The COVID-19 crisis has been a wake-up call for many businesses – not just those that have struggled the hardest. For many other companies that have weathered the storm fairly well or have even prospered, the events of the last few months may have thrown into relief strategic shortcomings that need to be addressed with or without the crisis. In this post I argue that the wake-up call in Switzerland has been relatively gentle. Smart operators will be seizing the opportunity to fast-forward to future scenarios and get their business strategically ship-shape for crises to come – crises that might not be so kind.
First of all I should explain why, with all the reports of human suffering and ailing businesses amid the COVID-19 pandemic, I describe the present wake-up call in this country as ‘gentle’. It’s certainly true that many Swiss companies have genuinely struggled – despite the support that has been forthcoming − and continue to do so. Speaking as a deals specialist, my message to these businesses would be to remember that a deal or restructuring is an option, and not necessarily an admission of defeat. In fact, depending on how you structure the deal, it can be a very good option. If you need cash to survive, you obviously have to do something quick. Selling a non-core asset, for example, can make a lot of sense under the circumstances. If you opt for this course, one of the biggest challenges is to avoid leaving too much value on the table because your buyer senses just how much you need the cash. It’s good to act with urgency, but not to lose your cool.
Time to breathe and reflect
But not all businesses are suffering the effects of the crisis in equal measure. The main reason I describe the wake-up call in Switzerland as ‘gentle’ is that in key respects, businesses in this country are in a privileged position. First, plenty of unbureaucratic support was rapidly made available early on in the COVID-19 pandemic. Second, compared with most other places, many businesses and consumers in this country have healthy cash reserves. Without government support and deep pockets, the Swiss economy would probably now be in real trouble.
As it is, many companies now have time to breathe and reflect on the lessons of the crisis. One of the most striking features of the last few months is the way developments in our lives and businesses have been ‘fast-forwarded’. In the space of less than a year we’ve been catapulted forward to see what the world will look like in five or ten years’ time. A good example is homeworking and the almost instant adoption of digital technologies and tools that would have been unthinkable even in February 2020.
The flip side of the coin is that the crisis has thrown into sharp relief major shortcomings, for example in manufacturing and supply chain strategy. This has been a challenge, but also a great opportunity to learn quickly, see where the megatrends are headed, and adapt your strategy – not just to avoid potential pitfalls in the future, but also to anticipate and capitalise on the radical changes that are taking place. In other words, this might be a very good time to consider strategic acquisitions to prepare your business for success in a rapidly transforming world.
No time for complacency
My hope is that Swiss businesses will heed the wake-up call and not simply switch on the snooze function. What seems to be a comfortable situation is actually quite dangerous, because it masks the underlying realities. Companies should be using this time to consider whether they’re strategically fit. Are we competitive? Are our costs in shape, and are we harnessing automation as fully as we could be? Here it pays to take a look abroad. Are we prepared for survival in a wider market in the long run? With the costs of production in this country so much higher than, for example, in Germany, how long will companies with commodity products be able to continue competing?
Viewing strategy through three lenses
A useful basis for assessing where you’re really at in strategic terms is to look at your business through three lenses: your end market, your products and services, and your business model. By understanding each of these components you can see more clearly what area might need to be tweaked.
For example, if you’re in an end-market such as hotel and catering, chances are you’re going to be feeling the impact at the moment, however good your products and services are. But by adapting your business model you might be able to become more resilient in the future. By the same token, you might be in a fundamentally good market with a sub-optimum product or a business model that isn’t sufficiently agile, automated or geared to remote working. Depending on the field you operate in, a model such as pay-per-use or software as a service, or new sales channels, could be more promising approaches for you. This is a good time to be looking at your business through these three lenses, fast-forwarding to the world we’re now able to see more clearly thanks to COVID-19, and working out how you can adapt.
To sum up: respond to COVID-19, but go further
At this point, unless you’re in an acute struggle for survival, it’s a good idea to make the best of this “fast-forward” moment. This might be a great time to reassess your strategic positioning and adapt your business accordingly. And the current situation might present ideal opportunities for the acquisitions you need to make the necessary changes.