Are business strategies worthless in the wake of Covid?
Updated: May 8, 2020
Covid-19 is forcing us to rethink our assumptions about everything we know about planning and business overall
“Everyone has a plan until they get punched in the face”
The great philosopher Mike Tyson once said that. Covid 19 has punched business owners and employees in the face. Hard. But we will get up and start to fight again. That is our nature, hard-wired into each and every one of us. Especially small business owners. Especially small teams that are pivoting strategies to align with the new landscape. Right now.
Today I walked into a supermarket wearing a bandana across my face and protective gloves. Had I done that a few months ago, I likely would have attracted the police. Today, no one paid any attention. Many of you are also experiencing the same thing.
Plans we may have had last month (e.g. weddings, graduations, business meetings, dinners out with family) no longer apply. Many things that we have held as givens and have counted on to live our lives (e.g. a functioning economic system, the ability to hug our parents and friends, toilet paper) - these things have been turned on their heads, almost overnight with no clear path towards normalcy. Many of us plan for the future based on a set of assumptions we believe to be true.
Assumptions, Strategy and Plans
Often, we allow for flexibility in those assumptions in case things change. This gives us a comfort level that we will have some sort of a roadmap to where we are headed and a “North Star” that we use to guide us there. In our personal lives these might be things like daily planning schedules, shopping lists, annual budgets, investment for retirement scenarios, etc.
In our business lives we do the same thing, but have a fancier word for them – Strategic Plans.
Most businesses large and small put some effort into developing strategies based on their assumptions about their future business opportunities and challenges. Some are short term and some are longer, like the infamous 5-year plans (often scrapped as obsolete after the first year).
Business Strategies are worthless - or are they?
But now things have changed, the 2020 strategies of almost every business globally seem fundamentally worthless as the underlying assumptions around products, customers, distribution, revenue, costs, employees and numerous other components of a strategy no longer apply. Are they truly worthless?
The answer is yes and no.
For some small businesses and perhaps some big industries there is no strategy that can help save them. Perhaps they were highly leveraged, operated on thin margins or no margins at all with no balance sheet to get them through a difficult time. Perhaps there were too many players in their industry and only the most efficient might survive. Perhaps their industry will no longer exist at the same scale. However, out of carnage often new life emerges. It is often of a different form than we had seen before, but it is life nevertheless. And that is likely to happen in this instance as well.
Which is why once businesses are able to stabilize themselves temporarily through reorganization, government assistance or other means, they should start planning for a new world. What will you do? What will your company do? Where should you start and how do you think about it in a way that can make some sense of this madness? Short term? Long term? As with all evolutionary processes, those companies that are best able to adapt to the radically new environment will be the ones with competitive advantage to survive.
What is Your Business Strategy in a post Covid Economy?
Two initial things you should consider:
First - reduce investments in any areas (including staff) that can no longer sustain investments - meaning that there is no reasonable short term path to generating revenue or reducing costs from this activity. This may be difficult and painful as you had likely put tremendous effort and passion into building something, but it is very important to deal with a new reality and make tough decisions.
Second - recognize and focus your resources (time, money…) on opportunities that perhaps did not exist previously. Opportunities will be there for you and your business, you must use a creative and fact based approach to consider the options, then decide and proceed with enthusiasm. The name of the game is execution. Don’t be shy about asking for help.
This does not mean completely changing the underlying nature of your business. But, it will likely mean a radical rethink of what the market is, who competitors are, how to produce your product most efficiently, how to sell your product most effectively. Radical rethink. Where should you now invest your resources internally? How should you now manage your capital structure that will leave you less vulnerable to a radical black swan type of event such as this?
I would love to help you move your business forward.
The sooner your business is able to jump start this process, the better off you will be.
Let me say that again. The sooner your business is able to jump start this process, the better off you will be. Not because you will have a document called “strategy". But because you will begin to frame your new roadmap with a much clearer view of the new landscape. The new landscape includes potential risks. You will have a better chance of reaching your destination than the businesses who continue down the road with their former plan. Or, no plan at all.
We are a few months into our almost total self-isolation and global economic shutdowns thanks to the nasty Corona virus spreading across the planet. It feels like the human and financial Armageddon no one ever expected is now upon us. It seems bleak, but we as a human society have seen bleaker times.
That said, I hope that someday in the future you can look back on this time as more of a fork in the road for your business rather than the end of the road. You can emerge stronger from this. Small business has survived most historical crises. Yes, there may be a lot of pain… or a lot of quick pivoting to new opportunity. What will you do? Please reach out to me if you need help radically rethinking your post-COVID economy business strategy. You can pivot smarter and with a new plan. Then, the next time you get punched in the face you’ll be better prepared.