Last year I made a post on immediate steps to be taken in regards to COVID pandemic. Now that SID has published survey results on board of directors responses to COVID-19, let’s see how it went in reality.
Overview.
The essence of my advice could be boiled down to these:
- keep financial reserves for M&A and talent acquisitions during crises;
- focus on employees;
- focus on your product(s);
- take notice of your expenditures, your suppliers’ and customers’ financial situation.
Survey shows that this is indeed what many companies has done. Many companies have also set up specialized crisis management committees, I assume, to coordinate these efforts.
So far so good. But there is a substantial part of the survey that left me worried.
63% of respondents identify their companies as Very Resilient or Reasonably Resilient in confronting negative economic outcomes due to Covid-19.
86% of respondents agree that their board is planning sufficiently far ahead to deal with Covid-19.
However, 90% of respondents indicate a short- to mid-term (less than 12 months) horizon in the company planning for its response to Covid-19. On average, 59% of a board’s time in dealing with the Covid-19 pandemic is focused on its current impact while 41% is focused on planning for the long-term.
They are also mostly focused on current impact and disregard post-COVID-19 environment.
Moreover, Systems and infrastructure and Talent and skillsets were perceived as the most important gaps preventing companies from effectively harnessing technology and driving innovation (65% and 58% respectively).
Conclusions.
First, there is no reason to believe that COVID-related issues would go away in 12 months even if COVID itself does. There are many things in doing business and in consumer behavior that are unlikely to go back to how they were before 2020. This means that long-term company strategy might have to be changed altogether. It’s true that there is no one size fits all and different companies would have different degree of changes they need to make, but chances are it’s significant enough.
Second, infrastructure is something that can not be changed fast unless you’re a small startup. Usually, it takes more then 12 months, sometimes years to update it.
As we can see below, boards actually feel this difference in mindset more than they want to let on. The largest perceived divergence in priority between board and management is the Ability to think and plan for the longer term, beyond the here and now. Respondents generally feel that this is a more important leadership trait expected of their boards as compared to management.
Taking all of this into account, it is somewhat baffling that most respondents feel that their companies are sufficiently resilient for the new environment, while the focus seems to be putting down fires here and now. If my memory serves me, resilience means that company is able to adapt quickly and is stable long-term.
Don’t get me wrong, it doesn’t mean these companies would fail. Quite the opposite – most of them would pass this pandemic successfully. But for the reasons above, it seems like their confidence doesn’t have proper basis. Unpleasant surprises are much more likely to happen, even though some of them could be avoided with proper long-term planning and adapting the strategy of the company to so called new normal. It won’t magically disappear in a few months.
