As the COVID-19 crisis spreads to new epicenters in Europe and the U.S., companies are scrambling to mobilize responses. Each local situation is different, but we believe there are opportunities for companies to learn from others in regions that are weeks ahead in responding to the epidemic.  Here are 12 early lessons learned from companies in China.

1. Look ahead and constantly reframe your efforts. 

By definition, crises have a highly dynamic trajectory. Initial ignorance gives way to discovery and sense-making, then crisis planning and response, recovery strategy, post-recovery strategy, and finally, reflection and learning. This process must be fast — and therefore CEO-led — to avoid getting stuck in complex internal coordination processes and being slow to react to changing circumstances. In China, some of the fastest-recovering companies proactively looked ahead and anticipated such shifts. 

2. Use an adaptive, bottom-up approach to complement top-down efforts.

Rapid, coordinated responses require top-down leadership. But adapting to unpredictable change, with distinct dynamics in different communities, also requires decentralized initiative-taking. Some Chinese companies effectively balanced the two approaches, setting a top-down framework within which employees innovated.

3. Proactively create clarity and security for employees.

In a crisis, it’s hard to find clarity. Employees will need to adopt new ways of working, but they won’t be able to do so unless they have clear, consistent information and overall direction. Proactive guidance and support for employees helps everyone.

4. Reallocate labor flexibly to different activities.

In hard-hit businesses, such as restaurants, employees were unable to carry on their regular activities. Rather than furloughs or layoffs, some creative Chinese enterprises actively reallocated employees to new and valuable activities, like recovery planning, or even loaned them to other companies.

5. Shift your sales channel mix.

Person-to-person and bricks-and-mortar retail were severely restricted in affected regions. Agile Chinese enterprises rapidly redeployed sales efforts to new channels both in B2C and B2B enterprises.

For example, cosmetics company Lin Qingxuan was forced to close 40% of its stores during the crisis. However, the company redeployed its 100+ beauty advisors from those stores to become online influencers who leveraged digital tools, such as WeChat, to engage customers virtually and drive online sales.

6. Use social media to coordinate employees and partners.

With remote working and a new set of complex coordination challenges, many Chinese companies took to social media platforms, such as WeChat, to coordinate employees and partners.

7. Prepare for a faster recovery than you expect.

Only six weeks after the initial outbreak, China appears to be in the early stages of recovery. While the depth and duration of the economic impact in other countries is impossible to forecast, China’s experience points to a scenario that companies should prepare for. Considering the time it takes to formulate, disseminate, and apply new policies in large companies, recovery planning needs to start while you’re still reacting to the crisis.

8. Expect different recovery speeds for different sectors.

Unsurprisingly, sectors and product groups recover at different speeds, thus requiring distinct approaches. This means companies need to calibrate their approach by business — and large companies need to calibrate their approach by division. For example, a large global food & beverage conglomerate used the crisis to accelerate the long-term shifts in its product mix in China (the company’s second largest market worldwide), including increasing its focus on health-relevant products, imported products, and on online sales channels.

9. Look for opportunity amid adversity.

While the crisis in China impacted all sectors to some extent, at a more granular level, demand increased in many specific areas. These include B2C e-commerce (especially door-to-door models), B2B e-commerce, remote meeting services, social media, hygiene products, health insurance, and other product groups. Some Chinese players mobilized rapidly to address these needs.

10. Adapt your recovery strategy by location.

Regional public health policies, disease dynamics, and administrative guidance will create recovery dynamics that vary by location — likely not following the geographical structure of companies. This requires a flexible approach.

11. Rapidly innovate around new needs.

Beyond rebalancing your product portfolio, new customer needs also create opportunities for innovation. When threatened by crisis, many companies will be focused on defensive moves, but some Chinese companies boldly innovated around emerging opportunities.

The insurance industry is notoriously conservative, but in response to the crisis, Ant Financial added free coronavirus-related coverage to its products. The action served a customer need, while promoting awareness of the company’s online offerings and improving customer loyalty. It expects a 30% increase in health insurance income in February, as compared to the previous month.

12. Spot new consumption habits being formed.

Some shifts will likely persist beyond the crisis, and many sectors will reemerge to new market realities in China and elsewhere. Indeed, the SARS crisis is often credited with accelerating the adoption of e-commerce in China. It is too early to say for sure which new habits will stick in the long run, but some strong possibilities include a leap from offline to online education, a transformation in health care delivery, and an increase in B2B digital channels.

Undoubtedly more new lessons will emerge from China, Korea, Italy, and eventually the U.S. Companies that adopt a high-frequency approach to learning, codifying and applying lessons from other regions will be better able to protect their employees and business. Indeed, in a fast changing, volatile world, such an adaptive approach should be applied more broadly beyond crisis management.

Source: Harvard Business Review