Business News

Plan a strategic pivot

September
15, 2020

7 min read

The opinions expressed by the entrepreneur's contributors are their own.

"It's not going away and we have to face this reality." This is what the CEO and founder of a high-tech manufacturing startup with 180 employees said to his management team in early July to convince them that they need a strategic fulcrum for COVID-19.

Before that, the startup's executives went step by step, putting out the various COVID-related fires that flared up: supply chain disruptions, canceled orders, employees struggling to set up from home, or needing flextime to manage children older relatives.

When the CEO saw more of the bigger picture, he realized that the company was going in the wrong direction. One of the board members recommended my recently published book on Strategic Panning to Adapt to COVID and Plan for Post-Pandemic Recovery.

After a quick read, the CEO convinced the other leadership team that the company needs to perform a strategic pivot to address COVID. He had his executive assistant contact him and arranged a facilitated strategic retreat to fight the pandemic, which was my sixth of nine such engagements. This article summarizes my experiences in helping a number of companies – five startups, three established midmarkets, and one business unit of a Fortune 300 company – immerse themselves in our new abnormal reality.

Related Topics: 5 Changes Business Managers Should Consider

Demanding business model assumptions

Without exception, the first step is to reassess assumptions about the company's business model. That means first short meetings with the management team in which we discuss the kind of fires they are exposed to.

For example, the production startup faced a new challenge in selling its high-tech products. Known for its superior quality, the products were previously off the shelf; The company actually struggled to keep up with demand.

Now the startup's sales force has reported that the decision-making process has changed. Accounting put a lot more pressure on the operations managers to prove that the quality of the products brought a sufficient ROI. Couldn't they do with cheaper options?

While the startup invested in innovation to ensure the quality of its high-tech products, it didn't have a clear measure of the ROI for innovation. Ultimately, operational staff focused on quality, not ROI. As a result, some customers apologetically chose to buy cheaper alternatives.

Other companies have faced a number of similar problems in sales and other areas. Often times, the news surprised other members of the executive team, even the CEO. Everyone was busy fighting fires in their own areas.

Gather internal information

With a greater awareness of the business model assumptions challenged by the pandemic, the next step is to gather internal information for a revised strategy and business model.

Those who run a department and are present at the strategic retreat get feedback from their direct reports on how each department's goals, structure, and relationship with clients (external or internal) are being revised in light of the assumptions challenged in three scenarios can be.

In the first scenario, a vaccine with over 90 percent effectiveness would be found by spring 2021, and the pandemic would be largely over by spring 2022. In the second scenario, this vaccine would be discovered by spring 2022 and most of the pandemic by spring 2023. We would never find a vaccine more than 50 percent effective, just as we haven't found a vaccine more effective than the flu

Related: 9 Ways Leaders Can Support Their Team During A Crisis

Strategy day

Next comes the strategic retreat. It should be a two-day event, with one day for comprehensive strategic planning and one day for operationalizing the strategy.

The team at the high-tech manufacturing startup struggled to accept the changing market demands. The operations team established a sense of identity and team spirit around innovation as a core value. Marketing and sales made innovation a fundamental element of their pitches. They kept turning away from the reality they need from innovation to measurement of ROI.

The CEO and I kept steering them back. I had to use all of my moderation skills to keep the conversation on track, a particularly challenging task as it was a virtual retreat.

The management team of a late-stage SaaS startup with more than 500 employees was surprised that the vast majority of their direct employees shared the feeling of burnout from home and "zoom fatigue". In this area, as an expert in emotional and social intelligence, I could provide significant support.

It is important to realize that these problems are not solely due to burnout. It goes much deeper.

Pandemic mental health issues like anxiety / depression / trauma / grief COVID-related pragmatic challenges like having kids staying at home Social isolation from friends, family and community events, and our past outside hobbies and entertainment Poor work-from-home environments with inadequate home offices – Attitudes lack of skills for effective virtual communication and collaboration. The fulfillment of the basic human needs – sense of connectedness, tribe, purpose, and purpose – that we naturally get from work is deprived of it

Achieving this doesn't just require financial support for home office setups or flexible working hours to cope with pragmatic pandemic challenges. It also requires professional development in effective virtual communication and teamwork. In addition, professional development in emotional and social intelligence is required so that employees can identify and fill the emotional and social gaps that the pandemic has left.

Operating day

The next day should focus on operationalizing the strategic changes in the business model. You need to address potential threats and opportunities in a variety of future scenarios and revise the previous day's strategy if necessary. These scenarios must include at least the three different COVID futures described above and several different potential economic recovery scenarios (K, U, W, V, L).

A start-up for corporate data analysis with over 120 employees recognized an unexpected opportunity. Long attempts have been made to get some lucrative customer accounts from several competitors. The startup's CEO knew that most competitor executives were hostile to COVID.

The startup decided to adjust marketing and sales to demonstrate the steps it was taking to be pandemic-proof. Sellers called the customer accounts of competitors and informed them of these steps and offered support if the pandemic lasted longer than the most optimistic predictions and the competitors were unable to meet their previous high standards.

Related topics: Tips for adapting your business model to the new normal

Next steps and follow up

At the end of the operations day, determine specific next steps for each new initiative you've discussed. Decide on the approximate resource requirements and success metrics. Select a member of the leadership team who will be responsible for running the initiative while others may be involved in the effort. Finally, prepare a report for the Board of Directors on the retreat highlighting how the strategic fulcrum will help the company adapt to different scenarios of COVID and economic recovery.

Follow any next steps in the weekly executive team meeting or any other executive team forum your company already uses. Then hold a half-day event in one month in which you evaluate the strategy change and, if necessary, make corrections to the strategy and / or implementation. Do the same in three months.

While nothing can guarantee success, I can guarantee that these steps will maximize your chances of not only surviving but thriving in these troubled times.

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