The Board’s Role in Moving from Survival to Thrival
The disruption to our personal lives and business world in 2020 is well known. What is less publicized is how boards of directors have addressed what they have faced in a positive, business-building way. It is now clear that if your traditional risk management and business recovery planning efforts did not anticipate major disruption, you were woefully inadequate in preparing for the COVID-19 pandemic. To be sure, some companies’ business models proved to be more readily adaptable to the near-term business consequences of the pandemic (e.g., fast food and drive-through restaurants), and some even accelerated their growth in dramatic fashion (e.g., online shopping, delivery services and video communications) as demand curves and adoption rates shifted by leaps and bounds.
On the boards I serve or advise, as well as others I am aware of, the initial pandemic impact on demand and the ability to operate was a call for immediate action to mitigate the negative impacts and ensure our survival. While many will debate whether the pandemic qualifies as a “Black Swan” event, it was and is a clearly impactful epidemic. By necessity, the leadership and board dialogue in these situations emphasized survival in many cases, with debates focused on furloughs, elimination of marketing spend, slowdown in research and development, mothballing of new programs and time-outs for mergers and acquisitions. The questions posed by boards and executives focused more on protecting the enterprise, playing defense and preserving the status quo, including:
- How do we minimize the damage?
- What is our crisis response?
- Where do we downsize?
- How do we keep what we have?
- What do we need to do to survive?
- Can we survive?
Leaders took an all-hands-on-deck approach and boards were engaged, providing input and oversight of management’s plans and offering problem-solving ideas and insights based on their experiences.
But as the air began to clear with short-term mitigation plans being executed, what did the best boards do? After ensuring a viable survival game plan was being executed, the best boards worked to reframe the situation to look at what learnings and opportunities were available to the business from the stresses being placed on the enterprise — what I call a move to “thrival.” How did they do this? Here are some key approaches and questions that the best boards are using. You might be surprised at some of the answers you find.
Evolve the board leadership tone and perspective from surviving to thriving
Perhaps the most fundamental thing a board can do is reinstill a sense of true confidence and optimism to begin the journey from survival to thrival. This is not false hope or cheerleading but a reframing of where we are, what we have learned, what changing opportunities have emerged and what we believe we could look like in the future. This requires strong board leadership, collaboration and counsel with the CEO, and confidence that the downside is adequately protected. Key thought-provoking questions your board might consider with your executive team include:
- Do we think our business has changed permanently, especially on the need for our products or services? How has it changed and why?
- Have we smartly used our crisis responses to experiment with new offerings, programs or services that could be new lines of business in the future?
- How are we better off today and better prepared for tomorrow given our pandemic experience?
- Now that we have recovery underway, how resilient are we and how do we reimagine the future?
Understand that returning to normal can limit your potential
The desire to return to normal is powerful when you are in survival mode. However, it can also limit your business by defining success as you did in the past and believing that the old normal is viable in the long term. Challenge yourselves with a few simple questions:
- Is a return to the old normal enough?
- What is the new market normal we should really focus on ahead of everyone else?
- How should we look when we reach the other side of the pandemic?
Become more ambidextrous as a board
During crisis mode, it quickly becomes the norm to defend and preserve what we have at all costs, and all too often we can run out of resources to compete and exhaust ourselves. The truth is that you can’t win the game if you never score a point; you must use offense as well as defense. You have to be ambidextrous.
- Depending on your board setup, you might allocate time on your board agendas to special sessions on “offense” opportunities or new plays while the management team still plays defense to ensure survival.
- You might consider a dedicated board committee to invest extra time and focus with management on what the company could do offensively in the near term and look at game-changing opportunities to revamp our business in the post-pandemic era.
- Ask about what new opportunities you see coming out of this time of crisis.
Look at the business from the outside in, not the inside out
A critical part of a board’s reframing is to consciously use a different lens in looking at your capabilities (now or to be developed) and their relevance and value in a new world with demand shifts and competitive disorder. Insights might be developed through asking yourselves:
- What do our customers think about our pandemic response, our reputation and our brand? Are there core strengths to be built upon?
- What has happened with our key external relationships, partnerships and venture? Is there a new way to leverage this experience?
- What have competitors abandoned and why? Does this disruption provide new opportunities?
Reorient the risk discussion from avoidance to include risk acceptance
When pragmatic remediation and survival become the priority, we all obviously want to avoid additional risks. The fact that we remain in existence is a big win in many situations. However, your board should consider shifting to ask:
- What’s the risk of inaction for our future, and what risks we should embrace at this time?
- Are we simply existing just to ultimately watch the world go by?
- How do we crystallize a new go-forward plan where we could leapfrog ahead coming out of the COVID-19 environment?
Do less to do more (and better)
In reviewing your business, a board’s emphasis on simplicity and focus can serve the business well, particularly if resources need to be effectively harnessed.
- Instead of striving for survival and recovery, should we shut down a business or get out of a market so we can focus on a better post-COVID opportunity with a more committed investment?
- Should we accelerate the inevitable in revamping our business so we free up and refocus our resources to be more viable in a whole different way?
- What do we get out of?
- What do we get into?
Become a disruptor
One of the hardest things to do when coping with disruption is to shift gears and ask yourself if you can be the disruptor in your industry — to look at opportunities differently and more aggressively than your competitors are. Ask these questions as an exercise to generate forward-thinking discussion:
- How would we disrupt ourselves?
- Are industry assets and strategic capabilities now available for us to become a disruptor?
- If we can’t or won’t take advantage of an opportunity, what happens if someone else does?
Boards surely have a lot to consider as they address the present pandemic impacts on the businesses they serve. However, we can all agree that thrival is much preferred over survival and that even in these difficult times we might be able to remake our business in the post-pandemic environment. I am confident that by really shifting your board perspective and asking and answering the right challenging questions during your board deliberations, at the least you will crystallize your go-forward plans. In the best cases, you will have taken a Black Swan and transformed it into a healthy Golden Goose.
Don Yee has been CEO or an independent board member of numerous companies, from startups to multibillion-dollar businesses. He currently serves on the boards of Blue Diamond (a 2018 Private Company Board of the Year), Aerometals, Jake’s Finer Foods, Fat Family Restaurant Group, and NACD-Northern California, where he is the founding chair of NACD-Capital Valley and an NACD Board Leadership Fellow. He is also a member of the Private Company Director editorial advisory board.