What this Crisis Means in the Boardroom
While we are still in the middle of addressing the coronavirus as a society, the pain points inside corporations across industries have already been felt. Sales conferences that drive business growth are cancelled. Events that fuel revenue for many organizations also cancelled. Non-essential travel and meetings are postponed, potentially delaying progress on important initiatives. Supply chain for many disrupted to the point of severe economic losses. A fearful workforce is preparing for extended work from home status. The travel, hospitality and transportation industries are coming to a screeching halt as governments struggle to determine what action is necessary to prevent the spread of the virus.
I attended my final conferences a week ago, all the rest have been cancelled or postponed through the spring. I asked board members and executives how they were feeling about this. Most shared similar sentiments. If they were healthy, they weren’t worried about themselves, but they were concerned about bringing it home to a family member who might have a compromised immune system. They were also fearful of becoming “stuck” somewhere or stranded and unable to get home. Most feel uneasy about the lack of solid information to make smart decisions – disruption at its core. This one took most everyone by surprise. It wasn’t expected. The long-lasting sentiments on younger generations could change the way they think about travel and work. In times of extreme disruption, we need leaders in the boardroom to offer sage advice and provide guidance to senior executives, customers and the workforce on what to expect and how to react responsibly.
While the days, weeks and months ahead will tell the full story, what lessons can we begin to learn in the boardroom? What should a board of directors do when something like this hits? What can we take constructively forward from this crisis?
Crisis Response Should Always Be Ready to Go. We live in a time where a crisis can come from a myriad of sources: a cybersecurity breach; a malware attack that takes all of your systems offline; an employee walk out; an energy shortage; tampering or malfunction of your product or environmental accident; a #metoo revelation of your CEO; or even just a sharp economic downturn leaving shareholders and analysts pointing fingers. Now, of course, we realize the potential of a health hazard capable of bringing entire cities to a complete halt. Boards need to be prepared to respond to any number of crises. There should always be a response plan ready to go. Consider the following:
Public Relations & Legal Expertise. Do you have your experts identified and ready to assist you? It’s a good idea to have a PR expert and Legal expert, both internal and external, who understands your company, your stakeholders and your strategy to provide on the spot advice. Don’t wait until a crisis to find someone – have them pre-identified.
Pulse of Your Stakeholders. How do you quickly get a pulse of your stakeholders (i.e. customers, employees, key partners or vendors and supply chain, the community you serve). Have a mechanism to crowdsource this information or talk to leaders in your organization who can help the board make smart decisions. How can you best help your key stakeholders navigate the crisis, what can you do to support them? How will each of your stakeholders be impacted? If you don’t ask them or get information from the source, you are guessing.
Quick Decision-Making Framework. A little pre-work before making potentially life altering decisions can help you make smarter choices when under pressure. In times of uncertainty, the best you can do is use your judgment to make reasonable assumptions about the future. Start by defining the assumptions you have as a board about the issue at hand –write them down on a white board or in a virtual shared document as “assumptions.” Look at them carefully and decide as a group what you believe is reasonable to assume. Determine what opportunities could exist for you and what challenges you must immediately address to manage risk for your key stakeholders. Triage critical problems to help your senior executive team mobilize. Your CEO should immediately frame key questions about how you will communicate to your stakeholders, what action must be taken and the implications to each stakeholder group.
Practice and Prepare. When you are not in a crisis is the best time to plan for one. Boards are advised to regularly take a prospective crisis and run a drill, what do you do, how do you respond. If you tackle a variety of disruptive issues, you might already have a plan in place the next time something happens.
Virtual Meeting, Virtual Reality and Social Distancing. If it was not already obvious, this crisis has made it clear that companies need to be prepared to work in a virtual capacity for potentially up to two weeks or longer. Organizations, large and small, should have the technology needed to quickly migrate employees to working remotely including access to shared documents, email and a virtual meeting tool. These are things your IT department should have in place with security mechanisms to continue to monitor their access and protect your company’s systems. Thinking strategically about accountability when working remotely is also important. Motivating employees during extended periods of working from home and setting up collaboration hubs or “water cooler” talk times can also be helpful.
For workers who can’t work remotely, how can you mitigate the damage? Could virtual reality in the future allow you to continue to provide services or experiences? Could drone based delivery mechanisms allow you to continue to deliver products or food to people stuck at home. As many challenges as there are, there are also big opportunities for companies who think about how this could become a new normal.
In the aftermath of this crisis, travel habits will change, potentially with long lasting effects. Younger generations already largely prefer to work remotely to allow for greater lifestyle enjoyment by living away from traditional urban environments and having more flexibility. As the younger generations seek out more affordable places to live, the capabilities to effectively manage a remote workforce will become expected to attract talent. Invest in strong technology tools and new frameworks for managing people. If working virtually turns out to yield a happier work force and/or greater productivity, it could create important questions about what office space looks like in the future and where companies are based.
Supply Chain Needs a Fresh Look. It’s not at all surprising that supply chain has been impacted globally by the virus. But this trend was already under way. This crisis will just accelerate the thinking for making a change. If you weren’t already, this is a good time to carefully rethink where you source important supplies (both products, raw materials and services). As I cautioned in my last blog after learning that China was responsible for the cyber-hack of Equifax and Anthem, the reality is it’s time to think more strategically about the impact of finding the lowest cost provider – sometimes the end cost is much higher than anticipated. We need to think longer-term about what best serves the organization. We have also learned that China is the exclusive supplier of many prescription drugs and medical supplies. Generally speaking, is that a good idea? Do we want to be overly reliant on any one supplier, particularly on something that is a matter of life or death? Companies have been growing more aware that regional and local supply chains may be needed to address issues of climate change, as well as changing consumer demands who want to support local companies and suppliers. Amazon offered employees a chance to become one of their suppliers as a delivery company. They gave employees $10,000 seed money.
I expect this event to be a catalyst for more companies to carefully consider the impact of over reliance on global supply chain related to cybersecurity, health and safety and just plain old preparation.
A key takeaway from this crisis is that we need corporate leaders to be prepared for disruption with clearly thought out plans for response. We need leaders to think about and be prepared for virtual work capabilities and how to use virtual reality to be prepared for uncertainty and health and safety of their workforce. We need leaders to think long-term not short-term about supply chain.
This crisis could be a lot worse. The coronavirus, while dangerous, is not life threatening to most people, what happens when the next pandemic is? Savvy leaders will use this as a learning opportunity and be prepared for what may come in the future. If you have one of the sought-after seats at the table in the boardroom, we need your wisdom, your voice and leadership now more than ever.
If you are interested in a keynote, workshop or facilitated discussion on emerging technologies, future trends, cybersecurity or cultural shifts for your next board meeting or executive retreat, contact me at jwolfe@consultwolfe.com or 513.746.2801.