Synopsis of an article from London Business School by Michael Jacobides and Stefan Stern, Published 1st May 2020
In this article the authors ask us to consider how your company will get through the pandemic successfully they go onto challenge us to rethink and reinvent business and leadership models.
To cope with the crisis you may need to make very significant and rapid changes, but given the fact that you are doing this during a crisis may lead to inertia, doubt or fear.
Crisis Leadership Looks Different
Leaders must respond directly and address the realities, staff are looking for their leaders to provide honest, simple, clear and direct messages.
“When the situation is dire people need to be told,” he says. “You have to have a clear, bold, realistic narrative.” Provide a clear sense of direction, which is robust and consistently communicated – even if it is not good news.Professor Jacobides
Revise and Potentially Re-Think Your Business Model
The tasks that face most leaders right now: Survival and then Re-Birth. Unfortunately no-one knows how long the current situation will last, so its better to preserve your cash as far as possible (without being to harsh on suppliers – who you will need later). Communicate frequently.
Rebirth is about understanding what drives the problems in your existing business model and fixing the the underlying problems, not just the symptoms.
Towards a New Digitally Enabled Normal
A joke has been circulating recently: “Who led the digital transformation of your business? Was it the CEO, the CIO, or was it…COVID-19?”
For some companies the transformation to digital ecosystems has not happened as quickly and for these companies it is now urgent. Consumers have adjusted to digital and to new forms of service delivery, finding the new ways to compete effectively in these ecosystems is now critical for your business too.
The Known Unknowns
2020 will be the year of transformation, how societies deal with and regulate the ownership of data will be different for countries around the world. There will be significant debate, which may in turn see changes in the strategic landscape.
“Don’t let history dictate your future” says Professor Jacobides, firms need to think about how they reallocate capital, reviewing opportunities and markets. He proposes that firms should:
- Ruthlessly and quickly divest from businesses which are challenged today and promise little in the future
- consolidate and expand where the future prospects are good, and there is little pressure today;
- harvest or reposition “cash cows”, which are not bleeding today but are heading to trouble; and
- build up those businesses which may be struggling now but look likely to generate strong revenue in the future.
And, as you do so, consider how each business affects your current position in terms of cash-flow, and how much future profit it may bring in.
It is the tradeoff between today’s (scarce) cash use, and tomorrow’s profit potential that should be used to guide your choices.
Here are Professor Jacobides’ suggested priorities:
- Focus on cash
- Get new skills/leadership
- Keep stakeholders involved
- Leverage this burning platform
- Drastically cull and reinvest
- Engage in digital platforms and ecosystems
- Communicate, often, frankly, humbly, directly
Read the full article here: