In these unprecedented times when C-level executives and business leaders are dealing with numerous crises where should the successful CEO be focusing their time?
The simple answer is that there is no simple answer—every company is different; every industry is different, and every situation is different. Having said that, here are some suggestions from my 25 years in helping companies maximize their potential in the short-, medium- and long-term.
Short Term
The short-term focus for every business should be liquidity, not profitability. The goal is to manage cash tightly and effectively. There is an old adage “businesses go under because they run out of cash not because they run out of profit.” Hence, it is key to focus on cash generating activities such as working capital management, cost reduction opportunities and the sale of easily sellable surplus assets. Also, it is important to tightly manage and control liquidity by monitoring short-term cash flows. Now is a great time to opportunistically review financing needs, especially in this ultra-low interest rate environment where the cost of debt is significantly below the cost of capital.
The overall objective should be to maximize cash in bank, though it might come at the detriment of short-term profitability. For example, if a supplier is offering a 10% discount for settling their invoices early, it would be preferable not to avail this offer in order to preserve cash.
Medium Term
Once liquidity is under control or at least understood, the first thing CEOs should do is identify and direct their focus to the core business. Non-core businesses and assets should either be disposed of or potentially closed.
Secondly, the core focus should be on managing and evolving the business to the “new normal.” Many businesses have experienced that their historical routes to market and ways that they interact with their customers have changed dramatically. Those who assume that “the old ways are the best ways” are potentially doomed to fail.
What customers want and by what means are constantly evolving, therefore CEOs need to pivot their businesses to best deliver this. This will mean more of a focus on digitization within organizations, both in terms of internal processes and interacting with customers. It will also mean adding flexibility into businesses, both in terms of operating model and cost base.
However, let’s not forget that in adversity there are always winners and losers—for many businesses now could be the perfect time to expand and invest. It’s about smart allocation of capital.
Long Term
In the long term, CEOs should remain focused on the core values of the brand and continue to assess and evolve the business model so that the customer experience is successfully met.
Investment in growth segments should be a focus, whether it’s new products, services, geographies or in core domestic markets through share gain or M&A.
Throughout all the above, CEOs should ensure timely and accurate communication with all stakeholders of the business—this is always important but becomes vital during times of adversity. Having your brand associated with positive change, respectful communication and putting health and wellbeing ahead of profits will no doubt enhance your brand reputation and value.
Overall, these are challenging times for CEOs and leaders, but this is also where the strong survive and the best leaders should thrive, carry the burden and accept the challenge to drive change for good.
