Crisis Management in a COVID world

Interview

Bénédicte Germon: Pr Thomas, you teach change management at KEDGE for  the Global Executive MBA, can you highlight for us how change management concepts are impacted after 6 months of Covid and a long-term crisis?

Ian Thomas: COVID has clearly brought huge challenges for businesses.  In the recent past we have taught the value of planning and process, reliance on data and refining the numbers.  Where organisations have sought to change and reinvent themselves, this was done in a strategic, planned, deliberate and long-term way.  COVID has challenged what we know and our pre-conceptions.  Business leaders and managers are facing the issue not about how to drive strategic, deliberate change, but how to cope with a global crisis, thrust upon them, without notice, brutal and unforgiving, and certainly not in the plan. 
Whilst crisis management and change management are close cousins, the situation, skills and approach needed to address them are very different.

BG : What are the differences you identified in the approaches needed to address crisis & change management?
IT: The first difference is that strategic change is something imposed by management, by choice, on the organisation to deliberately change the culture and capabilities of the organisation. Crisis management is not imposed by management – it’s imposed on them.  Whether they want it or not.

The second major difference is one of speed and duration.  To change the culture and capability of an organisation may take 3, 5 or 10 years and is planned for.  A crisis typically happens overnight and without warning, as happened with COVID.  No one knows how long it may last.

The third major difference is one of the final objective.  In transformational change it’s about long term business objectives; in a crisis, it’s about survival, pure and simple. Whilst there are lots of articles about how large companies such as Starbucks, BP, BMW are coping with COVID crisis, in reality every business, everyone is affected, and small businesses are particularly gravely threatened as they lack the resources of the larger companies to respond to the crisis.  So here’s a story about, and a tribute to, the small business in time of COVID: 

Milly Barr came to the UK a number of years ago from Colombia and liked Oxford so much she said “…this is where I want to live”.  A qualified lawyer, she risked disappointing her family by not taking up law and instead looked for something she could feel passionate about.  Her father suggested she consider coffee, so she took two months visiting farms in Colombia to learn the business and master the process ‘from tree to cup…’.  Eventually she set up a coffee stall in a market in Oxford, and before long established her first coffee shop in the city centre.  Differentiated from other coffee shops by offering speciality coffee, the business went from strength to strength, and 2 years ago she invested in her second, larger and more prestigious coffee shop.  Like all small businesses this took huge energy, time, emotion, passion, self-belief, risk and courage, but soon the second shop was also doing well – at least until COVID and lockdown struck in March this year. 

She was forced to close the doors of her café on March 27 shop with a heavy heart and fear for the future.  Then, after two weeks of kicking her heels at home in lockdown and thinking about her business slipping into failure, her frustration got the better of her and she decided to take a risk and open for takeaway coffee only (“people still need good coffee…!”).   
Customers were easy to find as they were typically queuing for food and essentials at the nearby supermarket, so the takeaway business found a ready clientele until the moment that a policeman passed by.  He told her that she couldn’t sell just coffee because coffee wasn’t essential (he said that to Colombian!!) - but that if she sold something essential she could stay open and sell coffee on the side for takeaway.  That was the lightbulb moment.  That night she discussed with her husband about the idea of selling vegetables next to the coffee.  The next day she went to a wholesaler who she knew and bought a load of high-quality vegetables and started selling them in the café.

She had no knowledge of vegetables, what to buy, how to store them, present them or price them.  But she knew she had to do it, do it quickly, and somehow make a success of it.  Today with lockdown finished, she continues to sell high quality vegetables and benefits from the cross-selling – some people come into the shop to buy a coffee and end up buying some vegetables – others come in to buy vegetables and end up buying a coffee.  It works, and she openly admits her revenues have been higher and better than ever.  For the foreseeable future, her coffee shop will carry on selling vegetables even after the crisis has passed.

BG: To conclude this exchange, what would the lessons from this be?

IT: 

• In a crisis, survival is primordial.  It is your main and arguably your only end objective. 
• Speed is essential.  This is not a time for consensus, consultation, planning and sensibilities.  Decide to do something, then do it quick.  It does not need to be perfect, but you need to make a decision and do it quickly.  If you are lucky and survive the first wave of the crisis, you can then go back and review what you had first decided, and adjust if necessary.
• Be prepared to rapidly unlearn (forget) what you know and hold dear, and live by different rules – the sacred cows that what you knew and valued in the past probably won’t be useful in the future.  As Milly says “I didn’t want to sell vegetables – I’m doing it to survive”
• Numbers, plans and planning are not key.  In the planned, organised world before COVID we learnt the important of planning, of judicious decision-making, of rigorous fact-based analysis, reliance upon the numbers being ‘right’, and detailed implementation plans, carefully coordinated between all the different stakeholders.  In a crisis, there is no data.  As Milly says “I have absolutely no idea what the future will be, so how can I plan for it?”  Instinct, the ability to innovate and think outside the box, and a determination to survive whatever, are the critical capabilities.     

So crisis management also challenges what we traditionally teach in business schools.  Most of what we know and depend on is upended.   New ways of thinking and behaving are necessary for a crisis.  Creativity, innovation, speed and agility are key.  Oh, but there is one of the traditional teachings which remains completely validated and critical by the COVID crisis:  cash.  In a crisis, you need to count the cash very quickly – how much have I got?  What’s coming in?  How much is going out, and can I delay some?  Without cash, imminent death awaits.  It seems like finance teaching will continue to be valid during and after COVID!          

Many thanks Pr Thomas !