Posted: 15 Mar, 2021
How leaders should adapt in a continued uncertain market environment
On 3rd March, TMA NextGen was pleased to welcome AlixPartners, who supported this webinar with some insightful advice on how business leaders can transition their businesses from survival-mode to refocusing on long-term value creation.
AlixPartners Managing Directors Jeff Drake and Glen Fietta shared their experiences and insights on how companies can best navigate an uncertain market environment and look forward to post-pandemic recovery.
Thank you to Arjun Malhota, President of TMA UK NextGen London and Jessica Liew of AlixPartners for organising and moderating the webinar. If you would like to watch the recording, you can do so here.
Jeff began the webinar by reflecting on how leaders reacted to protect their businesses from the disruption brought about by Covid-19. From March 2020, he said that he was pleasantly surprised by the speed at which companies took action. While no one knew quite how long the pandemic would last, in general, businesses reacted quickly to reduce costs, maximise liquidity, re-organise operations and focus on short-term forecasting. But while this was the appropriate reaction in the Spring of last year, now that we are one year on, he said the focus needs to change.
Glen continued, saying that while businesses quite rightly have been focused on the short-term, they should be starting to switch back to thinking about the long-term. This is challenging to do so because there is still a lot of uncertainty and management teams are exhausted from all the tactical actions they have had to take, but Glen is hoping to see stability improve throughout 2021 and thinks we will start to find ‘new normal’ demand levels and recovered consumer confidence from Q2/3 onwards. This is when we should have enough visibility to plan and start to execute longer term transformation actions.
But while there is still much uncertainty, Jeff said that leaders are finding it hard to ascertain what the lasting impacts will be to their businesses. In some cases, it is quite clear. Restaurants can quite confidently assume that their loss of business due to forced closure is a temporary impact, whereas airlines are planning for the lasting impact of dramatically reduced business travel. But in the middle, there is much uncertainty. Will leisure travel recover to pre-pandemic levels? Will demand for oil bounce back?
Planning under the shadow of all this uncertainty is extremely difficult. To provide some clarity and be able to plan for multiple scenarios, AlixPartners has been utilising a scenario-based planning approach with its clients. When planning for multiple scenarios, businesses must first develop a robust business plan, then assess key risks and opportunities, then quantify financial implications and, finally, identify what actions they can take to ‘close the gap’. By taking this methodical approach to planning, businesses can create a little bit more certainty and stability for their future.
When asked by an audience member for some advice for businesses looking to create their own scenario plans, Jeff said that the key to scenario planning is to be realistic and honest about forecasts. Businesses need to plan for the worst case, the best case, and everything in between so they can be prepared for every scenario, not just the outcome they’re hoping for. Hope, as Jeff said, is not a strategy.
Responding to a question from the audience on what management should be prioritising in 2021, Glen said that it will very much depend on each business and the sector they operate in. If the business is affected by temporary measures, such as a restaurant, they may just need to buy time until they can reopen, but where rebound is less certain, maintaining support from stakeholders and focusing on liquidity is important. But for every business, he said it’s important to test forecasts, ascertain what funding is needed under alternative scenarios and focus on a sustainable balance sheet solution.
It’s also important, Glen said, that businesses don’t just wait for the market to return to its pre-pandemic state. Anyone who thinks this will happen will be in for a disappointment. What is needed is for leaders to adjust and transform their business model to adapt to the way we are consuming now.
Thank you to everyone who joined this insightful webinar, and to the panellists for giving up their valuable time.
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