Seda Röder - How Can Corporate Directors Become More Resilient Before The Next Disruptive Event?

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Jul 07, 2020
by Seda Röder
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Seda Röder - How Can Corporate Directors Become More Resilient Before The Next Disruptive Event?

In the latest installment of the Salzburg Questions for Corporate Governance series, Seda Röder asks directors to consider corporate liquidity and flexibility in times of disruptive crisis Seda Röder at Salzburg Global Seminar

This article is part of the series, the Salzburg Questions for Corporate Governance by the Salzburg Global Corporate Governance Forum

Climate change, supply chain interruption, political and economic conflicts, cyber-attacks, and disruptive technological events were the top five risks discussed in boardrooms until the beginning of 2020. Although there has been scientific evidence since the mid-90s outlining an upward trend around the global spread of infectious diseases, only a handful of leaders equipped their organizations with the necessary action plans to prevent the worst from happening.

Unfortunately, science reiterates “black swan-like” events will occur more frequently in the future due to our interconnected lifestyle. Therefore, our organizations and communities need to prepare better. There are two crucially important areas for business resilience that should be made a priority on every director’s crisis response agenda before the next emergency hits.

Adequate Cash and Liquidity Management

The COVID-19 pandemic has unveiled the fragility of our economic systems. As the crisis continues to unfold, the number one reason why many businesses are severely struggling is their inadequate emphasis on cash and liquidity management.

It is no surprise companies with low cash reserves and profitability issues are the most vulnerable. However, even well-established businesses face immense challenges around liquidity to support their daily operations. This crisis should be an alarming signal to all organizations to reconsider their cash management strategy in general.

To manage a crisis well, all key people in the organization must start thinking like a chief financial officer and absorb a few vital financial skills. Besides revisiting and adapting third party policies, such as insurances and credits, there are three practical questions to keep in mind about a proper cash management strategy.

Have you gone through some worst-case scenario planning exercises to make a near-exact estimate of how much liquidity you will need and for how long?

Consider the financial risks of your key partners, suppliers, and customers, and create a solid Plan B for your supply chain.

How can you minimize the operating capital needs and have the most significant impact with the least amount of resources?

Don’t forget to include inventory management and variable costs. If you are considering headcount reduction, ensure that your top-executives and directors are ready to waive fees.

How can you open up non-traditional revenue streams?

What kinds of assets or processes have you developed could be converted into platforms that can also serve other companies in your industry? None? Please reconsider if your business model is timely.

Remote Work Preparedness

Remote work preparedness seems to correlate with the overall trust levels in political systems and society, and with the overall culture within an industry (i.e., startup lifestyle). As we have observed during the COVID-19 crisis, countries and industries with high trust levels and less micromanaging have been able to continue operations under lockdown conditions much more easily.

Take several of the Nordic countries, for instance. In Finland, Sweden, Denmark, [and] Norway trust levels in society and political institutions are generally very high. These countries have several years of experience in remote work and flexible hours. According to the 2013 Eurofound European Company Survey, nine out of 10 establishments in Finland offered knowledge-intensive labor to take place in multiple locations. Similarly, some industries have generally been applying practices where remote work is the norm rather than the exception. Many establishments in creative industries and in the startup world have successfully cultivated a culture of flexible hours and remote work for many years.

It is better to encourage your leaders and workforce to work remotely today, rather than to wait until the next lockdown. There are many great tools like Asana or Slack that can help establish a home office practice and allow organizations and their employees to start tapping into many tangible and intangible benefits. (For more information, see The Entrepreneur: 20 Reasons to Let Your Employees Work From Home).

Reboot With a Different Mindset and Culture

When a crisis hits, most of our daily actions are reactive. Businesses try to cut costs and reduce operations to an existential minimum while concentrating on putting out the fire and saving the day. However, once the first shock is over, business-as-usual is no longer an option. Companies need to adapt and reboot to survive in the “new normal.” While many insecurities lie in this renaissance, so, too, do many great opportunities.

Dutiful directors will take this moment to revisit past decisions, challenge the status quo, and make adjustments accordingly. In addition to the operational questions in their business resilience plan, directors should make an effort to address cultural issues around leadership, collaboration, diversity, and innovation to ensure the long-term well-being of their companies. Many organizations claim to care about their employees and stakeholders. There’s no better time than a crisis for leaders to demonstrate they truly mean what they say.


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Seda Röder is the managing partner at The Mindshift.Global, a boutique consultancy firm for strategic innovation and innovation management. Seda advises executives in questions regarding leadership style to dramatically increase effectiveness and innovative output in their companies. Her special areas of expertise include creative leadership, communication and community building, leadership brand, influence, reputation, as well as leading through transformation and cultural change processes. Her company is particularly well-known for its tech-literacy crash courses for top executives and board members. In addition, she is the founder of the Sonophilia Network, an international, cross-industry think-tank of top-managers from Fortune 500 Global and DAX companies as well as entrepreneurs and influencers from arts, technology, and politics. She is also a senior advisor and faculty member at the Salzburg-based accelerator Silicon Castles. Her background on international music stages as a performer and composer as well as her teaching experience at Harvard and the Massachusetts Institute of Technology constitute the foundation of her insights in creativity, performance excellence, and innovation. Seda trained as a concert pianist at the Mozarteum conservatory. She is a Fellow of Salzburg Global Seminar.

The Salzburg Questions for Corporate Governance is an online discussion series introduced and led by Fellows of the Salzburg Global Corporate Governance Forum. The articles and comments represent opinions of the authors and commenters, and do not necessarily represent the views of their corporations or institutions, nor of Salzburg Global Seminar. Readers are welcome to address any questions about this series to Forum Director, Charles E. Ehrlich: cehrlich@salzburgglobal.org To receive a notification of when the next article is published, follow Salzburg Global Seminar on LinkedIn or sign up for email notifications here: www.salzburgglobal.org/go/corpgov/newsletter

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