Responding to the Coronavirus Crisis: Three Courses of Action for a CEO

[Version française ici]

In these times of coronavirus epidemic, I have the opportunity to talk to people from very different backgrounds (emergency doctors, researchers, self-employed people, entrepreneurs, retirees, business leaders, etc.) to understand how they “live” the current crisis both personally and professionally. From these discussions, I can draw three courses of action that a CEO can usefully adopt in the face of the extreme and unprecedented situation we are experiencing.

The current crisis is a challenge for everyone, but especially for business leaders, many of whom have never had to deal with extreme situations. These managers are torn between the desire to preserve the safety of their employees and the need to keep the business going as much as possible. This difficulty takes place in a context of significant stress. Until recently, most people had not really taken the measure of the danger and, suddenly, for the first time, understood that the virus was not “just something that kills old Chinese people”, but something that could directly affect them, and probably will. It seems that companies are only gradually leaving this state of awe. But this stress also affects managers. One of them, in charge of a medical analysis laboratory and therefore on the front line, told me yesterday: “I have to be there to ensure continuity, but I also want to save my own skin.”

The three courses of action that emerge from these discussions that I can suggest are: accept reality, act quickly and prepare for tomorrow.

1. Accept reality. The temptation in the face of an extreme event is to reassure one’s colleagues or oneself: “No worries, everything will be all right!”. In a climate of great anxiety where everyone is aware that, no, everything is not all right, it’s totally counterproductive. The absence of orders, delivery difficulties (e.g finding a carrier for your goods), difficulties in getting paid, or the risk of losing perishable goods (it’s strawberry season!), are very quickly known within the company. The CEO’s first resource in this situation is his or her credibility. Accepting reality, however hard it may be – and for many companies today, the hard reality is the brutal and complete drying up of any business – is the first condition for survival. The more reality is denied, the more difficult survival will be. It is not a question of falling into a discussion between optimists and pessimists. It is neither. The lucid acceptance of reality is essential, and it does not lead to paralysis; on the contrary, it is the way out of paralysis, out of the initial shock of astonishment. The CEO therefore has to investigate the situation quickly – what exactly is going on, what is the real state of affairs (cash flow, orders, deliveries, logistics, etc.) and communicate with the employees and stakeholders (suppliers, customers, etc.). It is a matter of developing a deep understanding of the situation in order to have in mind the main parameters on which to act.

Wei Ji: Crisis and opportunity

2. Act now with what you have now. A deep understanding of the situation must lead to quick action. There are three reasons for taking action: firstly, of course, the urgency of the situation and its extreme nature require us to act very quickly to put out the fires; secondly, it is a way out of the state of awe and paralysis. It is a question of getting the collective back in motion. This is essential because an extreme event often constitutes what researcher Karl Weick calls a cosmological episode, i.e. one that is so out of step with our mental models that the collective can break down as a result. It is therefore essential to reconstitute this collective quickly, otherwise it’s everyone for oneself and the organization has no chance of surviving. Thirdly, taking action is often the only way to understand what is really going on, so action feeds the assessment of the situation and its deep understanding (for instance, only by trying to organize a delivery will we know if the deliveries really work).

In order to stimulate action, the CEO can mobilize the entrepreneurial principles of effectuation, which are particularly relevant to crisis situations, and ask the following questions: what can I do now with what I have at hand (I have neither the time nor the means to go and get additional resources)? What can I do at an affordable loss, i.e. no big deal if it doesn’t work (risk-controlled action)? Whom can I do it with (employees, suppliers, customers, etc.), i.e. with whom can I co-construct a solution? See a more detailed description of these principles here.

3. Be opportunistic. It is a commonplace that any extreme situation, no matter how difficult, is also a source of opportunity, a reality captured by the Chinese word Wei Ji (crisis + opportunity). It forces us to change, to reconsider our mental models (beliefs), to move forward in order to survive. The question the CEO can ask here is: how can we take advantage of the surprise of the epidemic? The scale of the epidemic means that many cards will be reshuffled. It’s not cynicism, it’s not about saying, “Great, people are going to die, how can we benefit from this?” It’s about saying, “This is a dramatic situation, there’s a lot of things I can’t do anything about, but that’s the way it is. Are there things that I can do something about?” Because life has to go on. There will be an afterwards and the role of the leader is also to prepare for that afterwards. Here too, mental models will be a resource. One recalls that with the emergence of digital photography, Fuji, a manufacturer of argentic film, accepted the harsh reality and concluded that it no longer had a place in the emerging digital world. Asking itself about its identity, about its mental models, Fuji concluded: “The world of photography is becoming digital, but we are not computer scientists. We are chemists, so photography is no longer for us. But as chemists, there are plenty of opportunities.” Fuji eventually found that one of the components in its films could also be used in skin creams (and perhaps today in a vaccine for the coronavirus). In a time of crisis, Fuji reinvented itself as a chemist. It is this path that managers can explore, by turning to the deep identity of their organization to discover new sources of opportunity in a world transformed by the epidemic. Here again, the principles of effectuation are extremely relevant in moving in this direction.

Accepting reality, acting quickly to control the situation and relaunch the collective, but also preparing for the future by wondering how to take advantage of this difficult situation, these three courses of action are in no way a guarantee of success, but the entrepreneurial thinking on which they are based is entirely relevant in a crisis situation.

To learn more about the challenges of decision making under uncertainty, read my previous article: The Four Things that the Coronavirus Reminds Us About Decision Making in Uncertainty. To learn more about effectuation, the logic of action of entrepreneurs, read my introductory article: Effectuation: How Entrepreneurs (Really) Think and Act. On the mental models that constitute our identity and on the basis of which we make our decisions, read my article Collective myths and the challenge of organizational transformation.

One response to “Responding to the Coronavirus Crisis: Three Courses of Action for a CEO

  1. Pingback: En situation de crise: Les trois lignes de conduite du dirigeant | Philippe Silberzahn

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.