MK: it’s a very useful collection of activities, at the same time the underlying assumption is that companies’ activities have sizeable degrees of inefficiency as well as they can be ranked by ROI. Usually the advice of focusing on present high-value activities is precisely the wrong one, as it’s not possible to reliably assess new activities future-proofing the business.
New Nature of Competition
Compete in a pre-vaccine world [12-24mo] and build for the postpandemic world.
Uncertainty, deglobalization, shifting customer behaviours [online?] à significant reduction of top and bottom lines.
Business continuity and competitive positions are increasingly under threat.
Long-term proactive moves are essential.
Investors want building capabilities to create advantage, drive future growth, be better positioned for winning the future, even at the expense of dividends.
Five CEO Priorities
1 Define the Agenda and Select the Team
Clear guidance for 12-24 months and beyond.
No-regrets moves (costs, operations and/or admin).
Seriously look at portfolio changes / asset divestiture based on scenarios.
Rapid response team, cross-functional, with extended mandate for short-term and longer-term decisions. Need sufficient authority and capacity to own the projects.
Functional areas: Customers/Channels, Sourcing/Supply Chain, Site operations, Finance, Technology.
2 Mobilize and Protect People
Obviously, remote work (incl. performance, motivation, satisfaction, engagement).
Cleanliness and safety equipment and protocols.
3 Win the Fight
Immediately – secure the cost efficiency and continuity of the current operating model.
Ensure the ability to operate in the next 12-24 months (manage top line, liquidity and net working capital). Reduce nonessential spending along the value chain.
Finance [cash management office] is responsible for managing short-term liquidity, planning, launching cash preservation measures, monitoring and forecasting cash and liquidity development.
Reducing non-personnel costs – quick actions without impacting people. Improving supplier management and logistics. IT: focus on high-value projects.
Cutting staff (usually starting with frontline and support, as the demand falls). Stop hiring.
4 Transform to Win the Future
As the duration of a fight is unknown, can’t make just short-term decisions (they won’t win the fight).
Reimagine the offering. Customer preferences change à change the charging model. Lease vs buy, CPA vs CPC, etc.
Build supply chain resilience and design future operations. The most optimized supply chains fall first. Review the entire operating model focusing on the suppliers and internal production network. This is to stay past the crisis.
Optimize the portfolio via M&A. Use the long-term vision and supplement it with opportunities to refocus or reinforce via M&A (at favourable prices). M&A is a competitive tool.
5 Accelerate Digital
Many companies focused on digital-first [for some reason it really hadn’t been obvious before] and executed multi-year projects in 2-3-4 months. Nothing to add here.
P.S. Feel free to suggest interesting articles. Drop me a line at email@example.com