Global companies have survived challenging times throughout the century, such as the Great Depression in the early 1920s. At present, businesses are challenged by the Great Lockdown; and in the future, there could be more challenging eras and organisations will have to prepare themselves for that.
Lessons from the past loom large. As for today, businesses large and small shut their doors, with millions of workers retreat to enforced isolation. The magnitude of the coronavirus crisis confronts corporate leaders with the economic challenge of a lifetime. It also demands of them a moment of existential introspection.
Likewise, in previous periods of economic shock, executives’ actions, both good and bad, lodged in company histories and forged perceptions that have endured for years. Decisions made during a crisis like this will likewise shape a corporation’s identity and tell a story that will leave traces long after COVID-19 has been quelled.
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In other words, business leaders should be able to define what they do during hard times, whether to respond to it or be defined by it. A handful of principles can help guide executives in shaping a critical course of action and building a powerful sense of identity and purpose that will long outlast the immediate crisis.
Leaders at McKinsey shares their tips on how to frame challenges below:
Examine exactly what is at stake for your employees, communities, customers, partners, and owners. All will have urgent, rapidly evolving needs that you should fully understand and prioritise. Some of these needs will be new and require creative thinking. Listen carefully to stakeholders that are well placed to inform you. Prepare for tension, too, as trade-offs arise among stakeholder groups, each with their own important needs. For example, increasing the pay of frontline workers might raise the prospect of cutting back on supplier bills.
Small businesses and large corporations alike are redeploying their capabilities to respond to this crisis: a wedding-dress boutique in New York responded to postponed orders by shifting to produce protective masks for healthcare workers, while French perfume makers have retooled to pump out hand sanitizer. In short, there is always an idea to bring out of every disruption.
At a time of great uncertainty, “gut check” your decisions against your values as a leader and as an organisation. Communicate not only your decisions but also the rationale for them and the trade-offs you considered clearly. If you have embraced initiatives, don’t borrow from one to support another – don’t risk appearing to “rob Peter to pay Paul.” The temptation might be to scale back environmental programs to support acute social needs better in this crisis. But beware of seeming to abandon deeply held stakeholder causes; supporters will have long memories.
Any crisis provides an opportunity to build a common sense of purpose with your employees, who will be looking for leadership and ways to engage themselves. It can also deliver the benefit of bringing a new generation of leaders to the fore. It might be tempting to withdraw into small, tight decision-making task forces to make key decisions as quickly as possible. But purposeful leaders will want to share execution plans broadly with staff to solicit input and engage them on the challenges the organisation faces, including the difficult trade-offs to be made.
Leading in a crisis is never easy, but hard times leave the most indelible imprints on a company’s identity. Authentic actions will demonstrate to employees a company’s genuine commitment to social purpose. Communicate early and frequently, even with incomplete information. Remember that, right now, suffering stakeholders seek empathy but are also looking to leaders to face facts bluntly, without sugarcoating them. Stay nimble as situations change, which they certainly will. Adapt to changing conditions and new information rather than returning to a static playbook. Offer perspectives on today’s crisis details, with a microscopic perspective to reassure stakeholders of competence. However, also take a telescopic view of what recovery might look like in the future.
Executives are uniquely poised at pivotal times to bring corporate power, guided by social purpose, to the aid of millions of dislodged and vulnerable lives. Done well, their actions during crises can bridge, in unprecedented ways, the divide between shareholders and stakeholders in the communities they serve and leave a lasting, positive legacy on their corporate identity.
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