By Kenton Chow
Global companies with remote operations spread across multiple countries face unique challenges when dealing with the business disruptions, economic pain, and business resumption uncertainties posed by the COVID-19 pandemic.
What if your company operates a facilities located in places, such as India, where social distancing isn’t a realistic possibility due to multi-family housing? Where your workers are the sole breadwinners for their entire extended families? Where the healthcare system is woefully unprepared for a pandemic such as this one? The painful implications for a CFO recommending a reduction in force (RIF) or furloughing workers is exponentially magnified in cases like this one. Global companies with information flows requiring high-risk security protections can be also be severely challenged by “work from home” directives. Do employees have strong enough wireless connections and secure, software-ready laptops to work from home? How will different businesses across global governmental jurisdictions respond to supply chain interruptions short term and longer term? These are the kinds of questions which keep CFOs managing global companies up these days – long into the night.
There have been numerous pieces emerging in the media that draw analogies between fighting the COVID-19 pandemic and “global warfare”. Having been a CFO operating on the global front through numerous business disruptions and financial downturns (although, to be fair, none quite like this one), here are 6 reasons why I think they are valid.
The Wartime vs the Peacetime Executive: A Different Breed
There are subtle and not so subtle differences between wartime vs peacetime leaders. One key difference is the ability of wartime executives to focus on how to achieve a given objective vs. focusing on how difficult it is to achieve that objective. In the midst of a crisis, true leadership shines. Strong leaders have the courage and judgement to make hard decisions without all the data. Those in the thick of the battle know that they must face challenges one step at a time and pace themselves. They focus on what they can control and let go what they can’t. They lead by example and leverage difficult situations into opportunities that encourage team solidarity in the face of adversity. They know how to motivate their troops to make individual sacrifices for the common good. They pay close attention as situations evolve and recognize the leadership that an organization’s strong performers provide.
As a CFO leading during a time of crisis, I have personally had to make very difficult RIF decisions affecting economically disadvantaged people. These are people who live hand to mouth without many options. Some of these decisions can put employees in other countries in dire situations that have people fighting for their health and economic survival, not just for themselves but also for their families. These are incredibly painful decisions for me because they are not merely economic business decisions, but also moral and ethical ones. I intentionally remind myself of every one of these “wartime executive” attributes when making these tough calls.
A Focus on Key Competencies and Core Assets
Another lesson we can learn from a military analogy is the way in which successful leaders protect their most important assets. They are masters in recognizing the most essential skillsets and capabilities that are critical to their success and represent baseline necessities for them to deliver a win.
During the COVID-19 pandemic, I am advising companies where our technology teams and our sales teams are our two most important assets. Without our ability to retain and support these core asset of our company infrastructure now, we may jeopardize our competitive advantage in the future. Protecting our flanks in these two areas is top on my priority list. When the “war” ends, we can always start to re-invest in other parts of the business, such as infrastructure. It’s staying invested and focused on your core assets that will enable the business to not only survive, but thrive and take market share.
Leveraging Technology to Improve Visibility
Global warfare, like most other complex processes, has also become ever more dependent on technology. Planning, management, and deployment are all dependent on a network of interconnected systems which must be integrated well together. It’s never more important than during a crisis where the real time accessing of data and reporting (customer demand, accounts receivables, supply and finished goods inventories, labor productivity, expense management etc.) helps a CFO gauge which of their scenarios is more accurate. These critical inputs enable leaders to improve visibility and recognize leading indicators in order to better project the impact to revenues, cost, working capital, and cash requirements over upcoming quarters as the crisis evolves.
Pay Attention to Leading Indicators to be Nimble
Uncertainty can be managed if you stay nimble, connected, and pay attention to leading indicators over the course of an unpredictable situation. As the COVID-19 virus began to extend its reach globally, like many global companies, we built a cascading plan to manage risk exposure and multi-level impacts across our enterprise. We started by limiting global travel, sequentially slowed then stopped all hiring, reduced then banned discretionary spending, cut capital expenditures, accessed lines of credit early, and finally started evaluating more painful reductions to our cost structure. Most importantly, we were able to focus on leading indicators of customer behavior to adjust for the risk to our revenue forecasts by vertical. Our ability to share this information across the company cross-functionally increased the speed with which we could make impactful, incremental adjustments in staffing, production, and operations, which enabled us to stay nimble while continuing to stay invested in areas that represent our competitive advantage.
Always Look for Silver Linings
Leaders know that there are always silver linings; opportunities you might never have identified can emerge in times of crisis. The most important of these for our company was our immediate narrowing down of our multi-faceted long list of strategic priorities to only two. Focus, rapid-fire collaboration and communication became our mantras across the company. We created two crisis team meetings per day separated by 12-hour blocks to tee-up issues, discuss, and agree on action plans and revise milestones.
New business processes have emerged that are longer term wins. Our company discovered how to build privacy and security safeguards successfully for at-home workers, which will allow us to reduce commuting time and cost post-crisis. Our IT department has pioneered a whole new AGILE process, rapid development and deployment process as a result of building these new capabilities out in the field. We have been able to rollout streamlined training programs to use underutilized staff in one area to support another. We have new models of collaboration tapping into videotaped tutorials, video chat communications which will reduce our need for long-haul travel long into the future.
Lose Some Battles – But Win the War
Finally, all wartime leaders know that it is not the battles which matter – it’s winning the war. As a CFO, I hate making mistakes, particularly during a crisis, but we all do. Because we often don’t have much data, we sometimes make assumptions that turn out to be wrong. We misjudge the timing of critical events. We fail to take into account unanticipated conditions and complexities. The management of the COVID-19 pandemic has been full of these missteps – not just for governments, but also for many companies. In the end, we can and we will all learn from our mistakes. Our models will get better. Our health outcomes will improve. And eventually, we will win this war, at home and globally. That is the end goal we must all pull for together.