Why crisis manage­ment and strategy communi­cations must go hand in hand

When a ship heads towards a reef, rapid action is required. It is vital to get out of the danger zone as quickly as possible, and every­thing else is secondary. Many companies struggling to survive in the current crisis also respond this way. They do every­thing they can to cut costs and ensure liquidity. Naturally enough, if there is no water under the keel, there is no point worrying about the ship’s future course. But if a company only focuses on the immediate present when restruc­turing, nothing will be achieved in the long term. After all, few companies will have a calm sea ahead of them once the current storm has passed.

The corona­virus crisis increases the pressure on trans­formation processes that had already begun before the pandemic and will continue after it is over. Take, for instance, the automotive industry, where the sales crisis during the first months of the corona­virus led to a collapse in normal sales revenues, which were urgently needed to achieve the trans­formation to digitally net­worked, electric mobility. It was already proving a huge challenge to find the necessary invest­ment before the corona­virus came along – since all carmakers and suppliers had under­standably introduced tough cost-cutting measures prior to Covid-19. The lower the earnings from traditional business, the faster that epic change will need to be mastered. The financial sector has been hit equally hard. Banks are haemorrhaging revenue in the midst of their digital trans­formation process. Meeting that problem with cost cutting alone would be fatal. The banks are there­fore rightly thinking more about their future role and reducing their real net output ratio to provide digital services in conjunction with fintech companies.

These examples illustrate how important it is for companies to not only ensure their immediate liquidity but also develop future-proof business models, optimise their own product ranges and leverage collabo­ration options. One strategic factor in all of this is the security of supply chains. Just how important it is to have an eye to the future in this climate of acute cost pressure became evident over the last few weeks. After the major carmakers radically ratcheted down the agreed sales volumes of micro­chips when the crisis broke, the conveyor belts of many manufacturers came to halt because sub­contractors had diverted their chip contingents to manu­facturers of communications electronics who were thriving on the social-distancing regime. In summary, the lesson here for almost all sectors is that it would be fatal to cling to supposedly secure traditional business. A strategic new direction is essential – and for that to work, it will need to be clearly communicated both internally and externally.

Five crucial keys to Corporate Communications

Balance expectations: While creditors and banks these days primarily want the certainty that their current debts will be serviced, customers need some certainty that the company will stay in the market over the long term – otherwise their reluctance to purchase will only exacerbate the current situation. Employees must understand the pressure of the current situation, but also be assured that their efforts will be worth­while in the long run. Suppliers and partners must be kept on side, even though negotiations about extended payment deadlines or lower purchase volumes may be necessary at the moment. Communications must address the current battle to overcome the crisis, so the messages are credible. At the same time, they have to convey where the journey is going – so that external stakeholders have trust in the company and the necessary workforce can be mobilised internally to turn the rudder around in the current liquidity crisis.

Provide more detailed explanation: This crisis breeds uncertainty and fear of the future. A key task of Corporate Communications is to counteract such concerns. Now that the prospect of a Promised Land and a “faster, higher, further” approach is no longer credible, a new, cleverly formulated narrative is required to explain that agility alone offers the promise of stability in uncertain times. This narrative also helps explain simultaneous cutbacks and invest­ments in future projects. It is important to convey these explanations in a variety of personal and regular forms of communi­cations. The more agile the company’s course, the more tightly woven the communi­cations have to be in order to convey a sense of security. It pays here to leverage the trend driven by the crisis towards digital forms of exchange, which simplify the process of more direct dialogue across all hierarchical levels.

Openly address uncertainties: The ability to survive must be ensured as fast and as suddenly as the pandemic beset the economy and society. It is not very credible to have all the recipes for a “rosy future” already in the back pocket. It is about with­standing the current uncertainties with an eye to the future while facilitating calm analysis and strategy development. At the same time, the current pandemic situation is fraught with all kinds of uncertainties. That presents a huge challenge to corporate executives and managers to communicate with a focus on the future, without having answers to all the questions or being able to spell out every detail of the new role of the company as a whole or that of individual employees.

Give continual guidance: Precisely because the pressure to change and become more efficient has persisted for a long time in many companies and has taken its toll on employee morale, it is important to explain changes on a step-by-step basis and place them in the context of the process as a whole – particularly now when companies are simultaneously having to invest in future projects while increasingly cutting back on the cost of their core business. To ensure acceptance of such investments, companies will have to keep on explaining how earnings and savings on the one hand are balanced out by invest­ments on the other.

As always, communicate actively: As different as the expectations of individual stakeholders may be, in the end the success of the restructuring and the credibility of the new strategy are what really count. Intensive communications, both internally and externally, are required to explain the economic impact of the pandemic while also pointing to recovery tendencies in certain markets. And it is vital to make it clear that financial stability is central but does not rule out future strategies. Messages delivered internally and externally may be expressed with different nuances – but the core message remains the same.

Thinking up and communi­cating a long-term strategy during the acute crisis demands additional strength. But it is essential to make this effort and communicate to everyone concerned in the current crisis where the journey is going. After all, if the above points are taken into account, companies can not only ward off the immediate danger, but also use the energy of the storm to ride out the crisis and come out the other side stronger and agile enough to steer their way clear of future obstacles.