The ‘new normal’ post COVID-19. Are you ready?
While the economy has lurched through the past six months of COVID-19 and Victoria’s woes continue to apply a handbrake to recovery for the rest of the country, Cannings Purple’s National Director of Strategy, Jenn Morris advises the focus for leaders must now shift from responding to the crisis to planning for the new normal.
Speaking at a recent client event, Ms. Morris stressed that this planning needs to take into account the likelihood of repeat outbreaks.
“The potential for COVID-19 to resurface means we need to be prepared for federal and state government decisions in response – not all of which will be universally popular, however necessary they might be to get the economy back on a growth trajectory beyond the pandemic,” she said.
“COVID-19 has had dire and tragic consequences, but has also been a catalyst for change; in some cases long overdue, and in others the outcome of rethinking in light of continuing uncertainty.”
The fundamental considerations in planning for the new normal were the need for sustainable growth strategies beyond any immediate stimulus measures; the emergence of a new style of leadership to manage change as the new normal; the death of complacency and the concept of a perpetual crisis response; and heightened focus on environmental and social governance (ESG).
Ms. Morris said that while various government stimulus initiatives had provided essential lifelines to many businesses and individuals, through what is hoped to have been the worst months of the pandemic, these measures had a use-by date.
“We must look for a more fundamental approach to underpin economic growth, beyond the short-term sugar hit for the economy,” she said.
“Part of this should involve effective tax reform, but tax reform that stimulates investment rather than stifles it.
“Now is particularly not the time to introduce a tax on the mining industry (nor any other specific targeted tax response to industry). The mining industry underpins Australia’s economic recovery and it is not in the best interests of that recovery nor job creation, if investment in the pipeline of major resource projects is stifled due to tax reform.
“Rather, the Government needs to minimise sovereign risk, real or perceived, and ensure policy optimises the sector’s contribution. It (Government) needs to remove regulatory barriers and ensure Australia’s taxation system is competitive compared to other global mining jurisdictions.”
While economic conditions remained uncertain, Boards should not allow the companies they governed to be paralysed by fear of the unknown, and the related complexity of assessing risk.
“Growth opportunities invariably and inherently contain an element of risk. Delivering on those opportunities requires decisiveness, while managing risk as part of good business practice, and against a backdrop of enabling policy set by Government,” she said.
Ms. Morris said COVID-19 had highlighted the qualities of the best leaders – those who demonstrated a mix of decisiveness, compassion, clear communication, and honesty with the facts, rather than using the crisis as an opportunity to play politics.
“They have excelled, and so too have their countries, including Australia, New Zealand, and Germany to name a few. Such leadership should be a blueprint moving forward, COVID or no COVID,” she said.
“COVID-19 has also amplified underlying factors that separate the best businesses from the rest. Those that adapted and applied smarter use of technology, asset-lite business models, global focus, and systemisation are ahead of the curve, further widening the gap between those directed by leaders who embrace change, compared to those clinging to tradition.
“We need an environment which enables the agile, as opposed to the laggards who complain how hard it is, resist change and wait for handouts.
“While the debate on what represents best practice post COVID-19 will be ongoing, no one is saying ‘let’s go back to normal’. By implication, this means we also need to embrace a different approach, with different leaders.”
The continuous crisis
While COVID-19 had put many businesses into crisis mode, many crises also brought opportunity.
A former elite sportswoman coached by Ric Charlesworth, Ms Morris told guests she had learned to analyse the numbers behind the results to find answers to performance. Her coaching, she said, instilled an unrelenting pursuit of improvement.
“Regardless of your position in the race, you need to remain deeply dissatisfied with your performance, because there is always more you could do. In the business context, even if you are prospering, now is the time to put everything on table for review,” she said.
“The best sporting teams do this all the time, especially when they are at the top – developing a crisis approach when there isn’t a crisis.”
For some businesses this will be a radical approach – however, regardless of whether the crisis was real or manufactured, using this time to find efficiencies, make difficult decisions, reduce costs, and take calculated risks would deliver long-term benefits.
Before COVID-19 diverted directors’ attention, ESG was the most discussed topic in global boardrooms. According to Ms. Morris it still loomed large on the radar.
“Big institutional investors and super funds have been hot on ESG for a while, but now with more mum and dad investors out there, climate targets especially will gain importance,” she said.
“In particular, Scope 3 emissions (the indirect upstream and downstream emissions in the value chain of the reporting company), are front and centre.
“Finding renewable energy that is sustainable, cost efficient and good for the environment remains a high-order priority.”
Jenn Morris OAM is Cannings Purple’s National Director of Strategy and a Non-Executive Director of Fortescue Metals Group. She is an expert in strategic leadership, business continuity and crisis response. Contact Jenn