How resilient organizations address the current crisis
Dr Javier Marcos
The global scale of this crisis
The coronavirus crisis has taken the world by surprise. Countries, organisations and individuals alike did not expect an upheaval of this magnitude.
The impact of lockdowns in economies across the world is being dramatic, with a projected shrink of the global economy of 3% at the time or writing this article. The International Monetary Fund Economic Counselor labelled this the “worst economic downturn since the Great Depression”. The growth plans of companies have been severely compromised. Moreover, sales and trade operations have been distorted as a result of suppliers and customers being unable to meet and interact. Customer facing functions are having to rethink their responses to disrupted routes to market. Sales leaders need to consider and implement how their companies respond to the Covid-19 challenge, one of a magnitude never known before.
Four approaches for responding to Covid-19
However, companies are developing a variety of responses across the ‘reactive’ and ‘proactive’ continuum and also the ‘strategic’ vs ‘tactical’ dimensions.
Taking these dimensions together, one can identify four classes of responses to crises, such as the coronavirus one: Resist, reframe, reinvent and renew.
A crisis first triggers an instinct for survival. It compels both individuals and organizational systems to find new ways to fight external threat, in order to maintain the status quo.
The coronavirus crisis has revealed hundreds of examples of small and large businesses alike who have found ways to continue providing service to their customers even in the most challenging contexts.
Most organizations who have seen their traditional business and service models disrupted have evolved to use technology to compensate for the restriction of movements of their customers and staff. For instance, the quarantine has forced consumers to transform their shopping habits. Many shops have quickly developed sleek online systems where the customer places the order online and picks it up at the store ensuring safety and security. Home-based working has become a widespread practice in companies and organizations and meetings are now held via online platforms, with individuals sometimes reporting higher level of effectiveness.
Restaurants have been forced to close. However, millions of consumers still wish to enjoy their favourite dishes from restaurants. As a result, many of these outlets have adapted from an on-premise to a take-away model serving customers on-the-go or via home delivery. With the help of food distributors like Sysco, owners are transforming their restaurant dining area into pop up shops, where their customers can shop for essential pantry items, while getting their meal to-go. Overall, we see that observing the necessary hygiene and safety measures and ensuring social distancing, some of these businesses are resisting the crisis tweaking their operations and adapting them to the current circumstances.
A plethora of large companies across the world such as Unilever, Mastercard, and Wipro, have mobilized resources to fight the coronavirus crises. With commercial fleets grounded, Airbus is employing some of its aircrafts to support governments fighting the COVID-19 pandemic flying millions of facemasks and thermometers amongst others, to countries where these are most needed.
A crisis also often triggers a degree of adaptation that is more radical, resulting in companies significantly reframing their business as part of their response to the crisis.
For instance, Anheuser-Busch InBev one of the world’s largest brewers, has repurposed its facilities and its supply chain to make and distribute alcohol-based hand sanitizer as opposed to their traditional spirits because of the closing of restaurants, pubs and bars.
Businesses are reframing their current capabilities, resulting in the transformation of their products and services to deliver very different outcomes.
For instance, the demand for ventilators rose exponentially, outstripping the availability of equipment of most hospitals. Car manufacturers such as Ford, GM, and engineering companies such as Rolls-Royce, have turned to manufacture medical equipment to aid in the coronavirus response.
University labs and workshops have started using their know-how in a very creative way to come up with workable solutions to aid in the colossal task of providing quality healthcare in overcrowded hospitals. at University Complutense in Madrid, a workshop in the chemistry faculty started designing an adapter to convert snorkel masks into respiratory gear, suitable for use in clinical settings.
Overall, collective wisdom is being redirected to fulfil a series of much needed outcomes, achieving both higher order purposes and legitimate commercial gain.
Every crisis conceals an opportunity. The adversity that a traumatic circumstance like the coronavirus brings about, in some organisations can turn into a driving force for change and innovation. These organizations, possibly encouraged by individuals with an intrapreneurial (or entrepreneurial) mindset, explore new possibilities and find out new ways of adding value that would not have been identified had it not been by the shock created by a crisis.
For instance, educational institutions are being forced to reinvent learning delivery mechanisms. The lockdown and closure of nurseries, schools and universities, has triggered a widespread use of online tuition, self-directed learning, flipped classrooms, and a plethora of remote and distant learning methods and tools. Entire scholarly communities are responding to the challenge of social distance, by fundamentally revisiting their traditional ways of working.
There are known examples of companies reinventing themselves, like IBM, whose demise in the early 90s when the company posted the biggest loss in the history of corporate America, $8 billion, was followed, a few years later, by a successful turnaround, transforming itself from a traditional hardware manufacturer to a pioneering professional services corporation.
In Norway, Telenor the communications operator, is reinventing the use of mobile data, gathering accurate and anonymous information on how people are moving around so health authorities can access relevant information to develop measures to protect lives and to limit the viral spread.
Renewal is the proactive approach to define specific measures to confront crises, finding novel ways of delivering services and creating value. Renewal entails creativity and a high level of tolerance to ambiguity. In most cases, renewal efforts are underpinned by a fundamental belief in opportunity and optimism.
For instance, during this coronavirus crisis, airlines have been massively impacted by the air travel restrictions. Some have started to renew their service provision, to offer passengers a new experience when travel resumes.
If there is a sector that has experienced the worst of this crisis so far, that is the health care sector. Hospitals and other stakeholders in the health care industry are rethinking the way healthcare is provided. New patient-centered approaches are being developed, creating mechanisms to deliver healthcare at the point of use. For instance, with rapid tests, or encouraging patients to stay at home, supplying medicines and basic respiratory equipment and checking their evolution over the phone or online.
The processes for drug development, its protocols, and the length it takes to bring a new drug to the market are being renewed, to warrant their fitness for purpose: safety and efficacy for the patient, and speedier approval and launch.
A plethora of companies have shown higher levels of preoccupation for customers. Insurance companies have extended the coverage of their policies to assist people in difficult times. Financial institutions have created new packages that will help organizations and individuals go through the worse of the crisis. Across sectors, businesses are adopting multiple responses to remain resilient and maintain their relevance and growth.
Overall, sales growth in times of crises, is founded on developing organizational resilience. This requires business to find ways of ‘resisting’, ‘reframing’, ‘reinventing’ and ‘renewing’ their activities and market strategies. None of these four approaches alone is likely to translate into immediate growth. The simultaneous adoption of elements of each of them can result in new opportunities. The four responses to crises outlined here work in mutually reinforcing ways, and thus, in combination, will enhance businesses’ ability to overcome Covid-19 and to grow over the long run.
All the best in these endeavours!
Javier Marcos is Associate Professor of Strategic Sales Management and Negotiation at Cranfield School of Management.