Strategic Thinking During and After COVID-19
Most enterprises design their strategies by conceiving a vision of the desired future and the path leading to it. Such a strategy features goals, key performance indicators, budgets, and strategic projects marking the milestones on the way to success. Most believe that they know their environment and understand key market trends well. And then a crisis hits. And this time it’s a global pandemic. Clients suspend their orders, suppliers are unable to fulfil the terms of contracts, employees fear insecure, and the government announces a lockdown and closes the borders. Companies, managers, and employees alike feel lost and confused. Could this have been foreseen? Was it possible to take appropriate measures to prepare oneself? In theory – yes. But in practice?
In reality, all of us (maybe except for science-fiction writers and filmmakers) were surprised. Shock and stupefaction, sometimes panic. These were – as studies show* – the initial reactions. Yet, the next stage involved “coming to terms” with the new situation, adopting solutions to ensure continuity of work and stabilise the financial situation of the managed organisation. The third stage (not reached by everyone) was about thinking, strategic thinking about the future. We can see managers regain their impact on the surrounding reality, new rules of the game being shaped, and a will to fight for the future of companies and of the people behind them. Managers and entrepreneurs are taking up the gauntlet thrown down by an invisible enemy. They seem to be driven by what can be summed up in the following words: “The world has not ended, we need to act”. Many managers see the crisis as an opportunity, a chance for a new hand. Their actions seem to be motivated by a strong focus on the future, on laying the ground for undertakings and plans beyond the time of pandemic, beyond the “here and now”. It is also a time to experiment within organisations, to test new concepts and ideas.
What can we learn from the current crisis in the context of strategic thinking? There are surely many lessons to be learned, of an idiosyncratic nature, depending on the nature of the company and the industry it operates in. However, what seems to be really important today and what concerns or may concern the future of many businesses is three aspects.
Firstly, it seems that scenario-based methods are making a comeback in strategic environment analyses. The beauty (and intellectual challenge) underlying the creation of unlikely, surprising scenarios of situations occurring in a business environment and the ways of reacting to these situations has been gaining interest among managers and will soon reach CEOs as well, which is proven by the interest in the subject among MBA students whom I have talked to during the classes I have taught during the pandemic.
Secondly, a more extensive business diversification will return to favour as well. Not right away, but the expansion from the core business outwards will take the form of an ever-wider circle, systematically reaching increasingly distant areas of activity in the product-market domain.
Thirdly, many concepts of “lean” management will be faced with a test. The organisations that had some organisational slack have made it through the crisis somewhat unscathed, at least to some extent, avoiding extreme measures such as redundancies and/or suspending or closing their business.
* As a team managed and supervised by Prof. Krzysztof Obłój, we conduct regular studies entitled “Polish Business in the Times of a Pandemic”.
The text is part of the publication "The New Normal. Reality in the times of the global Covid-19 pandemic. A commentary by the faculty of Kozminski University".