The COVID-19 virus infection came in like a Tsunami, unpredicted, fast and overwhelming. The leadership of North European Companies has been responding to it as if a disaster made an impact. Not all responses and decisions taken had the same quality and impact. In the age of data-driven decision-making, the lack of data and predictions did throwback management to the one thing left: Intuition. MRD has made a survey along with business leadership and discovered insights behind high- and low-quality decisions.
The COVID-19 wave setting in Hindsight, the pandemic spread of the COVID-19 virus was a matter of time and it was nearly physically visible how it neared into Northern European Countries. While disaster setting in, the responses of leadership was following this distinct pattern of “mental estate” that effected the intuitive decision-taking process.
Exhibit 1 indicates the emotional state of mind of leadership, as context to make decisions in.
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)”.
CNN, April 10th 2020: Trump was being asked for the metrics to decide opening the economy again.
The post-peak Phases: Or what the thought is of what it will be? The post-peak emotional phases that leadership will be thrown back on are: Hope, Desire and Acceptance to plan forward into a new reality based on a mix of what we would like to retain and what we need to comply with for safety reasons. Risk assessment is a judgment call: What Lead Time do we expect for a vaccine?
Strategic minds to lead: The challenge is to turn business around by having a super-fast strategic thinking process by leadership: Segmenting, targeting and positioning in their minds, with the full scope of the business taken into account. The strategic repositioning that normally takes place by multiple teams over the course of months is now to be formulated into a straightforward, complete vision and strategy by the leader, presented by speech.
Innovative Fast Changes: Interesting examples of these challenges to convert business into smart propositions that are in demand, instead of linear thinking, resulting in e.g. cost reduction, hire freeze while in fact wasting resources that would be crucial for installing the new strategy, fast. Likewise, some simple examples: The take-away food industry in Wuhan that managed to fully continue its business during the lockdown; Hebei based industrial companies that took 180 degrees turnarounds in manufacturing in matter of weeks to medical supplies; Philips and KLM re-launching the 747-400 pax/cargo fleet for ventilator shipments, etc.
Entrepreneurial leadership now surpassing PowerPoint leadership: It is entrepreneurial leadership that emerges in times of crisis and it is interesting to see that the formal organisational structure becomes to some extent obsolete, true experts are now asked to get into meetings to assess and provide advice that matters. Leaders take decisions to create new propositions.
Ruud Schmeink, CEO