Automotive CEOs: Plan your Post COVID-19 Revival Strategy
You look at any interview, article or webinar today about the COVID-19 crisis in the Automotive industry, and they are all focused on the dooms day forecast which everyone knows and the same survival actions, which all of us have learnt by heart by now. I agree that these are needed as an immediate response to such a mammoth crisis. But time and again such huge calamities have shown us that those companies where the leadership starts planning about REVIVAL & REBOUND actions even during this SURVIVAL mode, succeed and thrive well in the long term after the crisis is eventually over.
I found some rare gems of advice that are truly addressing this vital aspect, with really useful inputs for owners & C-level leaders in the Automotive & Engineering industries. Let’s take a look at them.
Systemic Risks Need Systemic Response
Here is my key takeaway from a fascinating Forbes article- truly a compelling read. Company CEO’s and the entire C-suite will be battling the impact of the COVID-19 pandemic on multiple fronts for months to come. But once things start to come under control, what’s next? Where’s the path to business renewal and growth and how is a company’s business strategy impacted by this crisis?
The key to business strategy coming out of the crisis is to understand the “systemic risk” which created this crisis. Systemic risk is about threats that can jeopardize an entire complex system or systems. While many small, medium and large businesses may not survive, every survivor will need to adapt. The future of business is not just about resiliency, i.e. snapping back into form, but also about renewal and adapting to the paradigm-shifting changes that are already unfolding. The systemic risk that got us into this mess will change to systemic change that will lead us all out. We can do better on many fronts, and now we have to.
Here’s the CEO cheat sheet for business strategy after COVID-19:
- Understand systemic risk and how it caused the pandemic. Systemic risk is about how a threat can jeopardize an entire system or systems. For example, automotive companies have seen the systemic threat of supply chain risk significantly impact their entire business systems.
- Anticipate the systemic changes being driven by COVID-19 and the events and opportunities that will change entire systems, including your business system. Each company leader has to assess his own situation. For instance, the scare of social closeness & crowded places is likely to be bothering us perhaps for months or more as a major systemic change. Entire Automotive operations process may change and get highly digitised as never before with more emphasis on Digital marketing, eCommerce platforms, AI dominated Automated plants, etc.
- Focus on how things work together as this is what drives systemic risk and changes in complex systems.
- Focus first on the forces of change that have high levels of certainty and predictability.
- Don’t ignore small, or micro-level changes. They often have an outsized impact on complex.
These thoughts need a lot of pondering, especially by the leaders in the mid-size automotive companies.
Do not shy away from asking WHAT IF questions
It is a brilliant instigation for strategic thinking as suggested by Accenture. Leaders of automotive supplier companies should think through the following “What if” questions while preparing the post COVID-19 revival strategy:
- What if the lockdown of the operations of their customers lasted for another 4 to 6 months?
- What if demand patterns post COVID-19 changed significantly and never went back to ‘normal’, or took 24 to 36 months more?
- What if Automotive B2B customers reduced drastically all investments in new projects in the months post-crisis or will it come to significantly delayed demand for new projects? Will supply issues prevent many Automotive Suppliers to rapidly fulfill a demand pickup post-crisis?
- What if markets in North America or in Europe failed to recover while Asia went back to growth?
Only those companies will be revived, revitalised and prepared to reap the rewards in the post COVID-19 world, who develop goal-oriented plans to counter these challenges as well strike the hammer when the iron is hot, i.e. make good on their plans when the time is right. The scare of crowded places may drastically reduce usage of airlines or any public transport for that matter. There can be a significant surge in demand for vehicles as personal safe transport. But if this is really going to happen, will vehicle makers and their different tiers of supply chain be ready for it, considering the massive scale down actions everyone is focused on right now. The C-Level guys certainly need to think about this deeply.
FOCUS on the bigger picture
This mantra is universally true but more so while strategising for post-crisis revival. In a time of global uncertainty, it’s easy to lose sight of the big picture. This is particularly true when the memories of the last recession are still relatively fresh. But it’s worth recognizing just how different the current situation is from where we were a decade ago in the last crisis. The financial system is more robust and the consumers are better prepared. It gives every hope for a strong revival, although it may be delayed. Recent revival of Auto sales in China including that in Wuhan, the very epicenter of the crisis trigger, indicates this.
I’m in agreement with what PwC point out, that in times such as these, an important thing to brainstorm is what makes your company different from the others. In order to thrive in the post COVID-19 world, it is essential for companies to think about how they can differentiate themselves from the pack. The hardships we go through currently may result in the transformation of the automotive industry in the future and present more opportunities for further development. What companies require is Focus!
I found these three advisories of wisdom highly positive & insightful for automotive companies’ leadership team for planning for that most needed set of strategies & actions for REVIVAL post COVID-19 crisis.
Would love to hear about your experience, thoughts & comments on these.