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Lockdown lessons from Kiwi businesses

Rod Oram spoke to the leaders of 16 Kiwi businesses over seven weeks, during which they and their businesses rose to meet unprecedented demands. Here's what he learned.

Lockdown was an extreme stress-test for New Zealand companies, one that intensely challenged their business models, cultures and leadership. The survivors have emerged battered but resilient, eager to apply the lessons to building better businesses and contributing more to society.

Those are my broad conclusion from 16 interviews I had with leaders of major organisations from March 23 to May 8 – seven weeks in which they and their colleagues rose to the unprecedented demands of the Covid-19 crisis first under Level 3, then 4 and back to 3. Links to the 16 interviews are in the Recommended Reads panel to the right of this article.

Some of them head major companies in the primary, technology, tourism, consumer, construction, and energy sectors. Others lead employer and employee associations, a government agency and an iwi.

Six strong themes come through their stories of corporate life in lockdown. Three are about their responses: they acted with foresight; they made rapid, iterative decisions; and they maintained a future-focus. Three are about tools: digitisation of businesses; inclusivity of cultures; and empowering leadership.

1. Acting with foresight:

All of the organisations tuned in early to the looming virus crisis. Some such as Auckland Airport, Tourism Holdings and Synlait Milk saw the stunning speed and scale of the pandemic in China and began to see its impact on their businesses in January. Others such as Z Energy and T&G Global began to see disruption of their supply chains, markets or sectors overseas.

Having overseas owners or partners helped many of the companies respond early. For example, Synlait is part-owned by Bright Dairy of Shanghai and T&G is wholly owned by BayWa, a German horticultural group with wide international operations. Similarly, Vodafone New Zealand drew on the Vodafone global community even though the UK-based business no longer owns it.

By late February, almost all of the organisations had activated their business continuity plans and crisis management teams. Those well-rehearsed systems were only a starting point, though. Quickly, the Covid crisis upended every aspect of their activities. They had to devise and implement many new systems to respond to issues they never imagined.

But in some ways we did have experience to draw on. The country’s strong, collaborative and effective response to Covid is typical, says Chris Quin, chief executive of Foodstuffs North Island. Thanks to earthquakes and other dramatic events, “we've developed a very good crisis management approach. The way people collaborate, take accountability and innovate is spectacular.”

That history of natural disasters played a role for Ngāi Tūhoe too. “We had made a very early decision that we were not going to be recipients of somebody's decisions and actions, says Tāmati Kruger, the iwi’s chair.

“Rather, we would contribute and be part of the team making decisions and taking responsibility. The reason was we've been through serious climate events, floods and earthquakes and we have not liked being recipients of somebody else's decisions that have been wrong.”

2. Making rapid, iterative decisions:

With Covid-19 sweeping through the world like a whirlwind, nobody – whatever their role in society – ever knew enough whenever they had to make a decision. Instead, they made the best decisions they could, knowing they would have to adapt, change or overturn them as the crisis raced ahead.

Organisations learnt to make rapid, iterative decisions which dramatically speeded up their responses — the antithesis of paralysis by analysis. T&G, for example, learnt how to “cut to the centre of issues quickly,” says Gareth Edgecombe, its chief executive. It made and acted on decisions with less than full information, and it met short-term demands while working on longer-term needs of the business.

“Repurpose at pace,” is a key learning for Grant Webster, chief executive of THL.

“Constantly look ahead; don’t discount any scenario; if it should happen, how would we respond?” became a crucial decision-making tool for Vector, the Auckland lines company, says Simon Mackenzie, its chief executive.

“The basics don't change in this situation. All of us are being asked to be the best leader we've ever been right now. So being stronger and calmer really helps, even when you're faking the hell out of it.”

Government responded in similar ways, says Brett O’Riley, the chief executive of EMA, the employers’ association. Civil servants and politicians worked closely and frequently with representatives from business and wider society. Issues were escalated rapidly to achieve resolution.

“I haven’t seen that sort of pace before. People are being driven by wanting to get announcements out there, wanting to give people confidence,” O’Reilly says. “There’s also been plenty of candidness. Some of the formality of the interaction with the public sector has disappeared. It could be a good model to continue – less hui, more doey.”

Lack of certainty had other impacts. “It’s really fascinating to watch humans responding to uncertainty and wanting to know what the future looks like,” says Leon Clement, chief executive of Synlait. “But I've decided you can't predict the future at all. Sure, you can theorise what might happen. The key, though, is to distil relevant information into material things that matter to you.

“We must be ready when that future arrives. So our focus has been on agility and resiliency and making sure that we are building those into the capability and competency within our business.”

3. Maintaining a future-focus:

Even in the most intense early weeks of lockdown when companies had to radically rejig their operations they all kept an eye on longer-term issues and opportunities. Later, when the immediate pressure eased a little, they all put more focus on the future.

“We crisis manage in three horizons,” says Mike Bennetts, chief executive of Z Energy. “Daily, rolling; 30-180 days; and a year plus, which has a particular focus on how do we exit from this as a better company.”

Rod Campbell, who holds governance roles at THL, Sky City, Precinct Properties and WEL, says the crisis is so deep and pervasive, many businesses can already see that their future will be quite different from the past. While they’re intently focused on dealing with enormous current challenges they’re also working on how to emerge as better businesses.

“The calibre of chief executives is really strong right now,” he says. Many of them are change agents already remaking their businesses. Factors such as the rise of sustainability and income and gender equality were making their old models obsolete.

Moreover, businesses are responding more effectively in this crisis because over recent years they have learnt to collaborate better internally, and externally with their suppliers and customers. They are also “having a more constructive relationship with government than they’ve had in past decades”, he adds.

Rick Herd, chief executive of construction company Naylor Love, for example, sees this in his sector in the Construction Accord between the sector and the Government last April and their Construction Sector Transformation Plan launched in January.

During the lockdown, the sector also devised physical distancing and hygiene protocols to enable construction to resume under Level 3; and some other sectors adapted it for their use too.

Given how effectively New Zealand locked down, “we can come out of this with a much stronger halo effect around the country that allows us to capture premiums on our long-term evolution from volume to value,” says Pete Chrisp, chief executive of NZ Trade and Enterprise. “Our sustainability credentials could be stronger but our reputation for having managed the pandemic well will have added to our global reputation.”

“We are so eager to engage in these conversations, to contribute to the rebuilding of a very, very much stronger New Zealand society, a society that is now acutely aware of its relationship with nature and its obligations to be a far wiser caretaker of our natural resources,” says Kruger of Ngāi Tūhoe. This will help New Zealand’s “quest for identity, for our culture, for our principles, for our values.”

4. Digitising businesses:

Remarkably, many organisations pulled off virtually instantaneous switches to remote working during Levels 3 and 4. Some had long invested in the technology but had barely used it, others saw lockdown coming and scrambled in the prior couple of weeks to equip their staff. All of them now appreciate the benefits to staff and productivity of a mix of remote and in-company working and plan to continue some mix of it.

But digitisation goes far beyond processes to embrace business models themselves,” argues O’Riley of the EMA.

“Covid-19 has facilitated the final death throes of the industrial age. Any business that hasn't moved fully into the digital space, or isn't able to quickly, is in a pretty perilous position,” he says.

“Some business, like manufacturers and exporters, will always produce real things,” he adds. But if they haven't adopted all the digital technologies they can to facilitate that, “they’re probably going to struggle”.

The crisis “is giving us the opportunity to accelerate to our digital future,” says Jason Paris, chief executive of Vodafone NZ. Rather than taking, say, three years for some of the investments, “we’re thinking of doing them over a 12-month period.”

“We've had to stand up a whole new competence in digital commerce and in digital ways of finding your customers and getting your stuff to market,” says Chrisp of NZTE.

Technology change drove culture change. “We've lost some of the interpersonal connection and some of the creativity that comes from [in-person] meetings,” says Edgecombe of T&G. “But having larger groups of people in shorter, punchier conversations has made them more engaged and productive.”

Fortunately, as a country we were very well prepared for this massive switch to online work thanks to the Ultra Fast Broadband investment driven by the previous National-led government.

Similarly, many companies were ready. Landcorp, for example, had invested heavily in recent years in the likes of digitising its business processes and in video conferencing. In particular, it had invested some $2 million through Vodafone to bring high-speed broadband to all its farms around the country.

5. Inclusive cultures:

With remote working came the urgent need for inclusive company cultures and more support.

“As leaders, we need to be very focused on mental health and anxiety ... so we can identify if there are any fears and put the right support in place,” says Jolie Hodson, chief executive of Spark. “Above all, we make sure we communicate that kindness and leaning in to our people so they can support our customers.

“It's fascinating to see the openness that businesses are willing to have with each other,” O’Riley says. “It’s good for mental health to realise you aren’t on your own. Other people are facing the same challenges.”

Adds Steve Carden of Landcorp: “Tongue-in-cheek videos with our families about how to survive in lockdown, which we share on our Facebook platforms for all of our staff, has been quite a remarkable way of breaking down barriers and democratising the problems we're all experiencing.”

Turbulent times like these are also an opportunity for people to step up, says Adrian Littlewood, chief executive of Auckland Airport. “You really are relying on great people working hard and playing ‘out of position’. You're giving them a new task and a new role; and they're applying their judgment and experience to it ... and really embracing it.”

A notable change in culture was signalled by a joint announcement three and a half hours before New Zealand went into Level 4 lockdown at midnight on March 25. BusinessNZ and the Council of Trade Unions put out a joint press release which called “on all Kiwi businesses to do the right thing and do everything possible they can to stop the spread of the Covid-19 virus and simultaneously maintain jobs as best we can through this very disruptive period”.

A rare expression of solidarity between employers and employees, it came about through “a huge step up in dialogue with business”, says Richard Wagstaff, the CTU’s president.

“We've succeeded in creating a positive tripartite relationship. We're working with businesses and government to make progress on very significant decisions and processes in a short time. There’s not a paint by numbers guide to that. We’re working it out as we go.”

6. Empowering leadership:

Unprompted, all the leaders interviewed reflected on the demands the crisis put on them.

“We have to do as much crisis leadership as management,” says Bennetts of Z. “This gives people the opportunity to take the initiative to contribute creatively.

“For a while now, I’ve thought about leadership as based on connection, clarity and action,” says Quin of Foodstuffs. “The basics don't change in this situation. All of us are being asked to be the best leader we've ever been right now. So being stronger and calmer really helps, even when you're faking the hell out of it.

“It’s a time where you have had to play your ‘A’ game as a leader because the environment is so ambiguous, chaotic and fast-moving,” says Chrisp of NZTE. “If you're playing the best version of yourself, you can really, really make a difference to the people around you, to the organisation to the work you are all doing.

“In the middle of a crisis like this you need to show energy, compassion, empathy, speed and agility. You need to show boldness and courage. You've got to ask yourself, ‘Am I being all I really need to be at this moment in time?’”

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