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What boards must do to survive COVID-19

Aug 27, 2020

How can boards navigate the many obstacles thrown up by COVID-19? David W. Duffy gives five tips on the way boards can future-proof their organisations.

COVID-19 has thrown up incredible challenges for all boards. These include going concern issues, survival, future financing, managing a workforce remotely and staying market-relevant.

Assuming the organisation can make it through COVID-19, one of the key questions to be addressed by the board will be to determine whether the organisation has a sustainable business model and, if not, what to do about it. While all organisations should continuously assess their business models, those in the education, tourism, entertainment, hospitality, sports, fintech, retail and restaurants sectors need to have a sustainable model to get them through COVID-19 and to the future beyond.

Business models will be influenced by several factors, such as:

  • effective leadership;
  • the level of innovation at board and CEO level;
  • the speed at which organisations are able to move online;
  • being able to breakeven while reducing capacity by at least 50%;
  • having the internal skills to enable a smooth transition to a very different working environment; and
  • how fast the competition is responding in comparison.

While it's hard to know what the future will look like, the time to figure out an organisation’s business model will depend on the strength of an organisation's balance sheet. However, even large companies will have a limited timeframe in which to act.

What does this mean for boards?

This is a leadership moment and the board should seek to take control of an organisation’s destiny. Time will be of the essence – organisations do not have the luxury of spending four to six months developing a plan. They must find a way of doing it faster, or risk being overtaken by events, both short term and in the future.

Five things boards can do

  • Initiate a strategic review of the business. Assess whether the current strategy is fit for purpose by seeking evidence from the market. If it is not, initiate the development of a potential new strategy that is sustainable in the current and post-COVID climate. Bear in mind that no one knows what the future will look like. It is therefore essential to consider various scenarios in strategic planning and evolving a model that will work.
  • If there is no future for the business, the board must look at ways to limit diminution in shareholder value by seeking opportunities to sell all or parts of the business, merge with a complementary partner or wind up.
  • If a sustainable business model does emerge from the planning process, the board needs to carry out an evaluation of its skills and competencies in the context of the new strategy to see what new skills and experience will be required.
  • Recognise that digital skills will need upgrading for all as the world and organisations move online, perhaps for good.
  • Induct these new directors and get cracking!

David W Duffy is the Found of the Governance Company and Co-founder and CEO of The Corporate Governance Institute.