Re-inventing your partnerships in crisis

My first experience with economic crisis dates back to 1998. The snowball of the Asian financial crash hit a very fragile economy of my motherland Russia. It resulted in bankruptcies of banks and small enterprises, drastic disengagement of foreign investors from local business and massive layoffs. 

Every single person was hit by the consequences of an impoverished country – as many, I lost my job, my savings got frozen by the bank and a 350% currency devaluation and 84% inflation rate made our household purchasing power drop beyond underground level. Every day was a fight for survival. Every day urgent decisions had to be made as the environment was changing extremely fast. Every day added a new leadership trait to my personality and to my longer-term success.   There is no better business school to learn agility, pace and strategic thinking then a one’s country default!

During the following 20 years working in global organizations, such experiences became particularly valuable in the context of the 2008 Financial crisis as well as regional turbulences that regularly hit developing markets. Although I cannot give a general recipe for crisis response, some ingredients seem to have a much higher degree of success than others. 

Let’s have a look at what is happening in our business environment today.   Undoubtedly, leaders of most organizations are overwhelmed: either by looking at ways to best survive (e.g. nimble players, non-food CPGs, Airlines, Luxury Industry) or at ways to transform their business and meet an exponential jump in demand (e.g. health and wellness devices, online retail, remote learning or working platforms). In both cases, it takes a lot of courage, problem-solving skills, and humility to stay one step ahead of wave. In both cases they must identify potential threats and opportunities. 

Even before Covid-19 was officially designated a pandemic, leadership teams of large companies were mobilized, and war cabinets set up, anti-crisis strategy and actions defined. Remotely working parents, balancing new responsibilities of home teachers, top chefs, sport coaches and tension mediators, were asked to put another discretionary effort to accelerate the execution of a new game plan. 

As a result, many organizations have already adopted cost cutting measures, challenged supplier contracts and payment terms, reviewed investments and budgets, contacted distribution and other partners to re-negotiate pre-crisis deals. The tension is now spreading across the total value chain, putting the existence of the most vulnerable or nimble players at risk. 

The question is: do such measures enable companies with significant bargain power to survive short term after tsunami? The answer is, yes. Then, would these measures enable these companies to get prepared for new demand patterns and consumers behaviors post lockdowns? The answer is, very unlikely. 

The importance of employee empowerment and engagement during times of disruption is well understood within most mature companies. However, the power and importance of having great business partners is often underestimated. Relying instead mostly on internal capabilities can leave business leaders trying to surf through a 24-meter-high tsunami wave with only one foot on the surfboard!

Instead, we believe that a time of crisis provides opportunities for new value creation. Firstly, with their existing partners. Established business systems and contracts are becoming more fluid in turbulent times, which may imply relevance for new contractual terms and conditions, new ways to do business or simply new ways of accelerating existing opportunities (e.g. e-commerce). The key is to allow for the evolution of terms that are mutually acceptable and do not add an additional risk to the continuity of other party’s business.  Something that large companies tend to forget about.

Secondly, the evolution of the environment surface unexpected needs and opportunities. To capture them requires fresh ideas, solutions and teams. Recently, @Pfizer and @BioNTech (biopharmaceutical company, based in Germany) announced that they will join up forces to manufacture vaccine candidates to prevent COVID-19 infections. @Medtronic shared its ventilation design specifications with over 4000 big and small players to accelerate efforts to increase Global Ventilator Production. 

Admirably, these companies realized that by combining their capabilities they will not only accelerate the development of breakthrough solutions in the short-term, but they are also building a strategic advantage for the future. 

Any business that has ambition to grow post-crisis can leverage both current and future partnerships with its customers, retailers, distributors, suppliers, and innovators by treating them as strategic asset. Here are some simple steps: 

1)    Put in place war cabinet members who are responsible for building a coalition with external partners 

2)    Select partners who share your strategic goals and motivation, being mindful that working exclusively with similar-sized companies is not necessarily an advantage. Fast, disruptive and agile solutions are often required and can be found by working with nimble innovation players.  

3)    Align internally WHY your relationship with a partner is important for the longer game and ensure the same vision of success is shared 

4)    Engage with partners in exploration and co-creation of WHAT you can do differently to support each other, focusing on:

a.    New ways to improve competitive advantage

b.    Increased agility and flexibility

c.     Acceleration of innovative solutions

d.    Testing alternative GTM approaches

e.    Implementation of productivity/cashflow measures

f.      Development of disruptive business models

5)    Define HOW you will mobilise your respective organizations to execute the plan with agile sprints. You might be required to adapt your standard processes to accelerate decision and go-to-market protocols. Insightfully, even the FDA adopted an emergency protocol to reduce the standard timeline required for new tests approval from 18 to 3 months. If they did it, your business definitely can! 

Unprecedented events are often a powerful engine for transformation. They push leaders to clean up obsolete models, behaviours and practices and build better ones. Today, time has come to re-invent partnerships and make their benefits stronger and bolder.  

In response to Covid-19, @Innopearl is mobilised to help companies identify and accelerate the introduction of breakthrough solutions through the collaborative work with external innovation partners. 

Olga Guerous, CEO at @Innopearl