Change happens. The market is in constant motion as competitors leapfrog one another to chase innovation and market share. This year, companies faced dramatic changes as markets across the world were disrupted by COVID-19. The organization-rattling effects of the pandemic are still reshaping how companies do business. And it’s expected that businesses will continue to feel those effects well after vaccines are administered and people and businesses slowly return to normalcy.
Over the year, we interviewed several CEOs who talked about how their organizations make systemwide changes in the face of immense challenges. Companies that have survived crises in the past share how they take what they learned and apply it in order to galvanize against the next crisis, whatever form that might take. We also learned from leaders about their communication philosophies, how they choose to gather and share information from across the company and how they turn what they learn into actions that lead to improvements.
Take, for example, Jim Smith, CEO of Elford Inc. He says the 110-year-old company had great momentum in every one of its customer segments headed into this year, and that wasn’t just by chance.
“That had evolved over a number of years as we’ve developed our strategy, because we have to plan for the long term,” Smith says. “There are all kinds of things that can disrupt business. So, we’re always listening and focused on our customers’ needs.”
Elford is taking that approach in part because lessons from past crises have taught the company to worry only about what it can control.
“There are a lot of things in the economy as tax laws change,” says Mike Fitzpatrick, president at Elford. “What’s the impact of the presidential election, what’s the impact of interest rates? And while we certainly follow and study those things and want to know how they’re going to impact our business and our customers’ decision-making, at the end of the day, we found a lot more success focusing on what we can control, and our customers and the attitude and intensity and effort we bring to the table every day — how we collaborate, how we communicate, how many customers we have, how many different types of markets we compete in.”
While the company experienced some lean years through the recession, it ultimately walked away with important lessons on how to conduct itself through uncertainty, sharpened its approach to strategic planning and brought its focus to the long view.
Like Elford Inc., Kimball Midwest— a company that’s also standing on the shoulders of a history of more than 100 years — is accustomed to learning and applying, lessons from a crisis.
CEO Pat McCurdy says when they’re coming out of a challenging environment — this pandemic or the Great Recession before it — the company would do a self-examination with a group of its senior leadership and really try to determine where it could adjust and adapt.
“So, when we’re in this COVID-19, it’s not the right time to figure out all the things we can do, but there’s no way you don’t learn from each incident and you don’t get better,” he says. “I think that it’s an opportunity to increase awareness of almost all aspects of the company. Part of our revisions when sales were impacted, we went through every department’s budget — there are over 40 of them — line by line, and we cut out things that we felt were unnecessary. Then, as you go forward, you might find out that there was some fluff in there, and you improve as far as the profitability long term going forward.”
Lean on the team
When facing a market impacted by COVID, Donatos Pizza President and CEO Tom Krouse,acted in a similar way to McCurdy at Kimball. Donatos’ executive team, in order to plan the right value tactics, spent time reviewing the last recession. What did the balance sheet look like? What was the cash position? How did sales and profits trend? What worked? What didn’t?
“There are a lot of ways to do value tactics,” Krouse says. “Some are damaging to long-term profits and some help you get through difficult times by offering the right customers the right kind of value.”
In a crisis with no easy answers, Krouse says it’s important to not be paralyzed to the point where you’re pulling back to try to figure out the perfect solution. You can’t be so shocked by the changes, issues and questions to be answered that you go into a hole to figure things out.
“That gap in time only creates fear and anxiety among people who already have fear and anxiety,” Krouse says. “So, if you’re faced with a situation that causes fear, talk to the organization — even if the answer is, ‘I don’t know the answer.’”
“No comment” is never a good idea, so lean into the situation. Don’t let too much time pass in silence.
“You don’t have to have all the answers,” Krouse says. “But just being there brings comfort, and comfort in a lot of cases creates a sense of connection. That’s what you need in dark times like this. That’s when we think more clearly. That’s when we act more clearly.”
For Ohio Transmission Corp. President and CEO Phil Derrow, his focus during this pandemic-disrupted market was to continue to empower his team. He let them lead the charge because he’s never thought it healthy to be the sole authority.
“I don’t have all the answers,” Derrow says. “I don’t have all the best ideas — not even close to it. I’m not as close to our customers as our salespeople and service people are. I’m not as close to our associates as our managers and leadership team are.”
The pandemic has driven home how important it is to stay on top of what’s happening in the business with real-time information and quick decisions. That information doesn’t necessarily come from analytics, but rather, people.
“This crisis has really brought out the strength in our model, where our leadership team is already close to people,” Derrow says. “So having to take additional measures to remain close when the model changes wasn’t hard because it wasn’t any different philosophically than what we were doing.”
The executive team has channels already in place for feedback, which in turn aids their ability to make decisions and execute. Decentralization and empowering those closest to the challenge, then, paid off.
Lessons from within
Ron Voigt, CEO of Hyperion Materials & Technologies — interviewed before the pandemic was a concern — wants there to be an upside for people within a company to be transparent.
“Companies and people ought to be all about understanding what’s wrong and use that to help frame what they’re going to go work on to make a situation right,” Voigt says.
So he champions what he calls embracing the red to help Hyperion have a clear focus, recognize problems and challenges, take responsibility for those challenges or problems, and then work hard individually and as teams to resolve those issues.
“We want to be a company where, when a metric is red, when we’re behind the level of expectation that we’ve set for ourselves, people think about red as an opportunity to embrace and to improve, and I think that message has resonated,” Voigt says. “People across the organization have shown a strong willingness to adopt that or to operate in a way that is consistent with that philosophy, and that’s allowed us to drive some great improvements.”
Making tangible improvements also should be mutually supportive; it’s not a choice between today’s issues and tomorrow’s improvement, Voigt says.
“Our improvements are focused on both helping today, as well as helping us get to where we want to go in the future,” he says.
Of course, as with any continuous improvement process, when you’re trying to improve, you’re going to get three things right and one or two things wrong, but that’s not a reason to stop trying. Instead, when things don’t go right, the most important thing is how you react to that information — even when it’s information you don’t like.
“It’s more important to react to that in the right way and focus on getting better, than it is to consume yourself with thinking about all of the reasons why something went wrong or to self-loathe,” Voigt says. “Rapid improvement cycles are how you build a sustainable competitive advantage. It’s not a matter of getting to the perfect solution.”
Helping to ensure an organization is aligned across its purpose, mission, values, visions and strategies is something Dr. Linda Lehmkuhl, CEO of MedVet, enjoys working on.
“You have to work more at it,” Lehmkuhl says. “You have to be aware that culture is a factor and that you’re driving it, or not, because it’s happening, regardless.”
Lehmkuhl realized during a three-month strategic planning process,that the company needed to focus on its employees first; they are the ones who deliver the MedVet experience that leads to healthy growth.
“We’re all about serving,” she says. “We want every pet to get the best outcome. We want every client to get the best experience. We want every referral partner to have a trusted place where they can send pets. But you get so focused on what you do that you aren’t focused on who does it.”
Lehmkuhl says your team needs to be supported, given a voice and developed into leaders.
It’s also important to sometimes look outside your organization to find answers.
“Some things just hit you at the right time, but you’ve got to be out there and be exposed to them,” Lehmkuhl says. “Widen your box a little bit.”