The past 100 days have been described as; ‘traumatic, exciting and exhausting’, probably a combination of all three – and that’s just the CEO’s view!
Covid-19 has been both a great leveller, ‘we are all fighting this together’ and a highly effective discriminator – the widening gap determined by managerial performance, behaviour and cash flow. These contrasts have never been so stark and hiding places so few.
Organisations are aware of the three phases they are moving through – from Protect (of cash flow and employees) to now, Recovery (unlocking and redefining future markets) and in due course, to Rebuild (making it happen).
Against this backdrop, during June 2020, we have asked our C- suite network and NEDs to be forward thinking in their response to three fundamental questions cited below. The key themes highlighted are an amalgamation of numerous discussions.
What have you and your executive team learnt over the past 3 months?
It has been a classic crisis management scenario – few companies were fully prepared for the onslaught. ‘The worst time to learn about crisis management is in a crisis’!
There are three recurring themes:
Remote working can be put in place overnight and it works. Legacy plans are useless, but planning is essential. Teams galvanise when there is a crisis. Customers and cash are critical and the balance with the longer-term perspective should not be lost – opportunities emerge whenever there is change.
Without current communication technology (say, 15 years ago), it would have been a very different crisis. Faster decision making and actions taken with less bureaucracy has engendered a ‘can do attitude’ and flowing empowerment down the line.
Pragmatic employers prioritised: ‘protect people, communities and then the business. If you don’t have people, you don’t have a business.’ Believe in your employees, guide them with confidence. Ensure (over) communication is open, honest and authentic, give clarity of objectives. Aligned corporate values helps to quickly reshape businesses and rebalance the possible.
In return most employees have proved the trust has not been misplaced. Almost without exception, the myths around homeworking have ‘been busted’. CEO mindsets are changing and there will be more flexible working as productivity levels have generally not suffered too much. Even Boards have proved they can function remotely; meetings are usually more focused.
The only downside to continued daily VC meetings is their intensity. It requires greater attention than being in a physical meeting. Several CEOs mentioned they are exhausted by them and going forward would welcome a more balanced diary.
3. Keeping the edge
Many businesses have surprised themselves over their last three months performance. The key challenge is how to hang onto the positives which will give a stronger platform in the recovery phase. It has also highlighted which organisational functions and individuals have not stepped up to the mark and shown areas for change.
The increased emphasis on mental health as wellbeing risks increase in a crisis. Management teams are working hard to stay in touch by increasing communication, visibility and practical solutions. This ongoing process should not be dropped.
What discussions are you and your Board having now, which are defining new priorities for the future?
The crisis has been an effective catalyst to widen the usual breadth of discussion as reverting to the previous norm is not acceptable.
The lockdown has provided a first ever pause to really think about how organisations could interact with society and what they stand for. In parallel, scenario planning has been particularly popular in mapping out possible future environments. This is all against a shifting geopolitical backdrop of China’s expansionist policies, the US Presidential election and Brexit. It’s hardly surprising the questions around business, market and supply chain resilience remain valid.
Discussions are beginning to fall into two distinct categories:
1. Belief system
Is this an opportunity to re-evaluate our sense of purpose, how do we articulate this?
As ESG becomes more significant, what does it mean for us and can we measure it in a meaningful way?
How do we balance the needs of investors, employees, climate and society, in terms of value creation and inclusion?
Are our business boundaries going to be redrawn?
Will customers’ behaviours change, what service elements will they value – temporarily and permanently?
How fast can we (or should we) accelerate the digital shift across the entire organisation?
How do we adapt our strategy to the new realities and ensure our business model is sustainable?
Is our organisational structure (and Board) fit-for-purpose, have we got the right talent in place?
How do we get the executive team back into a strategic mindset after being so focussed on the short term?
The Covid-19 crisis will define the decade ahead, what gives you hope for a better tomorrow?
It is a pivotal time for multinational businesses (and banks) to step up and reshape the ‘trust deficit’ which has grown since 2009. People will remember how we behaved. Now is not the time for a trade-off between differing stakeholders’ agendas but gaining alignment to build a stronger organisation.
Young people – have the platform to change society. The big issues of climate change, social inequality are still out there. It’s time to reflect on what a different world could look like and how to make it happen. Perhaps we are now braver to tackle these ‘difficult’ issues. Black Lives Matter is a prime example, where the speed, scale and drive for change means ‘we can’t remain passive bystanders and we need to question if we are doing enough’.
The Planners have been given a first-hand insight into what people value, where and how they want to live. This should help redefine policies and efficient use of finite resources. Boards are optimistic. After a shock there’s a phase of creativity and innovation, which we need to embrace.
We have all learned to appreciate things we took for granted. There is a fresh appreciation of the importance of community and helping each other, and there’s an expectation and hope that will continue. The world has proved that fundamentally people can radically adapt – this should be a good starting block for sustainable change.
Covid-19 has proved to be an interconnected problem, in terms of geography, sectors and people. It has laid bare that we live in a far from perfect world but at the same time it may be a catalyst for some lasting good. We have already seen the ‘Social’ element in ESG (which has always been the poor cousin) having a higher profile in recent weeks. It will also impact more on organisations, their associated corporate reputations and actions. Accountabilities will be held.
Over the last 100 days businesses have been tested to the full. The learnings and current discussions on ‘what’s next’ are encouraging but it is unlikely to be a smooth ride. There will be more soul searching, volatility and uncertainty through recovery. The trajectory of market growth is difficult to predict. However, we could be at the dawn of a braver world and it’s time to look to the future……
Hoggett Bowers are very grateful to all our contributors and a special thank you to:
Andrea Davis, Managing Director, Investcorp
Alan Stewart, CFO, Tesco
Andrew Trounce, SVP, Europe & Africa, Herbalife
Bob Ewers, CEO, AXA Partners, UK & Ireland
Bryan Jackson, NED Unipart, Chairman John Smedley
Catherine Chardon, Managing Director, RATP Dev
Craig Frazzini-Jones, COO, Canada Life, UK
Dave Shemmans, CEO, Ricardo
David Thatcher, CEO, Direct Wines
Forsyth Black, former CEO, John Menzies
Evelyn Bourke, CEO, BUPA
Ian Bull, SID Domino’s Pizza Group, NED St. Modwen and Dunelm
Kevin Moore, CCO, Greencore
Matthew Gregory, CEO, First Group
Nick Allan, CEO, Control Risks
Oliver Tant, Group CFO, Imperial Brands
Penny James, CEO, Direct Line
Peter Ruddock, Chief Executive, Lockheed Martin UK