Calculate crisis impact
Insecurity paralyzes organizations and delays taking important measures. Therefore, it is crucial to create transparency about the possible course of the crisis and its effects on the company as quickly as possible. At the same time, structures have to be established in the background that ensure the ability to act throughout the crisis.
What has to be done now
- Pool the critical know-how of the entire company in a crisis team. The executive board is not necessarily the best crisis team. Instead, take a military general staff as your example. It is crucial to combine crisis-relevant expertise and decision-making competence in this team so as to make quick assessments of the current situation and take decisions swiftly.
- Support the central crisis team with decentralized crisis teams. Depending on the size and regional footprint of your company, local crisis teams (for regions, plants, ...) can react quickly and flexibly within the framework of the central guidelines and thus increase the decision-making ability.
- Support the crisis team by setting up an “Emergency Room”. Bringing everybody together in one room provides the team with a working environment in which all information relevant to the crisis converges and is presented visually. The direct personal contact facilitates communication between the decision-makers. The emergency room can also be virtual.
- A high frequency of meetings ensures fast reactions. The crisis team should meet at least twice a week until the peak of the crisis has passed.
- Reduce the bureaucratic regulation of decisions. Approved budgets lose their importance in this crisis. Shorten the decision-making processes and reduce the approval requirements ("exigent circumstances", "necessity knows no law").
- Forget the current reporting structure. Define your "COVID-KPIs" and focus your reporting on parameters relevant to the crisis. Temporarily reduce your standard reporting to relieve the burden on resources. It is more important for information to be up to date than to be accurate.
- Set up a COVID dashboard. Focusing on a few critical parameters makes continuous updating possible. The visual overview facilitates the assessment of the situation.
- Establish direct lines of communication with the company's crisis hot spots. Quickly define who has to report what, to whom and when. Inconsistent information increases uncertainty and leads to rumors.
- As CEO, communicate directly with your employees. Your employees need contact with the management in difficult situations. Use social media channels to regularly address your employees in video messages. Setting up a room for transmission and recording close to the management team makes quick reactions to current developments possible.
- Identify the critical links in your supply chain. Do not terminate your analysis at your immediate customers and suppliers. The entire supply chain from raw materials to the end consumer can be affected by interruptions.
- Establish a team to monitor demand trends to quickly respond to marketing, sales and pricing implications
- Differentiate your portfolio of products and services according to their criticality for society and for your own company. Products and services that are not critical for society will be treated with lower priority in the sales and procurement markets. This will have effects on volume and price.
- Establish a simple and flexible planning model for your company. It has to be monitored permanently how the crisis affects the development of profit and liquidity, and the developments in the scenarios need to be adjusted accordingly. Only a highly simplified planning process will guarantee this.
- Think in scenarios instead of plans. The established planning processes will be of little help to you, as they usually assume a continuous development of the markets. Instead, disruptive developments need agile approaches, which process feedback quickly and constantly adapt the procedures. Developing scenarios helps reducing the complexity of possible developments and makes them manageable.
- Estimate the effects of the COVID industry scenarios for your company. Limit the complexity by working with a maximum of four scenarios.
- Devise and communicate your strategy. In a crisis situation, there is no alternative to a coherent and consistently communicated crisis strategy for maintaining decentralized decision making. Only this strategy allows for consistent and decentralized decision making in quickly and unforeseeably changing circumstances.
- Identify those strategy elements that are applicable in all crisis scenarios. Strategy elements serving the maintenance of production and financial stability will have top priority irrespective of how long the crisis lasts.
ROI-EFESO has many years of experience and highly specialized instruments for scenario development and the establishment of crisis response teams. Contact us for fast and pragmatic support in building your initial COVID-19 set-up.