In many strategy rooms, the social side of strategy—misaligned interests, egos, and cognitive biases—creates inertia that gets in the way of organizations committing to big moves.
In times of crisis, however, the burning platform is clear, leaders are often in military-command mode, and pre crisis budgets have become obsolete.
Resources are easier to reallocate when no one needs to be convinced of the need for a rapid response and the individual targets set before the crisis no longer apply.
Think of it as a big “unfreeze.” As one CFO told us about shifting resources in recent months, “What I thought would never be possible, I can now do in two weeks.”
Clearly, the crisis is affecting sectors and companies in very different ways. Some companies are achieving the best results in their corporate histories, and others are teetering on the verge of bankruptcy. Most are somewhere in between. What’s the unique window of opportunity this great acceleration presents for your particular business?
What’s the unique window of opportunity this great acceleration presents for your particular business?
Top quintile. For companies in the top quintile of economic profit and those thriving on the mega trends accelerated by the crisis, this could be the opportunity of a lifetime—and many are seizing it.
If your business is in this position of strength, how do you plan to use your momentum to extend your lead?
Can you use the unfreezing of your organization and its resources to leap into new trends, beating the odds to vault to the top of the power curve? We see companies in this position aggressively reallocating resources to new growth businesses.
Never let a crisis go to waste! If your business is in the middle of the performance curve, how do you avoid staying stuck there?
Bottom quintile. For companies that find themselves in the bottom quintile by economic profit or in industries facing secular headwinds, it’s imperative to avoid losing further ground and to start rebuilding momentum. Your starting position should encourage you to be bold.
Radical portfolio or industry restructuring may be needed to enable you to close the widening gap to top performers. Even with market values down, this might be the right time to divest nonstrategic parts of the business.
Companies that outperformed in the 2008–09 financial crisis divested underperforming businesses 10 percent faster than their peers did. Buyers eager for a good deal are there, and if freed-up funds are used to reposition a company toward growth opportunities, the returns of such strategic moves could outweigh the lower proceeds of a divestiture. Are you realistic about the downside scenarios of this crisis and your business model’s ability to compete in the next normal? Do you have a plan to avoid being drawn further into the downward spiral? How will you rebuild your momentum?
Your decision making and execution are likely to be hampered by the high levels of uncertainty still present around the virus situation, but waiting for clarity may come at a high cost.