The Ugly Duckling

I am sure we are all familiar with Hans Christian Andersen’s story of the swan that grows up among the ducks and is abused by the others until, much to his delight, he matures into a beautiful swan, the most beautiful bird of all. The story is beloved worldwide as a tale about personal transformation for the better.

It is irrelevant which you were a month ago; the issue to address is how you will emerge from COVID? A swan or just a duck? Thus, while many of my clients and other CEOs are, understandably, focused on cost reduction, you cannot cut your way to growth. Therefore, CEOs now need to determine how they will increase sales and take advantage of whatever opportunities COVID has provided? Now, as  Howard Marks said, no one knows what the outcome of this is and anyone who does it lying. However, CEOs need to start to try to conclude what they think will happen.

We have all lived through the lockdown for a month, and now some states are lifting the restrictions. But, as many commentators have mentioned, it is regardless of whether or not there are restrictions, as the critical issue is “Do you feel safe doing X?” where X could be going to a restaurant. Some individuals will say, “Yes,” and others, “No.” But that is a theoretical question. The real test will be, when you go into the restaurant will any of the following influence your decision to stay or leave:

• Valet without masks and gloves?

• No social distancing between tables?

• Cutlery and glassware on the table all the time?

• Unclean table or utensils?

• Menus not wiped down after use?

• Wait staff without masks?

• Wait staff without gloves?

• Kitchen staff without masks and gloves?

While some governors may issue the all-clear, the all-clear will happen when consumers feel safe for the activity.

While much of the current COVID-19 crisis is awful, it provides organizations a unique chance to experiment with radical new ideas and spur innovation. The innovation is essential as firms develop new methods to make existing products to overcome disrupted supply chains, or, as demand collapses amid self-isolation, create new ones.

Due to a lack of revenue, many organizations don’t have much capital available, and this is not the best time to tap the capital markets. So some organizations are changing the very way they innovate to discover ways to do things differently without huge capital outlays. A European food retailer has increased online fulfillment by over 50% without new money by all-night picking and packing. Other organizations are realizing the limits of insular development and turning to the Wisdom of Crowds approach. Examples of this are IBM, Microsoft, Ericsson, Tongal, and Lego, to name just a few. Topcoder sees a massive surge for its services, namely on-demand tech talent.

Also, COVID-19 is forcing organizations to innovate flat out and overcome “analysis paralysis.” Bain & Co. is urging companies to throw out old data, test quickly, and often, assuming you will be in testing mode for awhile. Long-delayed initiatives have suddenly been rolled out at scale overnight. According to the Economist, Sysco built an entirely new supply chain and billing system to serve grocery stores in less than a week. As the head of Fortune 500 firm recently put it, “We are learning more by testing than [from] months spent [with] analysts and endless meetings.” The crisis is emboldening managers to move faster, trying out risky new ideas on larger groups of customers. Learning from its experience in China with COVID, Nike undertook a digital pivot resulting in global internet sales of its sporting goods rise by over a third in the three months to February. Nike’s sweat-inducing masterclass is being streamed more than 800,000 times a week on YouTube.

Gao Feng, a consultancy, believes that autonomous delivery will be here much sooner than forecast, i.e., within 12-18 months. Companies are looking into automated cleaning robots and shelf stacking machines. Zipline, a Californian startup that delivers blood and medical samples by drone in Africa, is looking to do the same with coronavirus samples in America.

To emerge ahead, your team needs to work in sync and effectively, basically, make sure it is healthy.
Since COVID is an accelerant of all things positive and negative, a healthy organization is critical. As Pat Lencioni says, “If your organization is not healthy, then it doesn’t matter how smart it is, it will fail as the accelerant from unhealthy behavior will outweigh any benefits from Smart activities.” Until now, you may have ignored the health of the organization, but it never too late to start. Just make sure as the CEO you are modeling these behaviors, and that those in your leadership team and on your COVID response teams also model these behaviors. People who are behaving in a way that undermines the health of the organization have to go. At critical times like this, everyone needs to be working together to ensure the organization survives and emerges healthy. If negative behaviors compromise an organization’s health, it cannot arise healthy and in a strong position. Also, ensure that the leadership team is not exhibiting any of the five dysfunctions of a team.

With all the blocks in place, in addition to an emergency COVID response team, I hope every CEO has put together a cross-functional team to address the following:

• Identifying the company’s unique skills and abilities, what does it do better than everyone, what is its competitive advantage?

• What is happening to our traditional market? Nothing, some change, or dramatic change?

• How should the company respond?

• What new markets can the company enter with their unique skills and abilities that will give it an advantage?

• Should the company change any of its processes? If we were starting again, would we do it this way?

• Should we abandon specific markets? The future potential too low for resource commitments?

• What can we implement now?

• What should we get implemented to take advantage of the next wave of infections which the models predict are coming?

When looking at these items, as Bain recommends, look at testing often, throw out old data – before COVID, and implement changes quickly. Even consider A/B testing of processes to determine which is best. Now is the time to be creative. Look at things like Open Innovation.

This team should include a cross-section of the organization. As David Marquet says, “Move the decision making to where the information is.” With a cross-functional team including dynamic people from every level, the organization should uncover significant opportunities for growth and culling, With the right trust and conflict, the discussion around these questions should open up exciting areas for consideration and, once determined, a commitment by all to ensure they succeed.

If you can adjust your business model to take advantage of anything that is changing due to COVID, you could get an early start over your competitors or start a new market. Historically, those companies that emerge from any recession in a market-leading position hold onto for a long time. COVID is a huge disrupted in the business landscape and is leveling the playing field for many companies.

Do you want to emerge a beautiful swan or a duck? If the former, don’t waste the opportunity to take advantage of what COVID offers, and emerge stronger and in a leadership position in your market.

Copyright (c) 2020, Marc A. Borrelli

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