Preparing for success in the post-pandemic future

While we are being overwhelmed by a deluge of information on how to “survive” the COVID-19 pandemic, the astute among us are turning their attention to how the post-pandemic future will unfold. What will the new world order look like, and where will the emerging economic opportunities lie?

There isn't much doubt that the human species will defeat this latest threat that has us all glued to our TVs. Through the combination of technology, smart choices and, in many cases, the world coming together, COVID 19 will one day be in the rear-view mirror. It will leave in its wake more damage than anyone would like to see, but it will pass. What will that post-pandemic world look like, and how can family-owned businesses prepare to take advantage of it?

A new world order
A reconnected world: Clearly, a virus will do what many heads of state were not able to — bring the world together after years of isolationism. The pandemic will bring about the rebirth of international collaboration. Who would have thought, 12 weeks ago, that the United States, China and Italy would collaborate on the supply of medical equipment? There is a growing belief that once this is all over, countries and companies will work together to solve the world's biggest problems. And from this will develop a more prosperous world.

Rewired supply chains: COVID-19 brought into stark focus the importance of China to U.S. businesses and consumers. Business leaders and boards are looking at ways to mitigate risk to their supply chains. Do they bring production back to the United States and eat the incremental cost, or split production between China and an alternative? On the other side of the table, presidents and prime ministers of emerging nations are likely assessing how they might step in to solve this problem.

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Purpose-driven businesses: People who survived World War II did not just forget the damage it caused overnight. They carried it with them every day of their lives and tried to pass on their learnings to the next generation (with perhaps moderate success). Which one of us, in the few short weeks since this crisis hit, has not at least paused for a moment and wondered about how we might help those in need? The more radical among us say consumerism is dead and purpose-driven businesses are the wave of the future. Companies will pay as much attention to the “why” and the “how” of their existence as they do to the “how much” and the “what.”

Technology as an enabler: Artificial intelligence is speeding up the process of drug discovery, narrowing down a long list of COVID-19 treatment options to a handful for scientists to focus on. In the past, such a process might take years. A multitude of companies with 3D printers have pivoted to making personal protective equipment (PPE) for front-line workers, leveraging technology to fundamentally change their business models. During this period of social distancing, business meetings and family gatherings are being conducted via video conferencing.

Business at a distance: While the human species cannot and will not survive without interaction, COVID-19 has changed the way companies manage their affairs. The need to engage customers who are socially distanced has presented a challenge as well as a tremendous opportunity.

Finance 010: Many rules we have been taught about value creation, cash flow and risk management are being rewritten. For example, consider a small family-owned restaurant specializing in farm-to-table ingredients as it tries to survive the pandemic. The owners have many financial choices to make in an effort to return to acceptable profits: raise prices, renegotiate with the landlord and lenders, reduce wages, permanently change the mix between eat-in and take-out, renegotiate terms with lenders, to name a few. They also have some strategic choices: fundamentally change the value proposition, thereby extracting more revenue per customer visit; create scale through permanently shifting the eat-in to take-out ratio; grow through acquiring distressed assets, and so on. Even small family businesses will need to take a more strategic look at risk: how banking arrangements are structured, the types of contracts they have with suppliers, what kind of insurance coverage is now appropriate. Make no mistake: The P&L of the post-pandemic restaurant will be fundamentally different than it was in January 2020. 

Implications for the family-owned enterprise
During a crisis, along with the pain and suffering comes an opportunity for a new future. This crisis is no different. So what opportunities has COVID-19 created, and how should family enterprises be thinking about them?

Vision, purpose and legacy: This is an ideal time for families to come together and revisit what they believe the business should achieve over the long term. Why does their business exist, and what is their vision of greatness? Will the high-level purpose of the enterprise still be relevant in this new future? Does it require minor adjustments, or a radical change? Are there social goals that now play a role in addition to financial ones? Bringing family together to work through this can reaffirm family members' commitment to the business.

Strategy: The Vision-Strategy-Tactics continuum works. One must follow the other. Businesses that stick to this simple mantra have succeeded, and those that have gone off track have failed. What better time for management and the family owners to determine if the company's strategy still works, and if not, how it needs to change? Now is the time for family business leaders to focus their attention on what their business needs to look like for the long term. Does their strategy align with the vision, and will it create lasting value in the new market realities that are coming our way?

Stakeholders vs. shareholders: Private family-owned businesses are not accountable to public equity markets that drive quarterly accountability. Financial goals can be established on a different, self-regulated cadence. With this incredible advantage, family enterprises can start to focus on problems they to solve and establish a timeframe around which to solve them. Why is this relevant? Because innovation takes time.

Spring cleaning and realigning: The lull that many businesses have seen in everyday activity can provide an opportunity to identify issues that will unlock value. This could be a governance document that has not been properly executed, a set of themes that require additional dialogue to gain alliance on, or perhaps just getting the family stakeholders together to ensure everyone is aligned on vision, strategy and plan.

The role of technology: Time and time again, history has demonstrated that companies that invest in truly differentiated technology win over the long term. Clearly this is more relevant in some industries than others. However, a discontinuity of this magnitude is a gift to family enterprise owners. What key trends can your business take advantage of? How will you invest (yes, invest) in technology as a differentiator, as the rest of the world scrambles to meet quarterly guidance?

Some might ask what point there is in talking about the future if the very existence of many companies is under question. This is an opportunity for the fearless family business to rise, and to build the successful enterprise of the post-pandemic future.

Rustom J. Desai is a recently retired executive who spent a 25-year career with Corning Incorporated in a variety of leadership positions in the United States, China, Taiwan and India. He is a seasoned board director who has dealt firsthand with many issues related to family businesses. He will start teaching at Cornell's Johnson Graduate School of Business this fall (rustomdesai@gmail.com).

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