Resilient leaders shift organizational mindsets, navigate uncertainties, and invest in building trust in order to develop a recovery playbook that serves as a solid foundation for the post-COVID future.
Whereas organizations used to describe agile change as “fixing the plane while it flies,” the COVID-19 pandemic has rewritten the rules of upheaval in modern times. Those of us leading any organization—from corporations to institutions to our own families—are not fixing the plane in midair, we’re building it. Times like these need leaders who are resilient in the face of such dramatic uncertainties.
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This article is featured in Deloitte Review, issue 27
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The first article in this series described the essential foundations leaders need in order to effectively navigate through the crisis.1 Resilient leaders are defined first by five essential qualities of who they are, and then by what they do across three critical time frames: Respond, Recover, and Thrive.
As we progress into the Recover phase of the crisis, resilient leaders recognize and reinforce critical shifts from a “today” to a “tomorrow” mindset for their teams. They perceive how major COVID-19-related market and societal shifts have caused substantial uncertainties that need to be navigated—and seized as an opportunity to grow and change. Amid these uncertainties, resilient leadership requires even greater followership, which must be nurtured and catalyzed by building greater trust. And resilient leaders start by anticipating what success looks like at the end of recovery—how their business will thrive in the long term—and then guide their teams to develop an outcomes-based set of agile sprints to get there.
Resilience is not a destination; it is a way of being. A “resilient organization” is not one that is simply able to return to where it left off before the crisis. Rather, the truly resilient organization is one that has transformed, having built the attitudes, beliefs, agility, and structures into its DNA that enable it to not just recover to where it was, but catapult forward—quickly.
“The historic challenge for leaders is to manage the crisis while building the future.”
For many of us as leaders in the early days of the COVID-19 crisis, the days started to blend together. In fact, some have said that the COVID-19 world has only three days in the week: yesterday, today, and tomorrow. In that spirit, resilient leaders need to shift the mindset of their teams from “today” to “tomorrow,” which involves several changes that have important implications for the path to recovery. Specifically, as shown in figure 1:
“The recovery from the COVID-19 crisis must lead to a different economy.”
—António Guterres, ninth Secretary-General of the United Nations3
The substantial shifts in society, its institutions, and its individuals during the crisis have introduced major uncertainties into our familiar structures. Assumptions about what is true and stable—for example, the freedom to move unrestricted in free societies—have been upended. These shifts have resulted in macro-level changes in and uncertainties about the underpinnings of business and society that resilient leaders must navigate:
Changes in the social contract. Societal expectations of corporations are being reframed to ensure the viability of all stakeholders. The implicit contract between businesses and their stakeholders has always been based on accepted—and generally unspoken—assumptions about “the way things are.” But the way things are has changed, and that contract is being rewritten. For example, in the implicit “future of work” contract, remote work may be both more productive for the organization and more desirable for employees. Further, there are new considerations around work/life balance, job fluidity, and employee well-being gaining prominence in ways that suggest these factors are reshaping a new standard for how, where, and when we work.
Changes in the roles and rules of institutions. As the crisis unfolds, we find business doing government (such as by instituting employee stay-at-home orders before local authorities) and government doing business (such as by providing material financial support in exchange for equity), while nongovernmental organizations (NGOs) and other agencies are doing both (such as the World Health Organization shipping more than 2 million units of personal protective equipment to 133 countries).4 Concurrently, public-private partnerships (such as the U.S. National Institutes of Health teaming with American and European government agencies and over a dozen biopharmaceutical companies to coordinate an international research response to the pandemic5) herald a new form of cooperation that blurs traditional public/private boundaries, and may presage greater collaboration between government and business.
Unpredictability in financing sources and uses and in capital markets. The pandemic has sent financial shock waves through economies, sectors, governments, financial institutions, treasurer’s offices, restaurants, nonprofits, and purses. The sources and uses of cash and the movement of liquidity during the crisis have been unpredictable. Leaders will need to plan for wide variations in their financial position and needs, all of which are dependent on the disease’s progression, the level of government stimulus, and the pace of economic recovery.6 They will also need to evaluate their ability to handle a potential mounting debt burden and the impact this will have on government and financial institutions.
Permanence of customer behavior changes. The crisis has already had a profound impact on customer behavior. As China’s markets reopened, a segment of consumers who visited physical stores was reluctant to touch anything.7 Consumer research by Nielsen asserts that, after the crisis, people’s daily routines will be altered by a new cautiousness about health,8 suggesting that some shifts in behavior could be long-term. The significant increase in home deliveries has even increased the influence on behavior of an emerging player in the value chain: the independent delivery company. Leaders will need to anticipate whether and how the pandemic has permanently altered behaviors, experiences, expectations, and the role of digital engagement.
Expectations for physical, emotional, financial, and digital safety. Recovery will create anxiety among stakeholders as the post-COVID world takes shape. Understanding the fears that stakeholders are grappling with—and how their expectations for safety and security have changed, perhaps permanently—will be critical for leaders as they seek to restore confidence and chart a new path forward. It remains to be seen how the four “epidemics” researchers have identified—COVID-19 itself, fear of the virus, fear about the economy, and even fear of the ultimate vaccine—will ultimately be resolved.9
“To get the world back on track requires controlling all four horsemen of the COVID-19 apocalypse—which makes the response far more complicated.”
—Joshua Epstein, professor of epidemiology, New York University School of Global Public Health10
Each of these shifts represents a significant area of uncertainty for leaders as the world heads toward a new and yet-to-be-defined equilibrium. Amid the uncharted waters of the COVID-19 crisis, leaders should expect a significant increase in the number of “unknown unknowns”11—or at least a precipitous contraction of confidence in what we once knew to be true. We have gone from a world of widely agreed-upon absolutes to a relative world where our feet are firmly planted in midair.
Yet we also see new business models emerging amid these uncertainties. An e-commerce supplier in Asia-Pacific opened up its logistics capabilities to third parties;12 a major telecom company transitioned a large scale tech transformation to 100 percent virtual delivery;13 the strategic partners of a technology firm stood up a temporary finance function within days to provide critical services despite a pandemic-imposed hiring freeze;14 and dozens of hospitals in China opened online fever clinics via a digital platform to meet the exponential growth in demand for online health consultations.15
During the Recover phase, resilient leaders need to inspire their teams to navigate through these significant COVID-related uncertainties. But great leadership requires even greater followership—and followership is nurtured by trust. Indeed, many leaders have built a significant bank of trust from deftly navigating through the early frenzied unpredictable stages of the crisis.
Although some may think of trust as an abstract, ethereal concept, it is, in fact, a quite tangible foundation that is essential to successfully reaffirming a strong relationship with stakeholders through the recovery. Two attributes of trust are particularly relevant in this regard.
First, trust is a tangible exchange of value. It has no value in isolation, but represents value only in an interaction with others—for example, customers, suppliers, employees, investors, and team members. Likewise, trust is only built in relationships, where a real, genuine give-and-take provides mutual value. Trust is also accretive: Invested wisely and prudently, it grows through repeated affirming experiences; when invested poorly, it rapidly depreciates. Further, research demonstrates that trust also yields results such as economic growth and shareholder value,16 increased innovation,17 greater community stability,18 and better health outcomes.19
Second, trust is actionable, and human, along multiple dimensions. Trust is nurtured and built among stakeholders along four different dimensions: physical, emotional, financial, and digital (figure 2). And trust starts at the human, interpersonal level. COVID-19 has heightened stakeholder sensitivity across these four dimensions, which offers greater opportunities to act to build—or lose—trust. For example, trust may be built among employees when leaders thoughtfully consider how to reengage the workforce in the office (such as by reconfiguring the space to honor social distancing), or when they go to great lengths to preserve as many jobs as possible rather than just preserving profits. Similarly, trust may be built among customers when organizations add extra security measures to protect customer data from cyber threats.
Author Stephen Covey summed up the trust calculus well: “Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.”20 And social impact investor Andy Crouch highlights the interplay between trust and an organization’s recovery efforts: “In order to find our way to the new playbook for the mission and people that have been entrusted to us, we will need to act at every moment in ways that build on, and build up, trust.”21
A recovery of this scale and scope hasn’t been accomplished in most of our lifetimes, and it is complicated by the complexity of simultaneously navigating rapidly changing governmental mandates, fragile supply networks, nervous team members, and cautious customers.
Given the market uncertainties, companies that try to recover by relying on conventional wisdom may discover that the world they thought they knew is no longer there when they arrive. The way in which leaders created plans and playbooks in the past may no longer be relevant, especially if those plans and playbooks focus on either a functional or internal view. Organizations that are successful in the Recover phase must make clear choices about where, how, and when they want to emerge using these four moves:
Imagine, for instance, the retail unit of a major telecom company. The destination at the end of recovery might include reopening 50 percent of its retail stores, shifting 50 percent of its customer renewal activity to being Web-based, and consolidating repair activities into central hubs in metropolitan areas. Its recovery playbook would detail the path to desired outcomes for customers (such as a new, touchless store experience, enhanced online ordering, and the establishment of repair hubs); employees (such as reopening stores and retraining workers for new needed skills); and suppliers (such as replenishing the supply chain to match demand estimates)—with provisions for adjusting those plans as the company learns more about consumer behavior, market needs, and competitive threats.
Defining the destination first and then working backward is an approach that can help leaders create more aggressive and creative plans. Envisioning the leadership team in a position of success is emotionally enabling, and it frees the team from some of the constraints of the present. It also disrupts incremental thinking, which often hampers creativity.
Identifying immediate quick wins to move rapidly and decisively toward the destination is important. Many companies find that the crisis has dissolved bureaucratic boundaries, making decision-making more streamlined and action more responsive to accelerate outcomes.
Leaders will need to ask key strategic questions when defining the destination (for instance, “What is most important in creating advantage: strategy, structure, or size?”). The answers can suggest a variety of tactics to pursue during recovery, such as accelerating implementation of pre-COVID-19 strategic options, scaling pilots in progress, birthing new organic businesses, and even finding deal opportunities among distressed companies and brands.
A recovery lab can be an excellent way for senior leadership teams to explore these strategic questions. The tangible outcome of such a lab is a recovery playbook that has been codesigned (and therefore owned) by the entire senior management team. Beyond the playbook itself, the intangible benefit of doing this is that it encourages the senior team to mesh around a common goal, purpose, and set of outcomes.
Since the recovery project management office (RPMO) needs to be chartered, leaders should also consider whether they have the right team for this phase’s remit. This could be a great time to tilt the composition of the COVID-19 response team to include more operational expertise, recruiting team members with more execution-based skills and expertise. Also, given the added complexity of various stimulus programs and local regulations, the RPMO may have an elevated role in supporting functions such as legal and tax. Reporting within the RPMO should include a balance of internal operating metrics and external indicators that can provide real-time insight into macro recovery indicators. Organizations may need to invest in new data sources in the short term to provide required information about the pace of recovery.
Finally, modeling the financial impact of the recovery playbook is a critical check and balance. Does the plan hold up under various economic scenarios? Does the organization’s projected liquidity enable it to rebuild operations and working capital commensurate with the plan?
We have identified six key macro outcomes that a recovery playbook should address (figure 3), and several core strategic questions for the C-suite to consider in setting scope and direction for the recovery plan.
In the first article of this series, we specified six priority functional areas to be addressed during the Respond phase: Command Center, Workforce and Strategy, Business Continuity and Financing, Supply Chain, Customer Engagement, and Digital Enablement. A functional focus was entirely appropriate in the immediacy of the Respond phase. However, as noted above, the shift from Respond to Recover requires a mindset pivot from an internal, functional view to the outcomes-based view described here.
See the appendix to this article for more detail on what the C-suite should consider when developing the recovery playbook.
Agile delivery principles are essential on the Recover journey. Not only might the destination shift as new issues emerge, but “unknown unknowns” can cause unexpected detours. Running the Recover program in short (such as six-week) sprints enables leadership and the RPMO to monitor the program and make mid-course corrections.
In the Respond phase, organizations around the globe demonstrated a remarkable agility to change business models literally overnight—implementing remote work arrangements, offshoring entire business processes to less-affected geographies, and collaborating with other organizations to redeploy furloughed employees across sectors. In each situation, the urgency of getting results trumped typical bureaucratic orthodoxies. Resilient leaders will harness those experiences to embed rapid, agile decision-making into the culture throughout the Recover phase, doing away with traditionally cautious, silo-based mindsets.
“The shift has happened in days, not months. Businesses may be able to learn how to move faster, acting in more agile ways, as a result.”
—Amy C. Edmondson, Harvard Business School22
One of the core questions many companies are already asking is, “When should we pivot to Recover?” But the boundary between Respond and Recover is blended rather than a bright line. Due to the pervasive, far-reaching medical and economic variables, there is no simple, mathematical answer to the question. Effective sensing and AI mechanisms can be critical inputs to augment what is still a qualitative decision of when, where, and how to restart.
The right time to activate the recovery plan will vary across geographies and sectors, and even among different companies in the same geography and sector. Regions where the infection rate has subsided will be more able to sustain activation than regions where the disease is still spreading. Sectors that have suffered a lesser impact, such as media or technology, may shift to recovery much earlier than heavily affected sectors such as transportation or leisure. And each company will have its own operating nuances: Those with widely dispersed back-office support centers or better visibility up the supply chain, for instance, may be able to begin recovery efforts sooner than those that do not.
Leaders weighing when to pivot to recovery also must consider startup lead times. For instance, a retailer may be able to reopen in days, while some process manufacturing industries may require months for a shuttered plant to be recalibrated to required tolerances.
As organizations emerge from Recover and transition into the Thrive phase, trust, coupled with the five qualities of resilient leadership, serves as a strong foundation on which resilient leaders can build the business models to address the new markets that will emerge.
What might life be like after the crisis passes, and what will it take to thrive in a world remade? In a collaboration between Deloitte US and Salesforce, some of the world's best-known scenario planners developed four distinct scenarios that consider the potential future societal and business impacts of the pandemic (see sidebar, “The world remade by COVID-19: Scenarios for resilient leaders”).23 The team explored possible disease progressions and severity, the level of collaboration within and between countries, the health care system response, the economic consequences, and social cohesion in response to the crisis. The four scenarios provide a view of the future three to five years from now, created through a structured process to stretch leaders’ thinking, challenge conventional wisdom, and drive better decisions today.
The passing storm. The pandemic is managed due to effective responses from governments to contain the virus, but it has lasting repercussions that disproportionately affect small and medium businesses as well as lower- and middle-income individuals and communities.
Good company. Governments around the world struggle to handle the crisis alone, with large companies stepping up as a key part of the solution accompanied by an accelerating trend toward “stakeholder capitalism.”
Sunrise in the east. China and other East Asian nations are more effective in managing the virus and take the reins as primary powers on the world stage.
Lone wolf. A prolonged pandemic period spurs governments to adopt isolationist policies, shorten supply chains, and increase surveillance.
Sociologists have observed that history does not move linearly, but rather in cycles punctuated by a crisis approximately every 80 years.24 Such generational cycles have been found in Old Testament, Homeric, and Islamic cultures, and have been proposed by prophetic archetypes such as Lao-Tzu and Buddha. Researchers have identified seven such cycles in Anglo-American history since the mid-15th century, with the last crisis being World War II … 80 years ago:
Each time, the change came with scant warning … Then sudden sparks ... transformed the public mood, swiftly and permanently. Over the next two decades or so, society convulsed. Emergencies required massive sacrifices from a citizenry that responded by putting community ahead of self. Leaders led, and people trusted them [emphasis added]. As a new social contract was created, people overcame challenges once thought insurmountable—and used the crisis to elevate themselves and their nation to a higher plane of civilization. … [It] is history’s great discontinuity. It ends one epoch and begins another.25
As resilient leaders embarking on recovery, we embrace trust as the essence of resilient leadership. Invest it wisely and it will yield extraordinary returns.