1. Aim to survive before economic efficiency
Talking about an efficient dead organization would seem meaningless. Contingency preparation will be built into each link in the supply chain in the post-COVID-19 environment to ensure sustainability. The companies must be much more strategic in choosing, instead of structuring partnerships based on leverage and getting a better conclusion to the contract whenever possible, which alliances are essential and which are transactional. Instead of “What’s in it for me? “The first question would be, ‘What if? “Most of the more profitable alliances may be required in favour of those that can tolerate a delayed shipment or postpone payment here or there where fate intervenes.
Redundancy will therefore improve efficiency with regard to critical resources in order to increase reliability. To invest too much in one partner, supplier or market can be just as bad an idea as to bet on a horse to save your life. Some large multinationals, for example, would reconsider their decision to rely on China so heavily that a pandemic reveals fissures in the thriving façade of the country.
2. Quantify and schedule ecological and environmental risks instead of merely identifying them
Today, several administrators and experts identify different forms of risks, with very little in detail analysis about how they should cope with them. We still have the good old concept of scenario planning, but very few companies seem to practice it systematically and thoroughly. In comparison, traditional risk analysis usually omits risks with no defined feature of distribution of probability, including environmental destruction and rapid changes in refugee flows. And today’s companies, already overwhelmed with “clear and current” business challenges, are hard pressed to pay attention to what they see as events of low probability.
But recent history shows that extreme turmoil is far from uncommon. At least five dangerous virus crises have occurred worldwide in the past century, from the 1918 pandemic that currently infected about a third of the world’s population to COVID-19. At least two catastrophic nuclear plant meltdowns, two world wars, many near-misses, multiple earthquakes and tsunami, innumerable national military disputes affecting the availability of critical materials, were also happening. Climate change, overpopulation and increasing global inequality have only increased the probability of future threats.
Businesses should then commit more time to quantifying various categories of risks, even though the right way is not universally accepted. The main objective is not to be precise but to train the organization to plan different ‘unimaginable’ events. What is not calculated is not finished, as many managers also say. Therefore, a number of computer-assisted algorithms supplying data and different simulation models should be supplemented with a deep qualitative analysis and scenario planning. In the course of strategic decision-making, leaders must learn about AI and machine-learning tools – such as heat mapping algorithms that can quantify political risks based on analysis of sentiments in social media.
3. Develop a good immune system instead of optimizing short-term benefit
Technology is an important part of the arsenal in calculating and preparation of risks but cannot resolve profound antipathy to blunt realities. In the business world to come, the benefit will belong to companies that send bad news up quickly rather than down. Companies who can detect challenges if they look low, learn from them and establish preventive strategies easily have what I would term a good corporate immunity system. Just like our white blood cells identify and destroy invading cells before they become havoc on our bodies, companies need long, sensitive sensations and the hyper-responsive ability to stay alert to health at all levels.
The demise of the Nokia mobile company is a perfect example of the failure of immune-compromised companies. Well before the iPhone arrived, the Finnish company had a “culture of fear.” Senior and middle managers had developed a toxic sugar coating procedure and had avoided significant issues with their computers and patented operating systems. Nokia had enough time and money to establish a successful iPhone solution, but those benefits were wasted as poisonous internal dynamics were left to their own devices.
Many top executives claim that the use of terror leads to improved business results by reducing organizational satisfaction and inertia. This should have worked relatively well in a completely controllable and stable world in which people cannot share good news only and cover negative news if they can. In today’s volatile context, however, unheeded early warning signs will result.
4. Integrate government political strategy rather than solely market affairs
Globalization has been going well. For several decades leading to the 2008 financial crisis, the idea that the world is flat – free travel, worldwide deals, outsourcing to the lowest-cost countries , trade deals, etc. – had few powerful detractors. However, the idea of business without borders has been retreating since the advent of the Brexit and the Trump presidency. As I write, international air traffic is absolutely frozen and global supply chains have been closed off. National states, which are already returning before COVID-19, will likely increase their leverage in the months and years to come over multinational companies.
In addition to national security, companies in the sectors considered “essential” to public welfare – covering a variety of sectors, from foodstuffs to medical supplies, equipment and electronics, transport and energy – will be the first to sense localization pressure. Governments have learned how to rely on foreign trade for goods that lead to crisis or break crisis, including the reactive agents that are necessary for COVID-19 research, or even low-tech medical robes and face masks. You may want to preserve or restore these important supply chains on your own property. This may have major consequences for businesses looking to grow overseas. Corporations should expect that their joint partnerships, mergers and acquisitions, R&D alliances, including in non-defense industries would be subject to much tighter and stronger policy review.