As news of the outbreak of the novel coronavirus (COVID-19) emerged, global financial markets reacted in ways not seen since the 2008 financial crisis. Sequoia Capital is calling this period the “black swan of 2020” (black swans are rare unexpected events like 9/11 that impact global activity).As the world is concentrating all its efforts in containing and mitigating the pandemic disease, companies are facing unprecedented challenges, finding themselves in a situation where they must act decisively and react rapidly to the unfolding events. As Darwin said, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.”
But how do you act quickly in a highly uncertain and rapidly evolving situation?
1- Understanding uncertainty
Uncertainty, especially during a crisis, can have a severe impact on people’s perceptions and expectations, reducing their sense of control and their ability to process information. Situations of anxiety and stress have a significant effect on our cognitive system, resulting in panic and a protective state of mind and, thus, affecting our job performance directly, by considerably reducing productivity levels. Therefore, it is essential for the company’s leadership to avoid underestimating the effects of uncertainty, and support their employees to overcome this situation.
2- Strong leadership
Crisis requires strong leaders who are committed to putting aside their predefined response plans for routine emergencies and embrace the rapidly changing situation with a firm belief that the organization’s employees will adapt and prevail. As Gemma D’Auria and Aaron De Smet wrote in an article for McKinsey & Company (Leadership in a crisis: Responding to the coronavirus outbreak and future challenges), “What leaders need during a crisis is not a predefined response plan but behaviors and mindsets that will prevent them from overreacting to yesterday’s developments and help them look ahead.”
3- Planning to improvise
In the case of unprecedented circumstances, no single leader or decision-maker is an expert. Therefore, actions and strategies must be improvised to meet new demands by combining existing plans and capabilities as well as through innovation. During this time, organizations must adapt their approach to finding better tactics, and stakeholders need to be fault-tolerant, as improvised solutions may not work completely or at all on the first try.
In practice, while some moments during crisis will require immediate action, companies will also have time to pause and assess the situation. This pause-assess-anticipate-act cycle will allow leaders to process the information and avoid overreacting to new information.
4- Establish a contingency plan and long-term resiliency
Plan and define scenarios. Preferably, set up an emergency team that responds and coordinates to any shifts or new decrees. This will require some members to step out of their daily roles, and it depends on the number of employees within the company. Some of their responsibilities can include the following:
a. Employees’ welfare, and facilitating the way they can perform their roles
b. Developing a contingency plan and planning financial streams
c. Monitoring the supply chain
It is also important to note that while the global economy will likely overcome the outbreak, consumers’ shift in preferences may not change. More and more consumers are moving towards online purchasing, deliveries, and more digital technologies. Thus, companies (depending on their sector) that have not established a digital presence must do so to remain relevant.
5- Team building
As companies are adopting working from home policies, now more than ever, building and maintaining team cohesion, morale and performance became a challenge for the most part for organizations. With the lack of direct interaction, it is essential to maintain the connection among peers and boost employees’ motivation, keeping the relationships over video conference and instant messaging channels.
6- Communicate with customers
During crises and uncertainty, companies’ ability to communicate with their customers is crucial. It is important to inform them about the continuity of the business and any aspect that may be affected due to the new situation. The focus should be on the customer’s needs and having an emphatic approach rather than trying to create selling opportunities.
7- Demonstrate empathy
Many organizations have been shifting their business activities to support the global response to the coronavirus pandemic, such as providing money, medical equipment, or expertise. While not all companies can take this step, all of them can make a positive impact on people’s lives by supporting their communities and employees.
8- Remain transparent
During times of crisis, transparency becomes more crucial than ever. Often, leaders remain skeptical about sharing information as it unfolds; however, when it comes to your business and investors, it is critical to remain transparent and communicate frequently. For your investors and employees, this will increase their trust in your capacity to handle the situation, and will showcase your honesty. It will also leave little room for doubt, which is good for all parties involved, as it helps employees keep a relaxed mind – and ultimately focus on their responsibilities – and also ensures to investors that you act responsibly and immediately to unprecedented situations, which is reassuring.
While transparency is vital, communications should be carried out through both a realistic and optimistic approach. Often more than not, crises are followed by major growth. A good communications approach will reassure stakeholders that things will get back to normal.
During the financial crisis of 2008-2009, hundreds of thousands lost their jobs, and then the job market saw significantly increased demand soon after and global economic growth. Thus, amidst everything going on, this too, shall pass. Yet, the crisis today does not have a definite ending, and companies have an imperative responsibility to protect their employees, as well as address the emerging challenges and risks, while helping to mitigate the pandemic however they can.