Strategic Planning is Imperative to Managing through COVID-19
COVID-19 and the draconian, oftentimes bungled measures taken to mitigate its impact have brought unprecedented challenges to businesses; challenges that they hopefully will never have to face again. While the PPP and Main Street Lending Program have been a lifeline for many, more recent legislative advances signal a return to questionability in Washington, DC. Further meaningful federal assistance for business appears highly unlikely.
State and local actions have varied, with some, like Georgia, quickly removing obstacles to re-opening while others exercise a slower and more cautious approach as private sector struggles persist. How dire is it? Extremely. In fact, a late-April study from SHRM found that 52% of U.S. small business owners “expect to be out of business within six months.” The businesses that survive will be those that develop and execute a sound short– to medium-term strategic plan, led by the CEO and CFO. Below, we examine two valuable tools to support effective strategic planning and how one company has successfully applied them.
“Failing to plan is planning to fail” – Benjamin Franklin
PESTLE Analysis and VUCA
Given the upheaval in the world, a good place for leaders to start would be to apply PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis. This approach will help to define the new macro environment in which the business will operate as well as inform actions and planning in the context of one’s business objectives. More on the respective categories and specific questions that can help to illuminate them can be found here.
Another potentially useful but less well-known paradigm for a suddenly changed world is VUCA (volatile, uncertain, complex and ambiguous). This methodology was developed by the US Army War College in response to the collapse of the USSR in the early 90s and has since been successfully leveraged in business to assess one’s position and actions in certain conditions and situations. A VUCA leadership approach involves a shift in mindset from a relatively linear process with somewhat predictable outcomes to an approach that considers as many alternative scenarios, challenges, and issues as possible.
A Case Study in Adaptation – Luminare
Luminare, Inc. is an early-stage medical software company whose corporate vision is “To alleviate human suffering by improving medical outcomes.” To move towards achieving this vision, the company developed a robotic process automation and decision support system that essentially eliminates death by sepsis in hospitals.
When the COVID pandemic hit, the CDC asked Luminare if the core technology from their sepsis product could be used to develop a COVID self-assessment tool. In response, the company launched a “Manhattan Project” to develop such a tool in approximately 20 days. As an act of corporate benevolence, Luminare provided the tool free of charge to Harris County to support general public screening and ease testing demand as testing capacity was then more limited. 180,000 people have since used the system to self-assess.
Prior to the pandemic, Luminare was expecting a breakout year. With the shutdown of hospitals post-COVID, the market for the company’s sepsis product was totally frozen. The management team (of which the author of this post is a part) reacted by revamping its business plan and financial projections. A 90% drop in bookings forecast would be offset by expense reductions to obviate the impact on the bottom line and cash burn. With the help of an anticipated PPP loan, the company forecast making it through the downturn until hospitals reopened without having to raise additional capital.
The team felt good as it went into a meeting with the Chairman of the Board. They walked through their slides as he listened patiently. Upon confirming they were done, he exploded. Coming out of that meeting, the management team felt as if they had just exited the principal’s office having received corporal punishment for various infractions. It was clear that the group was still locked in a linear mindset. The experienced chairman recognized that would not cut it in a VUCA world. The team had been challenged to do better, much better. The challenge was accepted.
VUCA leadership seeks to obtain strategic competitive advantage by using these four steps:
- Counter Volatility with Vision. Create a compelling vision and values for your people.
- Meet Uncertainty with Understanding.
- React to Complexity with strategic Clarity.
- Fight Ambiguity with Agility.
Combatting COVID fell squarely within the mission and Vision of the company. Luminare found Understanding via PESTLE analysis – realizing that the biggest economic challenge facing the nation was the need to reopen businesses. Businesses could only reopen, however, if effective screening was in place to ensure employees felt safe returning to work and employers were confident that they had mitigated the risk and impact of any potential outbreaks.
Clarity was found in the years of development experience poured into the company’s core technology, which was robust, scalable and HIPAA-compliant, then pairing it with their new COVID-specific functionality to afford Luminare compelling competitive advantages in providing a viable screening tool.
Luminare achieved Agility by pivoting to focus, for now, on the corporate COVID screening market. The company offers these organizations a high-quality, inexpensive, HIPAA-compliant, and cloud-based software solution that can be deployed quickly and with minimal implementation. Their QuickScreenTM pre-launch has garnered an enthusiastic reception from CEOs and HR managers. With a vast addressable market, Luminare’s first mover advantage should be decisive.
Survive and Thrive
Emerging from the COVID-19 with a still viable and hopefully growing business will require leaders to expand their thinking as they determine the right course of action. Effective strategic planning that includes an analysis of multiple scenarios is the first step to ensure survival and a prosperous future in a radically changed world.
Add proven strategic planning experience to your business. Request a free consultation from one of vcfo’s expert advisers today.