Will there be a second wave of COVID-19? How many such waves will businesses have and for how long will they have to prepare? These and similar questions are becoming our new reality. CIVITTA, in collaboration with Customer Centric Consultancy, asked the experts and leaders of large companies about preparation to withstand yet another crisis and what we must learn from the pandemic to have a secure tomorrow. For this purpose, we compared the businesses that were quite resilient and the ones that suffered during this period.
New York University professor Nassim Taleb told Bloomberg television he was annoyed when the Covid-19 pandemic was called the black swan - a term he coined to describe an unpredictable, rare and catastrophic event.
“We issued a warning on the 26th of January and we had the opportunity to kill the virus at an early stage. But governments did not want to spend pennies on it in January. Now they will spend trillions. This pandemic is a white swan! They cannot use it as an excuse that they were unprepared, neither companies, nor corporations, nor, even more so, governments! ”
In the countries of the Baltic region, only one-fifth of companies could call the COVID-19 as a white swan, another third has managed to minimize the consequences with risk management actions and almost 40% of the businesses had no backup plans for the crisis. White swan came to companies whose pulled out regularly updated contingency plans, supplementing them with measures on mass employee illness, new employee and customer safety requirements. Businesses that have invested in efficiency and crisis management in recent years are much better off in the COVID-19 situation. Those are mainly manufacturing and distribution companies that have developed response plans for potential supply chain disruptions.
Unfortunately, "humanity's greatest shortcoming is our inability to comprehend the curves of exponential growth." The poor preparation and lack of alternative scenarios have led companies to a real black swan situation. The executives of these businesses either stressed the importance of flexibility or sincerely admitted that contingency plans were paper-based and they did not expect such development until the very last moment.
The first months have taught us to make decisions and adapt quickly. The increased efficiency, whilst keeping the amount of resources, will allow businesses to experiment and innovate. Under conditions of total uncertainty, experts say that it is best to experiment with several alternative scenarios for 1-3-6 months, maintain mobilized resources and team to make quick decisions.
This attitude is also reflected in the data - the company leaders emphasized that they purposefully plan in short scenarios to respond more flexibly to the changing situation.
"We are working with the current scenario, which includes the needs of the current situation. We have prepared further measures, which we will start to implement if the situation changes," said the head of one Lithuanian company.
Leadership indicators that help predict the future value or behavior of both the country’s economy and its customers, as well as practices that help make fairer decisions in conditions of uncertainty, are of paramount importance. That is why businesses need to invest in and strengthen the function of data centers to prevent uncertainty.
In high uncertainty, the most recognizable tool of strategic foresight is scenario planning. Experiment with what seems almost impossible: test different event scenarios and solutions, create response plans for unlikely events, maintain a crisis management function that would constantly collect information, assess the probabilities of different scenarios, drive decisions and implement rapid response actions in the organization.
Even if it seems that it is not needed today, let us think about the future of tomorrow - constantly invest in ensuring that we have digital solutions when needed and that we can adapt easily and quickly if similar situations happen again. Thus, the winners will emerge from the crisis with implemented digital transformation plans which were previously postponed, with more adapted start-up culture speed and creativity.
The beginning of the pandemic has prepared companies to respond quickly to emergencies and accelerated digitization processes that have led to a comprehensive reorientation of business to the online space. In the meantime, businesses have to learn how to work resiliently.
Learn more about business future resilience: