24. April 2020 - Report
7 things to tackle the current crisis and get out as a winner
Some regions are ahead of other regions in this crisis allowing also to draw lessons learnt from those companies in countries that came back to a more normal life already. Clearly each local situation is different, but we believe there are opportunities for companies to learn from others in regions that are weeks ahead in responding to the epidemic. China appears to be in the early stages of an economic rebound. While this recovery could be vulnerable if a new wave of local infections were to emerge, many Chinese companies have already moved beyond crisis response to recovery and post-recovery planning.
Here are some lessons learned already:
1. Build a flexible response to the crisis
In many regions it looks like that the situation is improving and strict measures are being released by governments step-by-step. Prepare for this and get ready to be among the first to restart the business again – at the same time be aware that another wave might hit us again. That means a very flexible approach is required that allows on the one hand side to go back to business and at the other hand side can handle drawbacks. For this it is crucial that safety of your employees comes first.
2. Use an adaptive, bottom-up approach
Rapid, coordinated responses require top-down leadership. But adapting to unpredictable change, with distinct dynamics in different communities, also requires decentralized initiative-taking. Quite obviously, regional differences need to be taken into account more than ever and action needs to be adapted to local public health measures.
3. Reallocate labor flexibly to different activities
Many companies around the world reallocated employees to new and value-adding activities, like recovery planning and crisis response. Some creative firms went beyond this: they started the production of products that became of highest importance in the crisis (e.g., protection masks), others loaned their employees. For example, McDonalds and retailer Aldi agreed on such a partnership in Germany. Aldi was in urgent need of labor for their stressed operations, McDonalds had to close most of their restaurants – quick win for both: move employees temporarily from one company to the other!
4. Shift your sales channel mix
Person-to-person were severely restricted in affected regions. Agile Chinese enterprises rapidly changed sales efforts to new channels both in B2C and B2B enterprises.
For example, Chinese cosmetics company Lin Qingxuan was forced to close 40% of its stores during the crisis. However, the company changed its 100+ beauty advisors from those stores to become online sales representatives who leveraged digital tools, such as WeChat, to engage customers virtually and drive online sales. This sales channel shift will in many cases outlast the crisis and give companies a competitive advantage.
5. Prepare for a faster recovery than you expect
Many companies most probably started their recovery planning and have by now detailed plans available for various rebound scenarios. While the depth and duration of the economic impact around the world is impossible to forecast, China’s experience points to a scenario that involves a rather fast recovery and companies should surely be prepared for this.
For example, a premium Chinese travel agency, encouraged employees to use their time to upgrade internal systems, improve skills, and design new products and services to be better prepared for the eventual recovery. Other companies, including many consulting firms ask their employees to take holidays or longer time breaks and make it attractive by offering (partly) paid leaves.
6. Discontinue underperforming business parts of no strategic importance
Companies that come out as a winner of this crisis, also use the time to transform or adapt their business models: This could be now the time to start the long-required digital transformation. Likewise, why not starting a required re-organization to account for new business needs (that were there already before the crisis).
Also, there might be the need to discontinue business that has no strategic value and does not help to strengthen the core but rather adds complexity.
7. Look for opportunities and adapt accordingly
Companies that will come out of the crisis as a winner, are actively looking for new opportunities. This could be M&A activities in a time when valuations have come down but it could also include to adapt the business model towards highly attractive new segments. Around the world some sectors have been impacted more than others. Looking at it on a granular level, demand increased in many specific areas: B2C and B2B e-commerce, remote meeting services, social media, hygiene products, health insurance and many other product groups. Some players mobilized rapidly to address these needs. Undoubtedly, learning, reframing and adapting business models will protect employees and businesses. In fact, in a fast changing, volatile world, such an adaptive approach should be applied more broadly and clearly beyond crisis management.
It’s an unprecedented time and a lot of uncertainty for many firms. Be assured that there are highly capable resources available to help you. expertpowerhouse's pre-vetted, top-tier consultants are available to provide guidance and support during the weeks and months ahead. Many of our consultants are already helping companies navigate the challenges of the crisis by providing management consulting and strategic expertise to ensure that they come out stronger than before.