CEOs, leadership teams and board members are consumed with managing the global pandemic and its impact on their business. Leading during a crisis requires the unique ability to maintain focus on a company’s long-term vision, while mitigating short-term risks as they arise. Management’s focus is split between the worthy and competing demands of ensuring employee well-being, managing stakeholders, preserving the health of the business and positioning themselves for long-term growth after the crisis.
While management addresses these challenges and more, a typical and inevitable exercise will likely begin to ensue. An in-depth review of the financial health of the business becomes a priority and soon management teams and boards find themselves engrossed in an exercise of cash management, cost reductions and spending freezes. While this is an important, and time-consuming, governance activity, the key function of the board of directors is not to manage the business, but instead to see and anticipate what management is not considering and position the company for growth, even (or especially) during a crisis.
Now, more than ever, boards serve a function of key importance, and I’ve considered five key disciplines that should be actioned to ensure future and long-term sustainable growth.
Invest, Don’t Cut
One cannot cost cut their way to a growth strategy; therefore, management must have the courage to invest. It is important to be rooted in reality while leaning into optimism and centered on growth.
Allotting a substantial amount of time to market trends, customer considerations and the investments required for future growth must be a priority, and this must permeate in all company town halls and meetings. The key agenda items should begin with the following:
- Where is the future growth?
- What do our customers demand?
- What investments should we make today to propel our future growth?
For every cost reduction, ask the question: Where will you invest and allocate capital for long-term growth? During the last recession, an executive survey revealed 68 percent of all CEOs managing double-digit growth businesses were focused on investments and minimized cost cutting.
Mailchimp, founded in 2001, added a freemium business during the 2008 recession, providing a base, free product to customers which resulted in their user base growing more than 400 percent. Freemium users quickly became long-time customers and propelled the company for exceptional top and bottom-line growth.
Lean Into Digital and Data
Understanding the company’s value premium must be more than intuitive; it must be an obsession with the customer at the heart and center of everything we do. How well has the company used data analysis and a digital infrastructure to build revenue? The use of data to understand customer’s behavior, trends and satisfaction is key. With digital acceleration driving the top-line across many enterprises, it behooves boards to ask the right questions and become well-versed on the company’s digital strategy, even if it means inviting outside experts to keep abreast of trends and developments.
The savviest, forward-looking companies focus on revenue—not cost. A technology and innovation committee of the board can take an in-depth review of the company’s strategy for developing a pipeline of innovations and digital solutions for the future. This is the perfect time for boards to lean into digital in a meaningful way. Procter & Gamble convenes an innovation and technology committee of the board with its primary purpose to oversee and provide counsel on matters of innovation and technology, further illuminating the company’s deeply rooted commitment to research and development for consumer goods.
Uday Kotak, founder of Kotak Mahindra Bank in India, created a digital bank after the demonetization of India’s currency, which allowed customers to sign up in three minutes, creating a large digital banking footprint and resulting in over 500,000 new customers per month.
Make, Buy, Partner or Outsource
Be bold. Did you know that more than half of the Fortune 500 companies were founded in a recession? The benefit of a crisis is the ability to reassess strategic priorities more regularly than on a typical annual basis. Now is the time to consider the market gap and future opportunity.
Are there opportunities in the market for mergers, acquisitions and joint ventures to fill a market gap for customers or our business needs? Are there opportunities to expand a business or improve our operational efficiency to heighten customer experience and increase sales?
Netflix formed partnerships early in their company journey to stream their product before their viewer market was fully developed. They also invested heavily in content serving them well during the pandemic with both subscribers and viewers accelerating. PCH International is supporting companies by providing direct-to-consumer for a host of companies including med-tech, electronics and consumer products, acting as an outsource partner for the last-mile delivery to consumers while accelerating cash collections on orders.
People, People, People
Take care of your people, especially the high performers. During the 2008 recession, Jack Welch, former CEO of General Electric, challenged CEOs to “pay your valued employees in cash—not plaques.” Start a robust campaign now to recruit the best players to your team. This is the time when your executives and teams, as well as your competitors, are mobile. Who are the top executives in the industry? Who are the best engineers, client service and sales teams? How will your differentiated approach to this crisis appeal to them?
Recognizing that regulatory change is a key driver of innovation, Cornings’ team of highly skilled scientists work closely with the business units and the regulatory teams to capture new market opportunities. Their collaboration and appreciation for all skill sets in the company (from inventor to risk management) has led them to market leadership in several verticals and has allowed them to abandon stagnant businesses.
Own the Narrative
How have your communications to your people and stakeholders changed? How have they stayed the same? In the intensity of managing the business and pandemic, leaders have forgotten to speak to and about the customer. Who is the customer? What are they saying? What do they need? Richard Branson, founder and CEO of Virgin, says, “I have always been fascinated with by the intersection between storytelling and entrepreneurship. We would be nothing without our story.”
These five disciplines are important priorities for every company and more so during a crisis—it requires a growth mindset and the courage to take risks.
Maria Pinelli is a board director and strategic growth advisor with over three decades of experience guiding and advising companies to achieve sustainable long-term growth.
Pinelli will be speaking at our Women & Worth Summit 2021: Actions Speak Louder Than Words, taking place March 2-4. You can register here or below.