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By Mai-Britt Poulsen , Joe Davis , and Lars Fæste

The Boston Consulting Group

Published March 20, 2020

Everyone is scrambling to come to terms with the outbreak of COVID-19. That includes business leaders, of course. In the past days, we’ve heard from CEOs about the questions they’re asking and the steps they’re taking. We recommend a set of immediate actions as well as a set of critical questions that CEOs should ask about something difficult but important to address right now: how to plan for what comes after.

The COVID-19 outbreak is an unprecedented situation for governments, companies, and societies. Business leaders should respond promptly and with urgency. This is a key moment for leaders to step up and do what’s right to protect people, customers, and the company. CEOs should:

• Establish a rapid response room and step up communications. Every leader needs daily—in some cases hourly—updates about the state of the marketplace, the state of operations, and the key issues the organization is facing. The issues list changes constantly. It’s important to have a virtual response room, an all-in-one, decision-capable “place” (which will probably be online) where key players can convene several times per day, ready and able to work the problem. Define a crisis communication strategy: Who communicates what to whom? And with what frequency? The audiences will be your own people, extended leadership team, customers, and business partners.

• Stress-test the top line, P&L, and cash flow. Establish detailed modeling of your top five markets to estimate how they will develop and to gauge key sensitivities in the P&L. As with the critical-issues list, this needs to be an agile model. It must be updated every 48 hours as the crisis unfolds.

• Instill commercial urgency in the front line. Even in this severe downturn, there are pockets of growth. Where are they? Online? Or in select customer segments or geographic areas? Charge your frontline teams with finding opportunities wherever and however they can. They need to organize a fast ramp into online sales channels in order to take the company from offline to online, not only for consumer channels and resale but for all B2B selling. Here, too, creative and agile models work: if you are caught off-guard or if conditions change suddenly, the commercial operation must respond. The emotional stress of the emergency and the reality of remote work make this harder—but much more important.

• Stay loyal to customers. Loyalty isn’t just a matter for your front line—it’s an imperative for you and your leadership team. Your customers are under the same stress you are. If you can help your most loyal customers with solutions that make a difference, you will tighten the bonds, and that closer relationship will persist once the emergency is over.

• Build contingency operational plans. The resilience of critical system operations is vital to your organization’s mission and survival. Even if you have closed many of your operations (for example, your retail bank branches, your production plants), your back-end and online systems need to continue functioning in order to meet your customers’ needs. Determine what it takes to establish and maintain operational and supply chain certainty, including how to operate with a workforce impacted by infection or illness.

• Protect your people. Health and hygiene come first: if your people don’t stay healthy, you don’t have a company. Establish remote-working practices, not just the basics but how to work effectively and productively while maintaining social distance.

• Engage with your staff. This is the time to leverage the purpose of your company and have leaders engage with staff on a frequent basis. Address your people’s panic and fear head-on. Be honest, be transparent, and convey that you share their concerns, but remind them that you will all get through this as one strong team. Take steps to meet practical challenges; for example, support working parents who have to take care of their children and provide for home schooling while continuing to meet their responsibilities at work. Decide how much flexibility you can provide during this very stressful situation. Be inventive. In China, one company is holding online singing, dancing, and sports competitions, as well as yoga classes—all ways to build bonds among people who are isolated at home. Remember to continue to reward and recognize your top performers and stay close to them.

• Reduce the burn rate wherever possible. Make decisive but no-regret moves. Stop salary increases, freeze hiring, reduce the head count of low performers, reap the savings from cancelled events, and significantly decrease marketing during the peak weeks of the outbreak. At the same time, identify radical cost levers to pull at certain trigger points as the crises unfolds. Will you significantly cut marketing to save it for later or even cancel some of the spending? Will you pause or downsize new-product launches? Will you close offices? Will you drastically slash your procurement? How tough an ask will you make of your suppliers? Plan today for worst-case scenarios. You need sufficient funds now.

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Source: The Boston Consulting Group