For companies, strategies to deal with the consequences | Analysis – analysis
Coronavirus disease (Covid-19) has dealt a terrible blow to all of us. Such difficult times require inspiring and innovative leadership. There are three risk elimination strategies that can help us prepare for the aftermath of the pandemic.
First, industries must reformulate strategic and operational plans based on a revised risk assessment. Every industry will face rotation. In the short term, the pessimistic environment will increase the power of buyers, while the surplus inventory will decrease the power of suppliers. Competition will intensify as the capacity of high-priced items such as real estate and automobiles declines. Substitutes such as work from home and digitization will emerge, and barriers to entry will be altered as governments accelerate many sectors.
Industries like tourism, aviation, hospitality and travel will be devastated. This will create a domino effect in the value chain. Companies will face several unknowns.
These will include the damage caused by Covid-19 in terms of human life, the duration of its impact, a greater focus on the climate crisis, negative market sentiments, deterioration of physical and mental health, and the time required for the hand of migrant work achieve pre-Covid-19 efficiencies. At least one annual cycle of people entering work for the first time, in both the public and private sectors, will be lost.
It is not about reducing costs or reducing existing plans. All previous plans have lost relevance, with no certainty of events beyond a few months. Organizations will now have to consider the chilling possibility of losing key leadership, relationships and business partners after the pandemic.
This paradigm shift will require a drastic change in mindset and morale – the two key ingredients necessary to navigate through a volatile, uncertain, complex and ambiguous environment (VUCA).
Second, industries must focus on realignment, recycling, and retraining. The global economy was already reeling before the coronavirus crisis, but the pandemic has upset it. Companies will need new competencies and skills. Digitization, automation, and artificial intelligence will accelerate in virtually every stream – education, healthcare, service industry, banking, entertainment, supply chain, transportation, food, and government services.
This will require a realignment of business processes, changes in curricula, development of new teachers, and reorientation of existing employees. Many employees will be impossible to train and many subunits will become unsustainable. The gears on the intricately connected machine will have to be redesigned while it is running.
Mindshare and dedicated learning and development resources are currently very low in most organizations. There is no way that companies can reorient their workforce with such inadequate capacity. If this supertanker needs to be changed in time to save it, there must be a unique focus on capacity building, executing unprecedented accelerated learning and realignment at all levels within the organization.
Third, industries should focus on building culture and preserving tribal knowledge. Culture functions as the gathering call around which organizations come together as a team. This is the time for leaders to learn from the history of their companies that helped them overcome adversity. It doesn’t matter how old the company is, because even startups have their stories just like their founders. Whether it’s a global pandemic or personal trauma, the courage and resilience to overcome it are the same. This is the time to reiterate those struggles and the lessons learned from them.
A corollary of narrative organization is the need to preserve tribal knowledge. During tough times, there is a tendency to downsize “older” and “redundant” employees.
In the late 1960s, playgrounds in Africa faced a peculiar challenge of abundance. Its elephant population increased exponentially, negatively affecting the ecosystem. The systematic slaughter or killing of the overpopulation was the only practical solution. Rangers resorted to the Darwinian principle of survival of the fittest and slaughtered old, sick and sick elephants.
This, however, wreaked havoc on the tribal memory and social structure of the herds. They could no longer find secret and perennial watering holes during droughts or ancient routes through the playgrounds. When the young bulls noticed a sudden absence of older elephants, the indiscipline within the herd increased, leading to frequent fights, which were fatal to both the winner and the loser. The younger bulls attempted to flee before puberty and became dishonest, threatening other elephants and tourists. The abrupt removal of social landmarks and role models turned a friendly, well-adjusted pack into a fighting and dangerous mob.
Similarly, organizations will lose tribal knowledge, morals, relationships, and social structures if they reduce the workforce without thinking. While reasonable reduction may be required, it is better to spread frugality throughout the organization than to amputate large numbers or entire subunits.
Like any economic crisis, Covid-19 will transform the business environment beyond recognition. Several companies will be devastated, many will withdraw, some will survive, and some will prosper. The category companies are in will depend on their leaders taking advantage of the pre-storm pause to think about these risks and implement mitigation strategies.
Raghu Raman is Founding CEO, NATGRID and former President, Risk and Safety, Reliance Industries
The opinions expressed are personal.