The initial phase was sheer denial and also ignorance, although it was very clear that the virus was showing erratic and unknown behaviour with underlying invisible causes of infections and as a result had the possibility to create a “hidden” spread. General thinking among leadership was that this was “again a China issue” with the well-known fierce responses of the Chinese government, most likely similar to SARS.
Phase II. The “landing” of Covid-19 in Italy and the Alps was resulting in a surprise of leadership but with the assumption that the western world for sure will resolve this quickly. Leading virologists are now consulting government and politics, corporate leadership is watching the news. The reactions of leadership were in a state of observation, or rather in a freeze of inaction.
Phase III: Shear Panic, absence of data, now the acute need for decision taking
The next phase was a full hit, with as a consequence sheer panic. Leadership was managing a Titanic-sized crash of unforeseen magnitude. On a basis lacking all sorts of data, facts, and figures. No predictions, no clarity on the outlook nor duration and development. No example country to learn from or look at.
In this setting, leadership thrown back at own insights had to make decisions that were to be taken instantly, with uncertainty as basis:
- Demand outlook. Target markets are shutting down, other markets are surging in demand, how to consolidate this into a true manufacturing request?
- Free cash flow. What is impacting operating working capital, what sales revenues are to be expected, outstanding, stock?
- Initiatives. And now what actions to initiate? The spectrum is ranging from bold (acute portfolio shift and activation of sales channels) to a simple and linear cost-cutting and hiring freeze.
- Timing. The factor that distinguishes leaders from managers. When to do what of the above mentioned. This is the moment that experienced and true leaders will be seen and recognized.
Of all factors, especially timing and the selection of the first actions are crucial, while the quality is fully depending on accumulated business experience and subject expertise: No time for rookies.
Trumps struggle as an example
A nice example of the struggle is displayed at a conference of the Trump administration while being asked at what metrics the decision for opening up the economy will be based upon. Trump’s statement: “I can listen to 50 specialists, but I have to take the decision with this (pointing to his head)”.