Companies that master both the transitory and the transformational response to a crisis reap long-term rewards. Transitory responses entail rapid actions that are critical for survival, including protecting employees, managing cash, and flexing supply chains to meet demand. But occupying new positions and building new advantages requires transformational moves and investment. In a crisis, when the immediate response can be all-consuming, transformational moves are harder. They are also smarter, and create opportunities to win in the long term.
TRANSFORMATIONAL RESPONSES
Our experience with companies that have mastered the ability to identify transformational opportunities suggests this starting point of action:
Detect and discern critical shifts. Stay ahead of the curve by setting up three war rooms: one for customers, one for competitors, and one to consider regulatory issues. Building these cross-disciplinary teams will help companies determine which signals related to demand and competition are most relevant to monitor, which are likely to persist after the crisis, and which reveal opportunity. In a crisis, the detection cycle is fast, and can even occur on a daily basis. In a prior crisis, one cruise company war room monitored credit card spend, detecting timing and patterns of early returning travelers. Currently, a client is looking at road congestion levels in China to discern the shape of the post-crisis rebound.
Such insights must be integrated into all three war rooms to discern patterns of longer-term opportunity. Following 9/11, for example, Qantas was able to guide its expansion plans and gain market share by monitoring customer data in addition to its competitor capacity and routes. CGI, a technology consulting firm, gathered detailed survey results through one-on-one field interviews with a quarter of its customers conducted by local senior executives. The results yielded competitive insights that led to a series of adjacent acquisitions through the downturn from 2007 to 2009, in turn driving 50% of CGI’s go-forward growth.
An essential role for the war rooms is to assess which changes are transitory and which are likely to be permanent—and to recommend actions for each. Temporary crisis behavior, like grocery stockpiling, may represent a closing window that requires rapid deployment to capture incremental revenue. More permanent behavior, however, often emerges where a preexisting trend or advantaged offering gets a crisis nudge—pushing consumers to trial new options, or resulting in a shift of cost-benefit tradeoffs. In the current crisis we already see candidates: telemedicine in health care, increased retail click-and-collect, more resilient supply chains, greater caution in travel and tourism, and normalized remote work. Capitalizing on these more permanent opportunities requires longer bets and capability builds, with historical examples able to inform companies today.