Countries around the world are planning to reopen their economies even though the “new normal” is yet to be defined. With this reality comes new challenges and responsibilities for Board Directors as they navigate governance issues and potential risks ahead for their companies.
Some parts of Asia are ahead of the curve in managing through this crisis, having been part of the earliest COVID infections and shutdowns. Egon Zehnder gathered Chinese executives and US public board members on May 14th to exchange their experiences and share their outlook for the future.
Pragmatism Leads to Optimism
Board members expressed optimism that China’s economy is headed for a rebound, thanks to the pragmatic approach business took in adjusting to pandemic shut downs. Businesses closed in late winter to protect employees and customers but are now starting to resume activity. Exports and some retail sales are on the rise. Even traffic and air pollution is back – a sign that companies shut down for safety are now returning to life. “China is now setting the stage for a global recovery,” said one board member. “China is one of the few economies that will show growth this year.”
Being exposed to the crisis early on allows executives in China to provide leadership and encouragement to their global counterpart, said another board member. “We are working with embassies and governments to help them see the light at the end of the tunnel. It’s challenging, but very rewarding to bring the world together during these uncertain times.”
Contributing to Community Needs
While safety of employees, customers and partners was paramount, businesses also tried to ensure that their actions during the COVID crisis reflected concern for society more broadly as well. One board member described leveraging the company’s existing supply chain to help solve the PPE shortage.
“When we realized there was a shortage in masks – which we learned about from the demands of our own employees – we leveraged our supply chain to source masks around the world,” one CEO said. “There was huge shortage, but once we mastered sourcing masks, we realized we could deliver them much quicker to hospitals and other areas that were in need, and we sourced 30 million masks to hospitals in need. At the beginning, in the US, we were supposed to deliver masks to FEMA for delivery, but then we realized that we could deliver the masks to hospitals directly much quicker. We designed and manufactured 1 million facemasks per week.”
Changing Processes to Elevate Customer and Employee Experience
Some firms were able to creatively use technology to remake key jobs and allow employees to continue serving customers on the front lines. One technology firm discovered its own staff could make use of its ware to adjust to the pandemic shutdown.
“We’ve shifted interactions with our developers to online,” the board member said. “For example, our developer training is digital now, and we can reach more developers this way. We also used to host free training sessions in our stores to help people learn how to use our products.” The online training modules will likely continue even as the economy reopens, she said. Internal training is also going virtual. “Our worldwide developer conference will be held virtually for the first time ever. Because of travel restrictions, colleagues can’t travel to greater China, and this will cut travel expenses, yes, but it will also help us realize that local teams can build and engineer products without having HQ engineers flying in. We can develop and elevate the capabilities of our local teams – this is something we think will also stay after crisis ends.”
Applying Creative Thinking
Business has also applied creative thinking to meet the challenges created by COVID. One travel company launched a special promotion to aid both customer and partners. “Most hotels currently have low occupancy rates, below 10%. Still, high-end demand is strong, which is why we launched the “V Plan”, utilizing the idle inventory of our hotel partners to offer attractive discounts to consumers, in return for locking-in prepaid rates, “ said one executive. “Consumers may enjoy a two night stay at a 5-star property, including breakfast, and access to Michelin-star restaurants at far below the usual rate, while hotels are able to secure revenue to help with cashflow. For us, recovery is above the curve, and throughout the May Day holiday, about volume recovered to approximately 50%, especially among higher-end products. Owing to the consumer-oriented incentives made possible by this new business model, these typically more difficult to sell product types are emerging as an promising segment for growth.”
Acknowledging the Culture Chasm
But while leaders in China are eager to provide guidance to other countries moving through COVID challenges, many acknowledge that there are cultural elements specific to China that may have helped.
In addition to government actions, business in China was quick to recognize the danger and organize into crisis mode, said one board member. “Many US-based colleagues have asked what China did differently to contain the outbreak so successfully. The implementation of strict controls in highly infected areas played a key role – once a cluster was identified, the government responded with effective containment measures to prevent spread, and limit the scope of outbreaks.” Personal habits and customs also played a role, she said. “Look at citizens and local governments – first and foremost – there is a habit of mask wearing in China, to which the majority of citizens are overwhelmingly receptive. Wearing a face mask is simply the norm.”
Even as China has moved into recovery mode, society overall has been willing to maintain vigilance. “Local governments hired thousands of people to conduct manual contact tracing work, who effectively identified, isolated, and tested cases, tracing infections back to the source. Effective contact tracing is critical in preventing the spread of the virus. That’s why the country made testing available to anyone who suspected they might be infected. Since, temperature, symptom and overall health checks, which were at first required at least once a day to return to office work, have become part of the daily routine,” a board member said.
“These precautionary measures have been engrained in peoples’ everyday lives. Whether returning to our residence, entering the office building, or going grocery shopping at the supermarkets, temperature checks and questionnaires are conducted before entry is granted. These thorough preventative measures have instilled confidence in people that even if a second outbreak were to occur, China is well-placed to identify and contain infections at an early stage. We’ve already seen as much in Northeast China, where recent returnees from overseas were diagnosed and isolated. I have great confidence in China’s ability to prevent a second wave.”
Mastering a Trilemma
“Policy makers are now facing a “trilemma”. They must focus on lower infection rates, economic rebound and privacy and freedom. Likely, they will need to give up one to master other two,” one board member said. “There is a great deal of compliance and conformity, sacrificing personal freedom for collective good in Asia. In the US, we value personal freedom and privacy more.”
All societies will need to grapple with the choices as we move forward and face new challenges.