Volume 13 - Issue 1
The COVID-19 Playbook
APR 2020
Level5 Perspective
How Leaders Should Focus Efforts Over the Next 7, 30, and 100 Days
COVID-19 is a global pandemic that is fundamentally changing our way of life and adversely impacting global economies. Markets are falling and even Fortune 500 companies are aggressively laying off workers as they enter full crisis mode. While an economic downturn is an inescapable reality, many experts predict that COVID-19’s impact on the economy will follow either a ‘V’ or ‘U’ trajectory. Most economists do not expect the economy to enter a sustained depression. The debate that remains amongst economists is the speed at which the rebound
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will occur. This forecast increases the imperative for companies to act purposefully and manage costs, assets, and channels in a way that doesn’t sacrifice their future growth potential. Over the next 6-12 months, the economy and almost every industry will move through 3 distinct phases: downturn, stabilization and normalization, and rebound. Each phase and industry comes with a different playbook that leaders must follow to best position their company for long term success. Currently, the North American and European economy is in Phase 1 of this process, while Asia is in Phase 2:
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The business that will survive and emerge as winners will quickly adapt to this new (temporary) reality and make short-term tactical changes while translating successful adaptions into long-term pivots for their business model. These winners will minimize their losses and risk while preparing their organizations to capitalize on the economic boom that will occur during the Phase 3 rebound. So, how do strong leaders translate this perspective into action? In times of great uncertainty, there isn’t an obvious solution. Leaders cannot brush the dust off their textbooks and refer to the last time a global pandemic disrupted a hyperconnected market. There is no template for this scenario.
That said, there is an obvious wrong answer. Companies who turn to over-aggressive cost cutting, through layoffs and property, plant and equipment (PP&E) sell-off, have historically had significantly longer recovery curves1. When the inevitable rebound occurs, these companies do not have the required means to regain share. Level5 believes that companies who adopt an agile and adaptive approach – the constant prioritization of business needs vs. market realities – across all three phases will be the ones who are most successful over the long run. Leaders need to be comfortable with the prospect of pragmatically weathering the storm (while still identifying tactical needs and opportunities) and then regaining share.
“Level5 believes that companies who adopt an agile and adaptive approach – the constant prioritization of business needs vs. market realities – across all three phases will be the ones who are most successful over the long run.”
Business Focus
Phase 1
1.
Phase 2
Phase 3
Economic Downturn
Stabilization & Normalization
Economic Rebound
Test Tactical Pivots
Establish New Norms
Implement Business Model Shifts
• Protect / support employees • Adapt to changing market dynamics to preserve share and protect cash • Prioritize crisis initiatives and test & learn • Assess highest risks to business model and focus on protecting core businesses and key customers • Build 7, 30, and 100-day scenario plans
• • • • •
Implement successful tactical changes Re-allocate capital, assets, and people Plan and prepare for potential crisis scenarios Address high risk areas of business model Position the business to satisfy shifted consumer needs
• Institutionalize business model changes • Prepare go-to-market strategy for economic rebound • Revise forward-looking strategy based on new world reality
https://www.bain.com/insights/beyond-the-downturn-recession-strategies-to-take-the-lead/
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Private and confidential. Do not copy. © Level5™ Strategy 2020
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In our restructuring experience, the playbook consists of the following areas to help both B2B and B2C leaders maximize their resources and protect their financial viability, while positioning themselves for future market share growth. Fundamentally, these areas are about optimally leveraging companies’ current assets and people with a view of what the new normal will be, not cutting costs too deep reactively and then determining how best to emerge. By engaging in tactical pivots or business model shifts, companies do not mortgage their future success for their current survival. Rather, they efficiently leverage or repurpose their assets and people, allowing for increased success upon economic stabilization and rebound.
While the points of focus employed during a downturn, stabilization, and rebound are similar, leaders must adjust their focus and priorities based on the phases of economic recovery and their circumstance. Initially, cost management and protecting cashflow take priority over growth. By adopting an agile methodology, companies can repurpose their assets and focus to manage costs. As businesses feel more certain about the future, their focus should begin to shift towards growth capture. Similarly, as organizations scramble to protect their business in the early stages, the focus is primarily on tactical pivots. As the economy moves toward Phase 3, that focus shifts toward growth capture opportunities.
“As businesses feel more certain about the future their focus should begin to shift towards growth capture.”
Cost Management
Growth Capture
Reactive / Tactical Pivots
Proactive / Business Model Shifts
Portfolio Optimization
Asset Redeployment
Channel Shift Strategies
Talent Reallocation
Share Capture Initiatives
Differentiation & Customer Insight
Adjust current portfolios to fit with the needs of buyers; e.g., increased pack-sizes, deferred payment terms, virtualized offerings, adjust supply chain to focus on fulfillment of high volume and high demand products.
Re-allocation of capital and focus toward digital channels, preventing market share loss and ensuring ROI of any marketing/ sales investment that will be put into the market.
Aligning functional leads across the organization on a temporary and targeted market share capture strategy, with the intention of claiming market share growth stemming from this crisis.
Portfolio Simplification
Cutting of tail SKUs to protect cashflow, reduce supply chain costs, and focus on core business.
Crisis Project Management
Create a central command of the crisis effort and ensure that the crisis plan is being executed in lock-step and there is a single point of accountability keeping an eye on the operations.
Efficiency & Effectiveness Streamline current operations to improve the financial position of the organization; including process redesign, org optimization, etc.
Private and confidential. Do not copy. © Level5™ Strategy 2020
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Take advantage of underutilized assets and redeploy them to support the COVID-19 efforts and capture government funding and brand equity; whether it’s leveraging unused facilities, people, or equipment.
Temporarily redeploy human capital across the organization to more productive capacities; either targeted at supporting the business or supporting the COVID-19 efforts.
Refine the brand positioning during a highly emotive time to ensure relevance and point of difference in the new reality; better understand changing consumer needs and leverage CSR as an opportunity to build brand equity and make social impact.
Scenario Planning
Model the potential scenarios that may come to life over 3 Phases and build response plans with associated triggers to ensure agility and speed of execution when conditions are met.
Agile Prioritization
Implement real-time agile prioritization of projects and initiatives in a time where resources are thin. Establish shorter PI (program increment) cadence and create cross-functional engagement using agile methodologies.
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Cost Management
Growth Capture
Level5 Perspective
Tactical Pivots
Business Model Shifts
Tactical Pivots
Business Model Shifts
Tactical Pivots
Business Model Shifts
Portfolio Optimization
Asset Redeployment
Portfolio Optimization
Asset Redeployment
Portfolio Optimization
Asset Redeployment
Channel Shift Strategies
Talent Reallocation
Channel Shift Strategies
Talent Reallocation
Channel Shift Strategies
Talent Reallocation
Share Capture Initiatives
Differentiation & Customer Insight
Share Capture Initiatives
Differentiation & Customer Insight
Share Capture Initiatives
Differentiation & Customer Insight
Portfolio Simplification Crisis Project Management
Portfolio Simplification Scenario Planning Agile Prioritization
Efficiency & Effectiveness
Phase 1
Economic Downturn
Crisis Project Management
Portfolio Simplification Scenario Planning Agile Prioritization
Efficiency & Effectiveness
Phase 2
Stabilization & Normalization
Crisis Project Management
Scenario Planning Agile Prioritization
Efficiency & Effectiveness
Phase 3
Economic Rebound
Darker orange indicates a higher level of focus. 3
Private and confidential. Do not copy. © Level5™ Strategy 2020
Every challenge of this magnitude brings with it equal parts risk and opportunity. The leaders that will guide their businesses through the storm and emerge in a stronger relative position than before are those that understand the interplay between the priorities outlined in the charts above, and are able to inspire their teams to move quickly and purposefully between the right strategies within each phase. If your organization could benefit from additional insight, agile skills, and guidance through this time of need, we are here to help. Our approach enables us to seamlessly integrate into your leadership team to drive the crisis
agenda, expedite decision-making, and provide confidence and clarity around important asset, portfolio, channel, and customer choices. We recognize that most business contingencies didn’t plan for this level of change and there exists a high degree of financial uncertainty potentially making it difficult to source the help you require. We understand. We are here to help you stabilize and operate within this new norm. Our firm has created flexible billing schedules to meet your needs.
We are happy to have a virtual whiteboard session to review your playbook. Please reach out to Sean Pavlidis or Claude Ricks by clicking one of their names.
References: 1.
https://www.bain.com/insights/beyond-the-downturn-recession-strategies-to-take-the-lead/
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Authors Claude Ricks is a Managing Partner with Level5 Strategy and is a transformational leader who helps clients align strategy and organizational capabilities – driving ownable competitive advantage. Claude co-built the change management global service offering for a tier one consulting practice and is a passionate executive change agent. Claude received his Honours Bachelor of Science from Western University. Sean Pavlidis is a Director with Level5 Strategy focused on building enterprise, brand, and customer experience strategies for a diverse range of clients. His work spans across a number of industries, with specific expertise in the retail and beverage alcohol space. Sean holds a BComm from Queen’s University. For more information, please contact: Claude Ricks at cricks@level5strategy.com Sean Pavlidis at spavlidis@level5strategy.com
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Level5 Strategy is a leading strategy and transformation consulting firm that helps our clients achieve profitable growth and a superior ROI by leveraging the power of their brand. We focus on four distinct yet interconnected core services: Insights, Strategy, Transformation and Customer Experience. Since our inception in 2002, Level5 Strategy has partnered with over 300 clients across B2B, B2C, government and not-for-profit sectors in Canada, the U.S. and other parts of the globe to navigate their most critical challenges and opportunities and to build and execute practical strategies that convert decisions into actions.
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