The 5F War Room
Ensuring health & safety while preparing recovery and future growth
A new crisis management approach
Businesses worldwide are facing unprecedented challenges. The first and paramount need is to secure safety & health of the workforce, clients and our societies at large. Then, on the one hand, impact on demand is brutal, with companies forced to juggle both major downturns and upturns for products and services. On the other hand, companies need to be ready to stage a rapid recovery once the current crisis de-escalates (potentially within the next two-three months).
Crucially, companies risk focusing all their efforts on short-term adaptation and survival without giving sufficient thought to their recovery plan.
We believe that companies need to structure their “War Room” in a different way to usual crisis management situations. Next to protecting the workforce’s safety & health, there must be a focus on mitigating the immediate negative impact of the crisis while also preparing to capture new upsides from it and improve their competitive position.
The War Room should be organized around three main objectives:
- Fast Adaptation
- Fast Recovery
- Fast Growth & Profitability
- Fast adaptation: On top of adopting measures to protect the workforce and society, the focus needs to be on what changes need to happen immediately in term of capabilities and offer. The approach needs to be tailored to the company, with pragmatism, agility and quick implementation remaining the golden rules.
- Fast recovery: Given this current situation is more than just an economic downturn or a localized incident, the recovery phase also needs to be immediately planned for. The more this crisis last, the more the recovery shape is unknown, nevertheless we have to stay positive and assume that a fast recovery could potentially start within 2-3 months and be ready for it. Being ready to capture it, will help to contribute to the virtuous circle of the economic recovery. However, the recovery plan must be integrated with the fast adaptation stage e.g. assessing which assets may be difficult to re-start, or which clients to prioritize. Specific actions will therefore need to be anticipated ahead of the recovery taken into consideration the new patterns of demand. The recovery scenario is still subject to uncertainty and the implications of various scenarios need to be monitored and anticipated.
- Fast growth & profitability: Be ready to take advantage of the changed business landscape. Following a major crisis such as this, consolidation will take place and deals could be available. There is the potential to expand into new client segments or increase overall market share. In order to reap these benefits, a long-term strategic vision must be place from day one, even as resources are under pressure and uncertainty is high.
It is vital that a separate sub-team is assigned to each of these workstreams concurrently – do not just focus people on fast adaptation. Of course, co-ordination between each sub-team and consistent working practices are also vital in order for the CEO, executives and the Board to arbitrate the company’s overall position successfully.
Two other supporting workstreams need to be managed separately but strongly coordinated:
- Free Cash
- Forward Organization & Communication
- Free cash flow: Efficiently managing available cash-flow (and bank covenants) is critical, not only for short-term survival (i.e. weekly update of cash position & cash flow forecast done with stakeholder, daily update of hedging position, regular communication to Finance stakeholders, weekly update of financial covenant, …), but also for longer term strategic leverage relating to the fast recovery and fast future growth stages.
- Forward organization & communication: This crisis requires a large proportion of staff to interact “virtually”, and for supplier and client relationships to be managed “digitally”. This is change management at pace, with the rapid adoption of emerging technologies and new ways of working becoming necessary. This workstream demands strong focus in the short-term, but its momentum can also be used to implement new digital organizations & behaviors.
We would like to share further our thoughts for setting up the 5F-War room and to understand if this framework could bring value to your company on top to your current actions. If this is something you feel could be beneficial to you, we would be more than happy to arrange a video conference over the next few days.