systems and processes still valid, or has the crisis thrown up areas that need review?
- In particular, are there changes we need to make to our health and safety and wellbeing procedures?
- Have we logged the lessons from this episode so we will be better prepared next time (and there will be a next time)?