The long-term consequences of COVID-19 are still uncertain, but one thing is clear: This crisis will profoundly influence how business will be done in the future. Once the short-term survival of their firms has been secured, leaders are well-advised to consider the potential impacts of this crisis on their strategy.
Up to now, Swiss executives have been busy managing the emergency. COVID-19 has resulted in many macroeconomic worst-case scenarios unfolding simultaneously.
As an export-oriented country dependent on international trade, Switzerland has been hit hard. As figure 1 shows, the initial downturn on the Swiss Market Index (SMI) was more severe than at the beginning of the financial crisis 2008/09, signalling significant economic problems ahead. Since then, the financial markets have made up for much of the decline (standing at "only" minus 8% as of 8 May), but most observers see this as a case-in-point for the disconnect between the financial markets and the real economy. While the exact speed and shape of recovery of the real economy are still being debated among economists, most experts believe that there will be a prolonged and severe downturn.
On a microeconomic level, many Swiss firms are therefore facing unprecedented challenges amidst uncertainty. Over the past two months, Swiss executives had their work cut out for them by:
However, we expect this crisis to have a significant impact on how business will be done post-COVID in many industries. And some of these forces may well make leaders reconsider parts of their current strategy. For example:
The complexity does not result solely from the effects of such a crisis on the business world. It is the correlation between various macro factors, such as economics, politics, society, ecology, technology, regulation and more.
Taking fundamental strategic decisions is difficult at this stage – not least, because the situation is still so volatile. However, many of the above-mentioned factors have disruptive potential. We therefore strongly recommend that business leaders take a holistic view of their potential impacts now – across their entire business and operating model, and rethink their strategy soon.
Our recent thought paper outlined some of the key questions that business leaders should ask themselves now. They help board members and senior leadership to align challenging financial ambitions with the core elements of a sustainable business model and the aspiration of operational excellence and resilience.
COVID-19 has brought a lot of suffering around the globe. However, history teaches us that every crisis brings with it opportunities for those who are well positioned to seize them.
Think of investors who are in a strong cash position: they can now engage in transformational M&A at a substantial discount compared to a few weeks ago. Alternatively, think of the corporate giants that were born in recessions of the past – from Disney to HP or Microsoft.
By asking the right questions early on and adapting their strategy to the newly emerging forces, Swiss leaders can now position themselves as the future winners from this crisis. For further details, please consult the original paper.
1 Applications for COVID-19 bridging credits
3 Point de Presse Coronavirus, State Secretary Marie-Gabrielle Ineichen-Fleisch (04.05.2020)
5 Article Business Traveller
6 Article Fortune
7 Article Financial Times
8 Article The Startup