Inside the COVID-19 business playbook
As the global pandemic continues, a common set of responses are being embraced by companies irrespective of industry, size, or country. This playbook unfolds in a predictable chronology: reactionary measures first, followed by a shoring up of operations for the near-term. But as leading firms begin to enter the next stages of this cycle —planning for an emergence from the pandemic and predicting what the new normal will look like — it’s important to understand the basic dimensions of the COVID-19 business playbook.
Reaction: We’ve seen many of these reactionary measures play out over the last four weeks. Companies modified travel restrictions and instituted self-quarantine policies for employees returning from high risk areas. Offices began stocking more hand sanitizer while highlighting the importance of hygienic practices. As the risks grew, flexible working plans like home office began, eventually expanding to the wide-scale social distancing required to keep employees and customers safe. All the while, firms were increasing their communication frequency, with some establishing dedicated rapid response teams. For a large swathe of businesses, social distancing brought their operations to a halt.
Resilience: Firms are focused on cash conservation in this time of extreme unpredictability. They are drawing down credit lines, cutting dividends, reducing salaries, and putting investments like M&A and capex on hold. Many have also ripped up their guidance, while others are rushing to put CEO succession plans in place.
Return: This is the stage most firms are at right now. With short-term cash management challenges resolved, the focus turns to formulating a plan to return to the new normal. Essential businesses are seeking masks for workers, and warehouses are ramping up hiring. Tech firms are finding that the new normal looks a lot like the old one, as explosive growth leads to the inevitable hangover around privacy concerns on their platforms.
Rebound: We’re approaching the question, “What comes next?” Not tomorrow “next,” but months from now. How will this experience reorient customer preferences, practices, and spending patterns? Firms will have to refine old strategic plans for a post-pandemic world, or develop new strategies altogether. It will take longer to see the fruits of this work in the public sphere, but already the conversations are taking place. Case in point: will Amazon’s Prime Day survive?
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$MMM - 3M
Last week, GM found itself in the crosshairs of a U.S. President grasping for others to blame. 3M and its CEO Mike Roman became that target this week, as the administration admonished the firm for not not prioritizing mask production for the U.S. 3M insisted that this was not the case, and refused to cave to the administration’s pressure that they halt exports to Canada and Latin America.
With the U.S. federal government more ineffective than ever, big business has assumed a larger role in driving important societal change. Big retailers have stopped selling guns, investment banks are taking a stand on board diversity, and tech companies are ensuring equal pay. But CEOs can’t serve as a proxy for Congress, and this week 3M showed us why. While the federal government exists to serve the U.S.A., most large companies are multi-national citizens. 3M wasn’t willing to sell out its customers abroad because they remain key stakeholders for the firm.
This administration loves its executive roundtables and dubious executive guest stars. But expecting American business to ask “how high?” when you say “jump!” is ridiculous. 3M is a multinational juggernaut, and any burned bridges could come back to haunt them once the global pandemic is over. It’s a risk that’s too big to take, and it was smart of Roman to stand up to the attack.
She Said It Best
“The essential mechanics are simple: it’s stating there’s a there-there when there isn’t one. And directing attention to a new “there” before anyone notices they were staring at a void. It’s the logic of gentrification, not only of the city, but also the self, culture and civilization itself. […] The Umami Theory of Value centers on losing your sense of what’s trivial and what’s valuable.”
— Emily Segal & Martti Kalliala, a.k.a the consultancy Nemesis, in their thought-provoking “The Umami Theory of Value: Autopsy of the Experience Economy”
If you read one thing on the internet this week, it should be this. It’s long, and requires your full attention, but it presents a fascinating way of thinking about the 2010s. A decade full of products and experiences built around “breaking cultural things into discrete (marketable) parts,” propelled by “the illusion of a secret” and a lack of critical examination because “the cycle was simply too fast.” Think Instagram pop-up experiences, Off-White, the Art Basel banana, things largely devoid of meaning, grasping at irony or paradox to sell themselves. Social media is a favorite target of blame, but Segal and Kalliala also single out low interest rates, a lack of innovation, and yes, umami.
That’s all for now. Good luck with your sheltering in place, working from home, quarantining, and perseverance. Remember, you’re living through a pandemic. Be kind to yourself.