By IESE Insight
COVID-19 is testing the leadership of executives who find themselves scrambling to limit the damage caused by the lockdowns and sudden drops in revenue, to reorganize their teams and to ensure that the operational nerve center of the company continues to function.
For IESE’s Miquel Lladó, this is a time when true leaders will be measured by their ability to breathe energy into their teams, to manage their feelings and to withstand the pressure.
Yet, while these are times of great uncertainty for companies, “We are in a storm that, like all storms, will pass and a new day will come,” Lladó says. For this reason, he advises managers to keep thinking about the future and to develop the strategic capacities in order to write down today what should be guiding the company tomorrow.
Cover the basics before anything else
Many managers aren’t used to thinking about the long term. Indeed, top executives are often “doers” — the action-oriented people who decide in the now to achieve results. And in the current context, speed is an essential skill to avoid greater problems later. In the first phase of this crisis, the basics are:
1) Find out how your team is doing. Show interest in them and make sure that everyone is managing okay.
2) Monitor your supply chain, from start to finish, to know if you have what you need to function.
3) Survey your customers. Know who is open for business and who is shuttered, if they have pending issues with you, etc.
4) Safeguard the operational nerve center. Make sure that you have the key elements to keep your company operational.
Tools for strategic thinking about the future
Once the basics are covered, start thinking about the future. COVID-19 may have companies in emergency mode, but it’s smart to think now about the long term and prepare your organization for the day after the emergency ends.
There are many conceptual frameworks to strategize and plan for the future. Lladó recommends the following three tools to help direct your thinking:
- The PESTEL analysis (for Political, Economic, Social, Technological, Environmental and Legal) is a tool that allows you to analyze macro forces in order to understand opportunities and threats to your company at a given time. Lladó recommends using it frequently to see how external factors are evolving and what aspects of the environment can affect them.
- Maslow’s hierarchy of needs is a classic of psychology with implications for consumer behavior. It holds that people move up a hierarchy of needs only after the more basic needs are met. At the base of the pyramid are physiological needs, followed by safety; then love/belonging; then esteem; and, finally, self-actualization up top. According to Lladó, consumers are likely moving down the pyramid during the current crisis. Keep in mind that some products or services that cater to needs near the top will be of less interest for a while.
- Porter’s Five Forces is a framework that can help direct thinking about what is changing, or what could change, in the competitive environment and a business’s value proposition. If the five forces — i.e., the threat of new entrants, threat of substitutes, bargaining power of customers, bargaining power of suppliers and competitive rivalry — are changing in intensity, so is the competitive landscape.
Beyond these tools, the important thing to do is invest time to ponder the future. Amazon CEO Jeff Bezos reportedly hosts regular four-hour meetings dedicated to farsighted brainstorming. In their book Playing to Win, A.G. Lafley and Roger L. Martin say that we can only define the future if we know how to respond to the questions: “Where will we play? How will we win? What capabilities must we have in place to win? What management systems are required to support our choices?”
And for Lladó, simplicity is also crucial. “If you can visualize the strategy on one page, that’s much better.”