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Freeze-Assess-Rebuild: how businesses can navigate the coronavirus “fog of war”

17 April 2020

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A three-part policy of Freeze-Assess-Rebuild can help businesses navigate the uncertain ‘fog of war’ posed by the COVID-19 (coronavirus) crisis, says Dr …

A three-part policy of Freeze-Assess-Rebuild can help businesses navigate the uncertain ‘fog of war’ posed by the COVID-19 (coronavirus) crisis, says Dr Thomas Roulet of Cambridge Judge Business School.

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Dr Thomas Roulet.
Dr Thomas Roulet

Societies are rightly proud of their resilience. Londoners survived nightly bombing in 1940-41 through the “Blitz spirit”, and Europe rapidly rebuilt after World War II to produce decades of strong economic growth. So it’s not surprising that people are recalling that wartime grit as we fight through the coronavirus crisis.

But in terms of restoring shattered businesses, such a comparison is unfortunately misplaced in today’s vastly more complicated global economy. The 1940s manufacturing sector shifted the means of much production toward the war effort and then to reconstruction, while in the 2020s few companies will be able to start building ventilators or producing relevant medicines. The coronavirus reality might be a lot grimmer for businesses.

Another comparison with military conflict is actually more apt: as battlefield generals must navigate the “fog of war” – the uncertainty about relative army strengths, intent and conditions – the coronavirus crisis has confronted societies and businesses with dazzling and unprecedented uncertainty.

Similarly to political uncertainty, the situation implies societal ambiguity. But with the globe in lockdown of indefinite duration, there is no horizon, no timeline, and individuals have no clear picture of what the world will look like in six months’ time: Will the virus be disappearing? Will our children be back in school? Will our lives have returned to what they were before the crisis?

And from a business perspective: How will supply chains be affected in the long run? How will the demands of stakeholders – consumers, governments, business partners – change as a result of this unparalleled crisis? While many people have theories or educated guesses, none of these answers seem to converge.

The crisis will sift away many businesses and jobs, and both managers and employees are legitimately concerned about the very survival of their organisations. So here are three key steps to try to manage our way through – and beyond – the fog:

1. Freeze

In the short term, firms will have to cut their operational costs to the bare minimum, to compensate as best as possible for their lack of revenues in the current lockdown. This is the “freezing” phase.

Many governments have set up support systems to bring firms the oxygen they need to go through this phase – providing loans and paying wage bills, or granting firms the ability to put their employees on temporary unemployment benefits. Companies will have to rely as much as they can on this assistance to slow down their decay until the next breath of fresh air.

Some service-sector firms are hesitant to discontinue their activities. A sales consultant for a major software company explained to me that he was afraid competitors would stay active, poach their clients or acquire new ones. While this fear might be legitimate, each firm will have to put in balance the cost of maintaining operations against revenue flow (or lack thereof). They might come to the conclusion that only part of their activity should be frozen, to maintain a minimum of customer relationships.

2. Assess

The clouds of the coronavirus will dissipate at some point, but how fast and, metaphorically, what the weather will be like when they do, nobody quite knows. The way we consume, the way we travel, and how we interact socially and economically might never be the same. However, we can expect the conditions of the lockdown to progressively ease up, enabling most businesses to consider gradually “unfreezing” their activity.

This will be the “assessment” phase – a time to reflect on how the firm’s business model and value proposition will need to change to cope with the new realities of the post-coronavirus world. Part of this thinking will be concerned with the physical and material aspects of businesses: how the firm geographically redeploys value chains (bringing them closer to home), or the way it interacts with clients (how will brick-and-mortar space be used if social distancing or more remote working and consumer activity becomes the norm?). Many small firms have already moved online and will discover new client niches. For B2B-focused firms, many of their clients might have disappeared during this crisis, and pivoting their value proposition will be required to acquire new ones.

3. Rebuild

When the light at the end of the tunnel will be seen, firms will start looking into the ways they can rebound at the end of the crisis – the “rebuilding” phase. Communication will be key to restarting the engine and restoring relationships with clients. They will have to appeal for their loyal consumers to come back, stressing the importance of this support in an essential moment.

Building on their assessment of the situation, they will carefully be able to implement the changes needed to address new consumer behaviour and demand. At this stage, their ability to invest is likely to be limited as most of their resources would have been burnt in shielding themselves from the storm. There will be a lot to achieve with very little, and managers will have to think creatively about the ways their business may bloom again. The current unique level of ambiguity means that firms have no other choice than relying on their imagination to anticipate the demands of their stakeholders in the post-coronavirus era. Yet while the current uncertainty seems to have no limits, we can hope that business imagination has no limits either – and that truly is the Blitz spirit.

Dr Thomas Roulet is a University Senior Lecturer in Organisation Theory and Deputy Director of the MBA programme at Cambridge Judge Business School. Visit Dr Thomas Roulet’s faculty webpage

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