Where Do We Go From Here? Prepare for the Next Wave of COVID-19 Disruption
While timing will vary, the prospect of economies reopening post the COVID-19 pandemic is in sight. Some countries are already beginning this process and over the next several months it is likely most others will as well. Society and business will be orders of magnitude different as we enter a “new normal” impacted by social distancing, precaution, and an unprecedented disruption of economic activity. As companies move beyond the crisis stage of securing their people and operations and maintaining business continuity, they now need to shift their energy to rethinking their previous strategy and plans and create a go-forward plan for the “new normal.”
Your go-forward plan must have a clear perspective on what your “new normal” will look like. Regardless of today’s constant changing conditions, it is imperative that you assess these implications to your business and prioritize your business initiatives to weather the upcoming business disruptions expected post-crisis. We recommend that you readdress your current strategy and supplement it with a new go-forward plan that focuses primarily on the immediate term (12-24 months) as there is heightened uncertainty beyond this timeframe. Most importantly, because most companies will be vulnerable to the fallout of this crisis, we urge you to develop these plans now with speed, focus, and high-energy.
Our suggested planning approach is outside-in, with a market-focus as the fundamental building block. To define the go-forward plan, for each business segment you need to develop a perspective on…
- Demand Expectations: What level of demand will your market return to post-crisis? What is the current starting point? When will the recovery start, and how fast will it happen?
- Market Disruption: How different will your market look in the “new normal?” Are the changes temporary or long-lasting? What are the implications for the business (new customer needs and behaviors, new channel partners and networks, consolidation and merger opportunities, etc.) and is our business advantaged or disadvantaged?
- Certainty: How certain are you about your go-forward perspective? How volatile might demand be going forward? Is it highly exposed to market fluctuations (high beta) or not?
Your go-forward plans should be based on a rapidly escalating understanding of market changes, your competitive landscape, and your company’s position. For each company, these dynamics will be different. Some companies will face significant market changes, while others will face few. The demand expectations for a business with heavy exposure to energy industries will look a lot different than a business with greater exposure to the technology sector. Just as a business whose markets are heavily impacted by social distancing (e.g. hospitality) will face greater disruption than those that aren’t (e.g. construction). The competitive landscape could have fundamentally changed with certain competitors suddenly weakened or distracted by other businesses that are under greater pressure. Each company will also have their own unique starting point, with some starting from strength (revenue, balance sheet, supply chain) and others from weakness.
A clear perspective on demand expectations, market disruption, and certainty are the fundamental elements needed to prioritize and make key strategic decisions. For example, markets with stronger demand expectations, where disruptions have advantaged your business, and have higher levels of certainty should be prioritized (see Business Segment A in the Business Segment Prioritization and Actions graphic below). Initiatives associated with these business segments, whether they be new product development, increased production, or strategic acquisitions, etc. are no-regrets decisions. Business segments that have the opposite dynamics (i.e., Business Segment D) deserve your lowest priority, and resources and investments should be reallocated elsewhere. High uncertainty business segments (i.e., Business Segment E) offer the potential for large payoffs and are worth the bet assuming the company can afford it, or you can make smaller initial investments to have the option to pull the trigger later when there is greater certainty. The go-forward plan should also include any “new” business segments that may emerge as part of the “new normal” market changes. Customers that might not have needed or considered your solutions in the past potentially will in the “new normal.” For example, high-end cleaning solutions traditionally only used in healthcare settings, potentially being used in air travel and accommodation markets.
Businesses that can quickly shift from reacting to the crisis to planning for the next wave of business disruption will be at an advantage as we move into the “new normal.” Using an outside-in approach, defining a clear go-forward perspective on demand expectations and market disruption, enables better strategic decision making and provides a confident path forward for your organization.
This article is a continuation of our thoughts on the impact of the COVID-19 pandemic and the key strategic decisions B2B companies should be focusing on. You can find our other articles here: