Leading to, and Leaning into, the “New Normal”

We have been through this before — on company, industry, national and global levels.  It is difficult to imagine that as we experience and react to the human and economic challenges of the COVID-19 pandemic. Pausing to reflect, however, on the challenges since the Vietnam War — from massive ones such as the Oil Shocks of the 1970s and the Financial Crisis of 2008 and 2009, to the 9/11 Terrorist Attacks, the Stock Market Meltdown of the early 2000s and Hurricane Katrina to the collapse of Enron and the impact on Union Carbide of the Bhopal disaster — shows it to be true.  While the specific nature of this crisis is different and due to technology the speed of change feels unprecedented, the path forward is well trodden — and indeed can offer opportunities to improve and accelerate change and growth.

Below we will answer some of the questions that you may have as you find your way on this path.

What is the path?

The path is essentially defining goals and creating a process to identify the needs and prerequisites to achieving those goals, developing the necessary plans, executing on and monitoring achievement of those plans, and continually adapting and improving as new issues and opportunities are identified and external and internal conditions change.

Goals mean surviving, of course, and growing to some target — defined in terms of something relatively specific such as a number, amount or type of facilities, products, services or the like. Goals also mean defining what kind of organization you want to be — not a vision or mission statement, but more of an attitude towards one or more relevant communities or stakeholders.

Can you provide more insight on developing the goals?

When developing those goals, you will likely identify a range of needs and opportunities, such as:

• Complying with government directives and assessing observance of government guidance;
• Addressing immediate challenges to liquidity and capital resources;
• Addressing immediate challenges to the workforce, the supply chain and customers;
• Building broader and longer term resilience;
• Re-imagining the “new normal,” including the new governmental and health-related environments in which we may have to reside; and
• Developing a plan to return to or integrate into that “new normal.”

How do we manage workflow?

First, establish a core response and planning leadership team — to drive identification of issues, needs and opportunities and to surface possible solutions, prioritize solutions and drive development of implementation plans, approve plans and then monitor, adapt and revise. The team need not (and probably should not) undertake all those activities itself; rather, it should draw on all experienced resources within the organization. It should also draw on outside resources, including ones that may not be typically considered such as epidemiologists as well as supply/logistics and sales/marketing chain partners (and the usual team of lawyers, bankers and accountants).

Second, establish an effective internal communications plan among the team and the various resources. Not just meeting times and means, but also procedures for managing email distributions/chains, efficient conference calls and the inevitable ad hoc communications.

Third, recognize that, for many, working remotely will be a new experience. In addition to ensuring that the communications technology functions as needed, it is essential to maintain effective interpersonal connection with all employees, whether working from home or on-site, to determine what is working, what is not and to ensure that each employee knows his or her role, feels valued and recognized and remains motivated and engaged.

How would that kind of a process work?

To best manage workflow, break down your business processes into manageable pieces such as:

• Marketing/sales; and customer/client engagement and retention;
• Sales/orders to accounts receivables; and accounts receivables to cash;
• Procurement RFP/bidding to purchase order; and purchase order to payment of accounts payables;
• Logistics: Sales customers; Purchase Order inventory;
• Production: Inventory processing inventory;
• Services: R&D, customer support, etc.;
• Functions: Law, accounting, tax, HR, treasury/cash management, risk/insurance, planning/business development, etc.;
• Capital resources and liquidity; and
• Governance and Stakeholder reporting.

It may be helpful within each of those pieces to have the relevant team undertake a SWOT analysis, so opportunities are surfaced as well as issues and a return to the “next normal” is planned.

What are some of the pitfalls?

Losing sight of the goal is likely the fundamental risk, but there are several other keys such as:

• Information overload, through focusing on the goals and the critical path for achievement should help.
• An attitude that solutions have to be “built here,” even though others are available or demonstrated externally.
• Losing a balanced approach to adapting plans — doing so either too slow or not fast enough.
• Lack of clarity/transparency in communications: what we’re doing, why and what could change.
• Being too focused on the internal issues, and missing fundamental changes in the external conditions, markets, drivers, and the like.

To quote Ludlum, “sleep is a weapon.”

Can we seamlessly move most operations to the cloud and provide employees with remote access?

Most large enterprises have already moved to the cloud; for others and for many smaller firms, this crisis will be the tipping point. The cloud is much more than an efficient way to store data. With proper planning and execution, cloud computing boosts productivity, enhances accessibility, group collaboration and customer service and creates a mobile-friendly environment. It is less expensive than a physical computing infrastructure and limits physical clustering — and it does not require large upfront capital investments to purchase equipment and buy software licenses on the ongoing costs of maintaining and updating the infrastructure and the expertise to do so. From productivity enhancing applications, reducing hardware failure/power interruption risk to data security and backup to liability management to disaster recovery, many aspects of the cloud environment provide cost effective benefits, freeing internal resources – – and it can be a “green” lower carbon footprint solution as well.

In the current environment, the “rub” is achieving “proper planning and implementation.” Cloud providers and consultants can help, but ultimately each cloud environment is tailored to a particular business to greater or lesser degrees.  If not already cloud-based, focus your efforts on the immediate needs (likely communications) and make analysis/planning of fuller migration one of the opportunities considered in work flow planning.

Will staffing be permanently reduced?

The “new normal” is likely to require you to prioritize roles, determine which roles can be performed remotely and which ones require presence in an office and which roles should be internal and which external.  Overall, the workforce may not decrease (and may in fact increase) but the composition of the workforce is likely to change materially

If some roles need to be permanently eliminated, determining how to lawfully and ethically, conduct reductions in force will be imperative – – from workforce retention and motivation to brand maintenance and growth to capital raising and other viewpoints.

What are the legal implications?

The legal environment is evolving in real time, even as courts are largely closed.  Notwithstanding, important issues to consider include:

Contracts: Because of disruptions to supply chains, declines in demand and the like, businesses globally may be unable or unwilling to fully perform their contracts, may assess early termination, or may just breach.  Businesses should review their contracts, including property lease agreements, to understand protections or remedies regarding non-performance, modification or termination as well as applicability of concepts like force majeure and commercial impracticability.  Businesses should approach future contracts, renewals and extensions with the learning from this crisis in mind.

Property and Casualty Insurance: Insurers and policyholders are attempting to navigate challenges posed by current business disruptions.  Many businesses have P&C insurance coverage for business interruptions, and those policies could potentially cover losses resulting from communicable diseases.  However, many such policies are limited to direct physical losses and damages, and some insurers are already denying COVID-19 business interruption claims on the grounds that COVID-19’s economic effects are not the result of direct physical losses or damages.  Businesses should carefully review their policies for opportunities and issues, including timely notice requirements, and be prepared for insurers to seek to deny coverage.

Director and Officer Insurance: As CEOs, directors and other business leaders react rapidly to challenges, they may subsequently find themselves the subject of claims related to their professional capacities.  Although D&O insurance typically covers typical claims, D&O policies may contain exclusions or coverage limits for illness-based claims, workplace health and safety claims, breach of contract claims, or other claims that insurers might argue apply to COVID-19 claims.

Public Statements: As is always the case during times of financial stress, CEOs and managers seek to project calm, strong and thoughtful leadership.  Transparency as to what is known, not known, planned or hoped, as well as the key risks thereto, is key. Those statements will be viewed in hindsight, and legal exposure can arise from securities laws and common law causes of action.  Businesses should carefully consider all public statements with that in mind.

What are the technical implications?

Successfully getting to the “new normal” will require great agility, necessitating more reliance on cloud technology, remote access, and adoption of new technologies to support continuity and growth of operations.  “Work from anywhere” capability requirements include:

Having the proper technology: Make sure your employees have a reliable computer, email, phone conferencing and high-speed internet access, whether they work from home or a public location.

Using a secure connection: Remote workers should have a secured Wi-Fi network and work with a trusted virtual private network (VPN).

Implementing communications programs: Stay in touch with employees who work from home via Microsoft Teams, Zoom, Skype, Slack and other messaging services.

The emerging technologies of artificial intelligence (AI), the Internet of Things (IoT) and blockchain represent exponential opportunities for the “new normal.”  Today, even the most advanced technologies are usually reactive rather than proactive. Think of virtual assistants such as Siri, Alexa, and Cortana — give a command and they respond.  But when powered by transformational technology, these virtual assistants become much more proactive. For example: virtual assistants might observe some pattern detrimental to your business; IoT data from cloud processors and sensors might determine that a critical resource is running low; machine learning (ML) might work out necessary changes to your supply chain; and blockchain can ensure that transactions are processed securely.  In the “new normal”, enterprises capable of exploiting these technologies will use them to optimize and enhance existing processes, create new business models and develop innovative products and services. The intuitive ability of IoT combined with the cognitive power of AI and ML and the immutable memory of blockchain will ultimately disrupt business models in every industry.

Written by M. Ridgway Barker, Michael Rueda, and Joseph Bambara. Michael Rueda, partner and head of the U.S. sports and entertainment practice at international law firm Withers, and Joseph Bambara, counsel to Withers, also contributed to this article.
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