Written on 06 Jul 2020.
How to master your strategy in a crisis? How to anticipate the future so we can start building it? Although deeply destabilising, a crisis can also be an opportunity to take a step back and look at the way we design our business strategies. As of now, it could be an opportunity to imagine the future, and to wonder which major trends could accelerate.
By Denis Dauchy, PhD, Professor of Strategy at EDHEC Business School and Director of EDHEC Executive MBA in Lille and co-director of the EDHEC EMBA specialising in Healthcare Innovation & Technology.
In the midst of a crisis nobody had foreseen, the mere idea of strategy has many of us wonder: what is the point of strategy, in a world where the uncertain and the unknown prevail? But to me, giving up on strategy would be a fatal mistake. On the contrary, it seems to me that crisis situations call for more strategy – only in a different way. Because more than ever, leaders must map out a direction and create energy in their business. But above all, leaders are responsible for thinking about what will come next, starting from today. What should we begin with? First, we need to leave the idea of a “return to normal” behind. Planning on a cohabitation with the current state of crisis for a while is more realistic. With this in mind, talking about crisis strategy is not enough: what about talking about rebound strategy instead, so we can look to the future?
As we experience a situation that very few people had anticipated, we realise that companies might have been confusing risk and uncertainty for a long time. The thing is, risk calculation, no matter how sophisticated, will never replace prospection. So, the first avenue to explore would be to put it back at the heart of our strategic approaches, by reconsidering the importance of scenarios – a concept which is now making a big comeback. The EDHEC Chair for Foresight, Innovation and Transformation provides particularly interesting resources on this subject.
A crisis also encourages leaders to use new analysis grids, to comprehend their environment in a more complex and systemic way. Because now everything is in motion, in transformation. In the business world, traditional boundaries between industries are disappearing while new, complex ecosystems emerge – EdTech and MedTech are good examples. More generally, the world in the geopolitical sense is being reconfigured: will the future be bipolar, structured by the US-China relationship, or “non-polar”, a fabric of relationships between local ecosystems? In both cases, companies will be impacted. To navigate the present and build the future, new grids appear: The Low Touch Economy, for instance, focuses on the importance of health issues in the post-Covid-19 business world. With such grids, you can understand what scenarios are possible for your company and draw conclusions about how to strengthen or reorient your model.
Rebounding requires resilience, a key notion which now, more than ever, reveals its strategic importance. How to improve it? By refocusing on certain elementary aspects that are often neglected in “normal” times: contingency plans and asset duplication for instance. It is also impossible to avoid thinking about your business model and its agility: we see today how the most monolithic companies are the most violently impacted – think of how Primark is suffering from not operating an omni-channel strategy, for example.
But the notion of resilience is mostly human and cultural. Thinking and developing resilience is a collective movement. That is why it can be interesting to start with an audit of your company from this angle, focusing on identifying different types of intelligence internally (emotional, behavioral…), but also considering leadership styles, or the idea of social resilience.
From prospective to resilience: a crisis is an invitation to engage in an ambitious strategic reflection. Because the post-crisis logic is based on pro-action. Without further delay, we need to anticipate the macro-trends that have been impacting the business world for a few years and that might now accelerate.
The first acceleration to be foreseen is the need for companies to define their purpose beyond pure financial value creation. This need for meaning had already emerged before the COVID-19 crisis, rooted in irreversible social evolutions. The whole narrative must change to integrate all stakeholders: how is my activity impacting health, climate, societal well-being? In the coming months, health issues will remain crucial, even for companies who had never really thought about it before. In this respect, the creation of new certifications is an interesting strategic tool: Accor has just announced a new label created with Bureau Veritas, to guarantee the sanitary measures that will support their return to business.
To embody these new narratives, value propositions – what makes a company useful – will have to evolve deeply, based on notions as important as the local, safety, health, trust, authenticity, “quiet luxury”, or function. Sourcing, for example, has come to the fore. Without even believing in “de-globalisation”, we can imagine how tomorrow will see a stronger need to go back to basics, with a move towards shorter loops and the rise of direct-to-consumer approaches. This subject is not new, but when it comes to revising value chains everything is about tempo: many companies already knew they need to diversify their sourcing but reacted too slowly.
To build upon this reflection on value chains, a crisis encourages us to consider the network of partners gravitating around each company: what does it look like now? What strategic alliances should we make tomorrow? Some groups are already in the starting blocks to acquire new businesses, following the ecosystem trend. Even a German automobile group like BMW – which you might consider as being more traditional– has built such ecosystems through partnerships, acquisitions and collaborations with innovative start-ups. Ecosystems by nature, platform models and marketplaces are also part of this growing trend – represented by companies as diverse as Airbnb or ManoMano.
Finally, this crisis like any crisis, will have an organisational impact that strategy will not be able to ignore. This context forces us and teaches us to experiment new work and collaboration modes, a new articulation between personal and professional life… In the face of emergency and the unknown, managers and leaders can be tempted to use a more centralised, vertical approach. However, it will soon be necessary to breathe new life and energy among our teams, and to give them freer rein. What if decentralising is the key to rebounding? In this respect, the example of Haïer has become a case study, with an organisation in autonomous and connected units, in direct contact with the market.
After a first phase of shock and astonishment, and despite difficulties that are sometimes extreme, a crisis calls for reflection and action – not just for today but mostly for tomorrow. “Moments of crisis produce a redoubling of life in man”, wrote Chateaubriand. This says it all: these difficult times are an invitation for us to take a step back and surpass ourselves. An invitation it would be a shame to refuse.
This article is adapted from a webinar, which is part of the Spotlight Webinar Series from EDHEC Executive Education – a series of free webinars designed to support managers and leaders during this unprecedented crisis.