Competitive Foresight
9 WAYS SMART LEADERS NEVER WASTE A CRISIS
Deploying these strategies outside of a crisis is practically guaranteed to future-proof and future-make
your organization before the next one hits.
A “crisis trifecta”—that’s what 2020 will be best known for: a global pandemic; the collapse of economies/supply chains/revenues; extreme social and political unrest. Wouldn’t it be great to know what did and didn’t work for those who led organizations that survived and thrived?
Through interviews, attention to the assessments of McKinsey, Deloitte, HBR and others, as well as my own observations and board experience during the trifecta, here’s what I’ve been able to deduce. The first won’t surprise you, but the second is a real eye-opener:
1. Most every C-Suite and board immediately deployed basic survival strategies: Cutting expenses and conserving cash; securing the health of people, buildings and IT systems. Executives operated as virtually as possible, communicated empathetically with employees, and obsessively with distributors, suppliers and investors. Leaders focused on the immediate; putting out fires and preventing new ones (in some cases not just figuratively but literally).
2. But some execs had the nerve to say to their teams: “We don’t just need to do the basics; we need to do better than what the basics call for!” There is much we can learn from those audacious enough to try to gain from 2020’s distressful, harrowing circumstances.
While it’s long been said that one should “never waste a crisis,” few are ever able to do so. One reason: There’s not really been a playbook for it – until now. My analysis has identified nine specific strategies C-Suites and boards used to the advantage of their organization and their own careers. They’re not only valuable in guiding one through a crisis, they also set one up for success in its aftermath. As you will see, deploying them outside of a crisis is practically guaranteed to future-proof and future-make your organization before the next crisis hits.
1. LOOK FOR THE SILVER LINING.
Sounds crazy, yet it’s true. Many executives and board directors I interviewed noted that in the crises they experienced unexpected blessings. For some it magnified what was working in their organization despite the trifecta. From this, they drew strength and confidence to tackle what wasn’t working. The crises magnified that, too.
2020’s blessings “in disguise” were the inherent weaknesses the crises exposed. Especially common were an over-dependence on a single country or company for raw materials. Out-of-date business models. An uncompetitive e-commerce strategy. Biased hiring and promotional practices. Operational silos. Weak balance sheets. Product offerings grown stale or generic; an ineffectual value proposition.
Now exposed for all to see, leaders were able to use the urgency of the crises to get people to acknowledge weaknesses about which they’d long remained silent. By addressing these weaknesses, invariably other serious weaknesses were also exposed. That’s because weaknesses tend to be related. For example, a weak leader may not have the spine to rid the organization of under-performers. So, correcting the former also corrects the latter. By resolving weaknesses exposed by 2020, many organizations are already benefitting from the improvements and now strengthened for the future.
Another benefit of facing 2020’s big challenges, leaders developed greater confidence in themselves and their colleagues. Many admit to having less fear and anxiety about the future and the next big crisis, “whenever it comes.” Observing this too, McKinsey refers to this silver lining as “strategic resilience.” [1]
The next entry in the playbook on how not to waste a crisis comes from discovering the degree to which even those executives with a lot on their plates choose not to play it safe when working to resolve their situation. They disregarded convention or what would typically be presumed impossible. Instead, they chose to –
2. MOVE QUICKLY, BOLDLY AND, AT TIMES, EVEN AUDACIOUSLY.
Here’s an example: Serving 215,000 members and holding $4.7 billion in assets, Summit is the second largest credit union in Wisconsin, though far from being the largest financial in the state. Yet, early in 2020’s pandemic, bold moves by Summit CEO Kim Sponem helped 16,615 people with home lending—the most of any entity in the state—propelling the financial institution to become Wisconsin’s top mortgage lender. The bold moves that drove this outcome will benefit Sponem and her organization for years to come in the form of more and deeper consumer relationships, more household data, the preemption of competitors in Summit marketing, and thus the promise of even greater growth in the future.
How did it come to be that Summit was able to capitalize on the crisis? As mortgage interest rates started to fall in March 2020, people who wanted to refinance found it almost impossible to take advantage of the falling rates. Mortgages (which still require a few “wet signatures” with the borrower and lender together) were impossible because lobbies of financial institutions in South Central Wisconsin (Summit’s territory) had closed by official mandate, and in-person meetings were anathema due to Covid. Summit’s ingenious solution was to dedicate drive-throughs to the task of “in-person” signatures and notarizations. It was an audacious idea because to pull it off required redeploying over 50 Summit employees to lending (reallocating others to do the work the redeployed had been doing), and then training everyone, getting the right systems on their laptops and recasting many processes, all while people were struggling to learn how to collaborate virtually.
It was an enormous effort, but in the end, it drove record-breaking results month after month; twice the volume of the financials’ highest year prior to 2020. Of course, competitors noted their customers switching to Summit. But even as they tried to duplicate the initiative, it was clear that Summit had first-mover advantage. Sponem’s bold move succeeded in large part because she’d already built a culture that prioritized customer needs.
3. ADDRESS CUSTOMER’S FEAR AND ANXIETY BEFORE YOUR OWN.
Even in times free of crisis, the organizations that do well are always those that anticipate people’s unmet needs and rise to satisfy them sooner. But a crisis provides the opportunity to address new and emerging needs; mitigate greater fears and anxiety. In addressing these sooner, better and with more compassion, leaders can capture new customers, establish trusted relationships and a loyalty that can last for years. That’s because of the emotional bond that comes from giving people hope in their darkest hours.
Just think back to your worst days in 2020. What organization, brand or person seemed to really care about you? Helped you meet the basic needs of your operation and people? Who supported you emotionally and gave you reason to hope through long weeks and sleepless nights? People do not soon forget those who ease their pain and suffering. Seventy-seven years after liberation from the Nazi occupation, the French still pay tribute to the Allies. Organizations able to convey to current or potential customers “we’ve got your back” during any crisis find in that choice a goodwill that can pay off in new and long relationships, positive word-of-mouth and higher ratings, which attract more customers—a jumpstart to future growth and margin.
One strategy really lays the groundwork for this when a crisis strikes.
4. HAVE IN PLACE A CUSTOMER-CENTRIC OPERATIONAL VISION AND STATE-OF-THE-ART INNOVATIONS TO DELIVER ON IT.
Organizations that gained the most from 2020’s trifecta were not floundering and burning precious time trying to figure out and then build offerings that, years before, could be predicted to delight customers and now be technologically possible. That’s because they already had them in their queue. Take McDonald’s. Three months into Covid—when most restaurants were closed, grocery stores compromised, and people were struggling to get food conveniently and take a break from cooking themselves—McDonald’s managed to shave 25 seconds off the average time to complete a drive-thru order.[2] This was a strategic initiative they were already working on, “not just to do the basics of drive-thru but do better than the basics.”
Clearly, the virus spurred consumers to embrace new behaviors at an accelerated rate: Telehealth, online shopping, touchless payment systems immediately made their lives easier, more convenient, less stressed.
The virus also propelled businesses into the future. spurring them to make changes in months that normally would have taken them years to execute. It may have been hell tackling these changes in 2020, but for those who did there was a silver lining. They ended 2020 already performing at levels they’d not expected to achieve until 2023 or 2024. The significance of this achievement cannot be underestimated. They are now able to craft their next strat plan on advantages they’d not expected to have until 2024. This leaves any of their competitors who lag in customer centricity severely disadvantaged as they try to catch up.
An analysis by McKinsey[3] found a widening gap between the best- and worst-performing companies as organizations with future-ready business models pulled away from the pack during Covid. This means that leaders who failed to find ways to leverage the crises of 2020 (capturing new customers, delighting them and current customers) now need to make up for lost ground and move quickly, boldly, even audaciously. Any C-Suite or board that finds itself in this situation faces a crisis of their own making. For them, the playbook on how not to waste this crisis has a recommendation.
5. CAST A SOUND STRATEGIC PLAN THAT’S FOCUSED ON IDENTIFYING AND RESOLVING THE MOST ESSENTIAL CHALLENGE THAT MUST BE OVERCOME IN THE NEXT 3-5 YEARS TO REMAIN VIABLE, COMPETITIVE AND GROWING PROFITABLY.
In other words, cast a great strategic plan now to avoid crises in the future. Research by Lindsay Foresight & Stratagem revealed many of the common mistakes made by even the smartest leaders tackling strat plans. One of the most serious is that they focus their plan on achieving a financial ambition. They don’t realize that financial metrics, while important, are not the goal. They are a measurement of success in resolving the most essential challenge the company faces in remaining viable, competitive and growing profitably in the future.
As somewhat of an authority on strat planning (and wanting to stay that way), I paid a great deal of attention to the nature of strat plans that helped or hindered organizations survive the crises. Plans focused on making a certain financial goal were immediately made impotent by 2020’s crises, because each of the plan’s strategies to achieve the goal were rendered useless by events beyond anyone’s control.
In contrast, those with strat plans focused on resolving an essential challenge—such as outperforming competitors in delighting customers with better, faster, more convenient ways to live their lives—did well. They executed their future strategies ahead of schedule, finding that the same kind of critical thinking used to ID and tackle the essential challenge of their strat plan was the kind of critical thinking that also helped them ID and tackle the essential challenge they faced in the crises of 2020.
6. TAKE THE SAME CRITICAL THINKING SKILLS USED TO PRODUCE A GOOD STRAT PLAN AND APPLY THEM TO CRISIS MANAGEMENT.
The best practices of the former are practically identical to the latter and devoted to preventing disruptions and surprises by using proven processes to foster and organize critical thinking and align teams on the same right things.
The similar nature of strat planning and crisis management was confirmed in an extensive research study published in 2018.[4] It was done in service to hotel and tourism industries which are especially vulnerable to natural disasters, terrorism, infectious diseases, economic recessions and more. In analyzing how 5-star hotels successfully navigated crises, the researcher discovered that strategic planning and crisis management are mistakenly seen as separate from each other, when the purpose of both is to proactively prepare a company for challenges on the horizon. Both involve the formulation and implementation of decisions regarding threats and opportunities inherent in changing situations and management.
This means this playbook’s skills on how to not waste a crisis are relevant to future-proofing and future-making not just for the short term, but also for the long term. In fact, from now on, you should expect to constantly use this playbook on how not to waste a crisis. Why? Because (though I hate to say it), a constant state of crisis is the new norm.
7. LEAD AS IF IN A CONSTANT STATE OF CRISIS.
Think about it: 100-year floods are happening a couple times a year; Black Swans are increasingly common. Significant tragedies, setbacks and catastrophes now occur almost daily—cyberattacks, mass shootings, expansionist moves by the Chinese, acts of terrorism, stock market volatility, meme stock events. Add to these the long list of emerging and disruptive marketplace dynamics that wreak havoc daily. Consumers, employees and shareholders who know full-well that with technology and social networks they can bless or damn a CEO, board, company or brand overnight; dysfunctional city and state governments, a dysfunctional U.S. Congress; growing government debt, the interest of which threatens to exceed GDP; and, of course, there’s climate change, shortages of fresh water and more threats to life as we know it.
Yet even in the face of this list, I’m an optimist. I believe in the ingenuity of people and what they will accomplish with research, technology and a new and improved approach to strat planning that is right for the times, especially when crises spur them to move more boldly, quickly and audaciously to resolve essential challenges before us. This playbook on how not to waste a crisis can also help. What follows are its final two tenets.
8. ID YOUR MISTAKES DURING PAST TIMES OF CRISIS AND, IN LIGHT OF THIS NEW PLAYBOOK, CONSIDER AND CODIFY NOW WHAT YOU’D DO DIFFERENTLY.
Grab a pad of paper and, with regard to 2020’s crisis trifecta, write down:
• What are the three biggest lessons you learned about yourself (your good and bad performance)? What will you try to do differently from now on?
• What three significant weaknesses did 2020 reveal about your organization, leadership, finances or business model? For each you’ve yet to address, what is your plan of action to resolve the weakness in the next 3–6 months?
• Crisis or not, when people experience the need for a product or service you sell, why should they prefer you over alternatives? What about your answer is something your competitors couldn’t easily copy and, in that way, future-proof and future-make your organization?
• Do you make strategic planning a priority? If not, why not? In what way could you overcome these hurdles and have a sound strat plan for the future in place six months from now?
• What is the essential challenge your organization must resolve in the next 3-5 years to remain viable, competitive and growing profitably? What is your singular strategy to resolve it and the measurable goal that you know it has resolved?
• Finally, who among your colleagues would benefit from reading this playbook and a little self-examination? Consider sending it to all those on whom you depend on to help you survive the next crisis; to be viable and thrive in the future despite the constancy of crisis that is now the new norm.
Take your answers and, along with the study findings noted in this article, then –
9. CREATE A PERSONALIZED VERSION OF THE PLAYBOOK ON HOW NOT TO WASTE A CRISIS.
Keep it where you can see it every day. This is not only because a constant state of crisis is the new norm, but also because of two universal and timeless truths that none of us needed 2020 to realize. Those who don’t learn from their past mistakes are doomed to repeat them. The best way to predict your future? Create it for yourself.
