The coronavirus outbreak has severely impacted the global economy and every industry is feeling the ripple effect. Companies are facing an uncertain future and deciding what to do next can be a paralyzing exercise. But in times like these, strategic planning backed by prior experiences can help you move through uncertainty and come up with a plan of action.
I have looked at academic material and real-world examples from Harvard, Yale, MIT, McKinsey, General Mills, Netflix, and Shaw, and combined it with my past experiences of shepherding my businesses through the dot com bubble, 9/11, and the 2008 financial crisis to come up with some recommendations for people to navigate these rough waters. Below is a summary of what I consider to be some key lessons.
Not all uncertainty is the same
Before you start developing a strategic plan, it is important to understand the type of uncertainty you face. As per HBR, all uncertainties can be categorized into four levels. Depending on your industry and business model, the level of uncertainty that your company faces due to the novel coronavirus outbreak will vary.
However, I believe that what most businesses today are facing is a Level 2 environment of uncertainty. A Level 2 environment of uncertainty is also referred to as the ‘Alternative Futures’ stage of uncertainty, one with a few alternative outcomes.
At Level 2, the future can be described as one of a few discrete scenarios. Knowing that we face a Level 2 scenario of uncertainty is important as tackling each level of uncertainty requires a unique approach. To tackle a Level 2 uncertainty we must follow a 3 step approach: examine, plan, and act.
Step #1 Examine: Know yourself and your environment
Hugh Courtney, the author of the book 20/20 Foresight: Crafting Strategy in an Uncertain World, argued in an interview given during the post 9/11 crisis that decision-makers often take a binary view of uncertainty, where they think of uncertainty as either on or off. He says that “the problem with this binary view of uncertainty is that decision-makers, by systematically either under- or overestimating the level of uncertainty they face, miss out on the threats and opportunities that an uncertain business environment provides.”
As a decision-maker, your first step should be to undertake a systematic analysis of what factors have truly changed for your business and what remains relatively stable.
Is my product/service still needed or in demand? Think about the utility your company delivers and examine the motives for purchase.
Can I effectively deliver my product or service?
What has happened in countries that have been successful in tackling the crisis? Look at how China has coped and is already seeing an economic bounce back within 6 weeks.
Can I apply for any of the government subsidies to tide me over? All major governments are implementing policies that allow businesses to claim relief benefits. See if you qualify for them.
Examine the key value drivers of your business and the macroeconomic environment. This analysis will enable you to identify the various scenarios that you could face in your alternate future.
Step #2 Plan: Think through alternate futures
Scenario Planning is an exercise in which you identify the various threat or opportunities that opened up for your business because of the coronavirus outbreak. Scenarios are alternate futures in which you try to map out how the decisions of today could play out in the future. Think of it as storytelling where each scenario has a beginning, middle, and end.
One important thing to consider when scenario planning during times like these is to stop ourselves from simply trying to fit in with the current environment. It is important to adapt and change the way you do business as the world around you is changing too. You should look at the opportunities created by the current limitations and try to envision a future landscape where, with the existing resources, competencies, and capabilities of your organization you can achieve a winning position.
Can I change my delivery method and still sell my products and services? Restaurants around the world have adopted a contactless delivery policy allowing them to remain in business.
Can I create a new value proposition? ChargedUp a company that makes independent phone charging stations for supermarkets and malls has pivoted and started manufacturing hand sanitizer dispenser stations by leveraging their existing infrastructure.
How can I leverage digital technology? Babylon Health, the digital doctor app by TELUS, is training its AI chatbots to identify symptoms of coronavirus. This will help them address the pandemic outbreak much more efficiently.
In what ways can I remain part of my customers’ world in this trying time? Telecom providers like Rogers, Telus, and Bell are removing data limits for home internet customers. While this move might not make financial sense it does make a lot of sense from a marketing and PR perspective as these companies can get a lot of positive exposure from this move without any incremental costs.
Step #3 Act: Choose a path that is right for you
Once you know the various scenarios you face in the future it is vital to act. You can choose to gamble or play it safe.
Shape the future (high risk, high reward): Win by leveraging the fundamental shift in the economy that has happened. Take a high stake gamble and redefine your industry’s future. This is the strategy that Berkshire Hathway adopted during the 2008 financial crises.
Adapt to the future (medium risk, medium reward): Win through adapting and capitalizing on immediate opportunities created by the economic turmoil. Peloton has started giving free 90 day trials. They are banking on the idea that this free trial will help people build usage behavior when there are few alternatives available.
Reserve the right to play (Low risk, low reward): Win through investing the bare minimum amount and staying in the game. As soon as the situation normalizes, you will be poised to jump back into action. Apple created a new category on its app store to promote work from home apps as more people have started working remotely.
If history has proven anything about these kinds of crises, it’s that businesses who move fast and focus on their customers' needs that come out on top. To succeed, you don’t need to take unnecessary risks. Rather, stay focused on the right scenarios and the right solutions.
At Apply Digital, we can be your strategic partners and work with you to help you identify your next best strategic moves. We can maximize the potential of your digital channels or enhance your products and services through a digital medium. We can ensure that you are not flying blind and give you the foresight you need to succeed. Reach out to us via email at email@example.com.