Originally a shock to our global biological structure, COVID-19 has quickly impacted economies and industrial systems around the world. Organizations are facing major uncertainty, with many struggling to make sense of what’s happening or understand what it means for their future survival.
With some industries severely affected, most notably, travel, tourism and hospitality, the natural instinct for many is to switch to ‘firefighting’ mode and focus on short-term survival. But rather than responding to situations as they occur, a clear roadmap of the key response phases to the crisis, along with the critical success factors needed to successfully move through each phase, can be a crucial aid to getting you on the path to recovery – and potentially an even better normal.
Crisis response phases
While it is an unfortunate reality that there will be some business casualties in the most affected industries, we would typically expect organizations to move through the following four key response phases. The pace at which they progress will depend on the sector and markets in which they operate, and their own individual circumstances.
Each stage will be characterized by specific organizational challenges. Moving through them will require completing various actions and meeting the relevant critical success factors. It’s important to recognize the phase you’re in based on a correct diagnosis of your symptoms, and to anticipate the phase(s) you’re about to enter, while still working to meet the critical success factors of the phase you’re currently in.
Phase 1: Respond
The starting point in a crisis is operational resilience, which is about the ability to keep your core operations going, where this is possible. Companies are already facing huge challenges across multiple parts of their business, from managing global supply chain disruption risks, to protecting their staff and customers, to brushing off outdated and incomplete business continuity plans and putting them into action.
The critical success factors in this phase are focused on rapid response and decision making, ensuring clear health and safety measures to protect employees and customers, followed by effective business continuity planning through financial and supply chain stress tests, staying close to customers to protect revenues, the inevitable cost and cashflow control and rapid set-up of remote working.
Phase 2: Resume
During the gradual return to a ’new normal’ the focus will remain on how to make sure your operational resilience remains as effective as possible to deal with the shifts that have taken place within different areas of the business, e.g. clients, workforce, supply chain, procurement, systems, etc. However, at this point, it will also be important to start thinking about the future. Develop multiple scenarios to understand what that future might look like, identifying critical areas and trigger points in advance of returning to the workplace. It is likely that this ‘resume’ phase will be more complex and protracted than the initial entry into lockdown and require more planning.
From this moment onwards the strategies are dual in effect – a focus on operational resilience to keep your operations running and a focus on strategic resilience to build the capacity of the organization to respond effectively to new changes, while maintaining medium and long-term competitiveness.
Organizations should not only aim to become more resilient but also ‘antifragile’, a term coined by modern day scholar Nassim Taleb. Not only will it enable you to cope with existential disruptions, but it will also help you absorb the shock and grow stronger.
Phase 3: Rebuild
In order for your organization to become ‘antifragile’, you need to identify and build the capabilities that will enable you to scale quickly to the new normal state. Keep in mind that when you need to optimize the use of scarce resources, relentlessly review the options for each target operating model component, design iteratively and implement quickly, agile principles often work best.
In this phase, cost transformation focuses on medium to long-term plans to ensure profitability and optimize cashflows. It’s also likely that your organization will need to undergo rapid restructuring to continue to be functional in the new normal, with digital workforce principles employed for the longer term.
Now more than ever it will be important to stay customer-centric. Focus on high-value customers, understand their changing behaviors, rethink and optimize their digital customer experience, and shape meaningful conversations around their new needs. This is also a time for strategic renewal. The crisis is likely to reshape entire sectors, so continually reassessing, reprioritizing and innovating your business model in relation to markets, products and client segments to capitalize on emerging growth areas will be essential.
Phase 4: Recalibrate
This last phase will focus on long-term strategic resilience and how to embed it into your organization to deal with further changes, for instance, governmental decisions, new regulations and policy frameworks. Actively engaging with government and relevant institutions will help you to anticipate such changes.
History has shown that from a financial standpoint, organizations with a mission have consistently fared better during difficult times. For many businesses and individuals, this crisis has highlighted the importance of purpose in organizations and a greater commitment to contributing to wider society. These attitudes are likely to motivate an increasing number of organizations to shift their focus from pure profit to a deeper, more purpose-driven meaning in the future.
Where next?
As we come out of this crisis there will be a need for organizations to reinvent themselves if they are to stay relevant in the new world. There will be those that will want to reinvent themselves to the extent that they are able to navigate back to the position they were in ahead of the crisis. This is a perfectly reasonable approach and will be suitable for most businesses. In our view, however, those organizations that are likely to emerge the strongest are those that use this moment as a catalyst for reinvention – an extraordinary accelerator of organization-wide transformation rather than simply a survival strategy.
COVID-19 response phases: typical challenges and critical success factors
We support organizations to adapt and respond to COVID-19 and beyond to ensure you are well positioned to take advantage of new opportunities as we recover from the pandemic.
