Everyone is scrambling to come to terms with the outbreak of COVID-19 and at such a juncture, by acting urgently, making the right immediate moves and asking the critical long-term questions can help CEOs and their organisations better prepared for whatever comes, according to a new report from global management consulting firm Boston Consulting Group (BCG).
The report titled ‘Big Decisions for CEOs Right Now…” recommends 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.
“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,” said the report.
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.
“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, the findings showed.
Instill commercial urgency in the front line. Even in this severe down-turn, 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,” according to the BCG report.
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.
“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,” the report stressed.
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.
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.
“Focus on cash management to strengthen liquidity. Your financial strategy should be to preserve cash above all. Build reserves, and postpone capex projects and large opex projects. Reduce your share buybacks. Liquidity should be your sole focus,” the report suggested.