Sunday, April 19, 2020

How to Approach Marketing Planning for the Balance of 2020

Developing sound marketing plans is never easy, but it becomes a herculean task when a global pandemic turns the business world upside down. Scenario planning enables marketing leaders to manage marketing effectively in the face of unprecedented uncertainty.

The momentum for reopening the U.S. economy is steadily building, and it now appears the process is likely to begin within the next few weeks. On April 16th, President Trump released guidelines for restarting the economy. These guidelines lay out a set of conditions for reopening the economy, but leave most of the specific decisions (including timing) to state governors.

So far, three groups of governors - one involving six Northeastern states, one involving three West Coast states, and one involving seven Midwestern states - have announced they will work together to coordinate plans to restart the economy in their respective regions.

The reopening of the economy marks the beginning of the "recovery" phase of the coronavirus saga, and the task now facing marketing leaders is to develop a marketing plan for the balance of 2020. The challenge is, there is still a huge amount of uncertainty about how the restart of the economy will be managed and how quickly economic growth will recover. For example:

  • When will the reopening process actually begin in the markets we serve?
  • What conditions will be imposed on our business, and how will those conditions affect our operations, our ability to generate revenue, and our profit margins?
  • How quickly will the demand for our products and services return to more "normal" levels?
So how can marketing leaders create appropriate marketing plans in the face of these uncertainties? One approach that has been used effectively for strategic planning is known formally as scenario planning. With scenario planning, business leaders construct a set of alternative strategies that are based on a range of possible future conditions.
Given the current level of uncertainty, scenario planning is the best tool marketing leaders can use to approach planning for the balance of 2020, but to use it effectively, marketing leaders must be able to construct a set of realistic scenarios. And that requires a clear understanding of the major factors that will shape future economic and business conditions.
In normal circumstances, the first step in a scenario planning process is to look at estimates of future macroeconomic conditions such as GDP growth, employment levels, and consumer spending. Then business leaders drill down to estimate the growth prospects for their industry and company.
In the circumstances we face today, however, the most important factors to consider when constructing scenarios are potential medical and scientific developments pertaining to the prevention and treatment of COVID-19 and the processes used by states to reopen the economy. More specifically, the pace of the economic recovery will be largely dictated by three factors:
  1. The availability of an effective vaccine for COVID-19
  2. The availability of effective medical treatments for COVID-19
  3. How restrictive the reopening "rules" adopted by states are, and when the reopening begins
Vaccine Availability - The availability of an effective vaccine for COVID-19 is the true "end game" for the coronavirus pandemic. Most health experts agree that we can't really call the pandemic over until we have an effective vaccine, and many economists say that we will not get a complete economic recovery until a vaccine is available. Unfortunately, most health experts also agree that the development of a COVID-19 vaccine will require 12 to 18 months. Therefore, all marketing scenarios for the balance of 2020 should reflect that no COVID-19 vaccine will be available.
Treatment Availability - The race is already on to identify and/or develop treatments that will reduce the severity of COVID-19 and save lives. Having an effective treatment is important economically because it will make people feel more comfortable about returning to work, shopping, and engaging in other economic activities. Many health experts believe that we may have an effective treatment by late summer, but there are no guarantees. Therefore, when planning for the balance of 2020, marketing leaders should use three treatment scenarios:
  1. At least one effective treatment for COVID-19 is widely available by September 1st.
  2. At least one effective treatment for COVID-19 is widely available by November 1st.
  3. No effective treatments for COVID-19 become available in 2020.
Reopening Rules - As I noted earlier, President Trump's reopening guidelines leave most of the decisions about reopening the economy to state governors. Therefore, there will actually be multiple "reopenings" that begin at different times and have different rules. It's fair to think that most governors will be cautious about when to begin the reopening and how quickly to relax the restrictions they currently have in place. For marketing planning purposes, the baseline scenario should be that the reopening process will begin in many states sometime in May and will be implemented gradually at least until an effective treatment for COVID-19 is available.
All of this suggests that the recovery of the overall economy is likely to be sluggish through most of the third quarter of 2020, but may pick up steam in the fourth quarter. With these scenarios as a backdrop, marketing leaders will then need to analyze the growth prospects under each scenario for their industry and their company.
The most successful marketers in 2020 will be those who are best prepared for a range of possible futures. Scenario planning can help you be ready to respond quickly when the shape of the future becomes more clear.

Image courtesy of Dan Moyle via Flickr CC.

Sunday, April 12, 2020

When Can We Reopen the Economy?

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." 

Winston Churchill made this famous statement after the British defeated German forces at the battle of El Alamein in 1942. As Governor Andrew Cuomo observed in his daily briefing yesterday, Churchill's words seem to be a fairly apt description of where we are today in the coronavirus pandemic.
Over the past week, there were glimmers of hope that the initial wave of the pandemic may be subsiding in some parts of Europe. Here in the U.S., New York may be near or at the apex of the coronavirus epidemic curve. On Friday, for example, New York's net increase in COVID-19 hospitalizations (daily admissions less daily discharges) was just 85, down from 1,095 one week earlier. A few other states appear to be in a similar position.
These developments have prompted a growing number of discussions about when and how the U.S. economy can be "reopened." Over the next few weeks, governmental leaders will be under increasing pressure to end or at least relax the "stay at home" orders and mandatory business closings.
The restart of the economy will be a critical milestone for marketing leaders because it will signal the beginning of the "recovery" phase of the coronavirus crisis. To maximize revenue growth, marketing leaders will need to be ready to launch appropriate marketing programs as soon as possible after the recovery phase begins. And that means planning must begin before the economy is reopened.
As with many aspects of the coronavirus pandemic, the determination of when and how to restart the economy is a complex issue. There are already conflicting opinions on this issue, and the debate is likely to become more contentious before any decision is made. However, there appears to be an emerging high-level consensus - at least among most health professionals - about what preconditions should exist before the economy is reopened.
Dr. Scott Gottlieb is a resident fellow of the American Enterprise Institute (AEI) and was the Food and Drug Administration commissioner from 2017 to 2019. On March 28, 2020, AEI published a report by Dr. Gottlieb and four colleagues titled National Coronavirus Response:  A Road Map to Reopening
In this report, Dr. Gottlieb and his co-authors described how the United States can transition to tools and approaches that target individuals with the coronavirus infection rather than target entire populations in areas where the transmission of the virus is widespread and not controlled.
The report also lays out four prerequisites that should exist before any state ends or relaxes the "social distancing" measures currently in use. (Note:  The authors wrote that these prerequisites can be applied to localities in a state under certain circumstances.)
Prerequisite 1:  A Reduction in Cases - The first requirement for reopening the economy in a state is when the state reports a sustained reduction in COVID-19 cases for at least 14 days. Fourteen days is the generally accepted incubation period of the coronavirus.
Prerequisite 2:  Sufficient Hospital Capacity - Hospitals in the state must be able to treat all patients requiring hospitalization (both COVID and non-COVID) without resorting to crisis standards of care. This means having an adequate number of beds, adequate staffing, and adequate equipment and supplies.
Prerequisite 3:  Adequate Testing - A state must have the ability to test all hospitalized individuals, health care workers, and workers in other essential services (e.g. first responders), the close contacts of individuals with confirmed cases of COVID-19, and all symptomatic individuals. The authors estimate that the U.S. would need a national capacity of at least 750,000 test per week to meet this requirement.
Prerequisite 4:  Adequate Monitoring - A state must be able to identify all infected individuals (through testing), identify (through tracing) and test the close contacts of infected individuals, and actively monitor all confirmed cases to ensure compliance with quarantines.
Fully satisfying all four of these prerequisites will be a challenging undertaking. It will take time for any state or locality to meed these requirements, and not everyone will meet them at the same time. Therefore, restarting the economy is likely to be an uneven process, with some states or localities reopening before others.
It seems likely that most governmental authorities will adopt some version of these prerequisites. The key for marketing leaders is to monitor the progress being made on these four factors so that they can begin planning in time to have programs ready to launch when the reopening occurs.

Image courtesy of Levan Ramishvili via Flickr (Public Domain)

Sunday, April 5, 2020

It's Time for Senior Leaders to Begin Planning for the "Next Battle"

In his 1989 best seller, The Seven Habits of Highly Effective People, Stephen Covey wrote that effective people practice the habit of "putting first things first." By this, Covey meant that highly effective people focus most of their attention on things that are truly important.

Covey used a 2 x 2 matrix to illustrate that we spend our time and energy in one of four ways. Below is my version of Covey's diagram.

In this matrix, Quadrant I contains tasks, issues, and problems that are both urgent and important, while Quadrant II includes things that are important but not urgent. Quadrant III issues are urgent but not important, and Quadrant IV issues are neither important nor urgent.

Covey argued that most of us tend to spend most of our time in Quadrant I, while highly effective people find ways to give more of their attention to issues that are important but not urgent (Quadrant II). Highly effective people also stay away from Quadrants III and IV as much as possible because, urgent or not, these issues aren't important.

When a major crisis erupts, the number of issues in Quadrant I increases quickly and drastically. Issues or problems that were not particularly urgent or important a week or a month earlier suddenly demand immediate attention. Many of these issues feel like they are critical to survival, and some of them can be. Under these circumstances, most of us would be spending most - if not essentially all - of our time dealing with the urgent and important issues in Quadrant I.

The COVID-19 pandemic is a health and economic crisis of immense proportions, and business leaders bear the responsibility for leading their company through the crisis. Most leaders are responding to COVID-19 by focusing most of their time and attention on the urgent and important issues that are critical for business continuity. But it's vitally important for senior leaders - including senior marketing leaders - to begin looking to the future as quickly as possible.

Anticipating the future and making appropriate plans is the particular responsibility of senior leaders. One of the best expressions of this truth can be found in Into the Storm by Tom Clancy and General Fred Franks, Jr. (Ret.). General Franks was the commander of the U.S. Army's VII Corp during Operation Desert Storm. Clancy and General Franks wrote:

"One of the greatest skills of senior commanders is the ability to forecast. The more senior you are, the farther into the future you have to force yourself to look. You must be able to see beyond what others see. You must be involved in the present to know what is going on, but you must also discipline yourself to leave those actions for your subordinates to handle while you forecast the next battle, and the one after that."

During the initial stages of the COVID-19 outbreak, everyone in a company from the CEO down was working intensely on those issues that were both extremely urgent and critically important. That focus was entirely appropriate, first because immediate actions may have been necessary to keep the company functioning, and second because there was simply no visibility about how the outbreak would progress, which made it impossible to plan for the future.

There are still many unknowns about how the COVID-19 epidemic will evolve, but we know more today than we knew a month ago, and we should know much more a month from now than we know today. For example, as I am writing this on April 4th, there appears to be an emerging view among infectious disease professionals that the overall national peak of demand on hospital resources (beds, ICU beds, ventilators, etc.) in the U.S. will be reached sometime this month. If this projection turns out to be reasonably accurate, it's likely that we will begin to hear discussions in May about "reopening" the U.S. economy.

The key for senior leaders is to be prepared to respond quickly when business conditions begin to change. The most effective way to achieve this level of readiness is to be thinking in advance about how conditions may change and developing preliminary plans for each of those possibilities. In management circles, this is known formally as "scenario planning," and it becomes vitally important when senior leaders are working through a crisis.

So, senior leaders have two critical tasks to perform to respond effectively to COVID-19:

  • First, they must develop and implement the actions that are necessary in the very short term to ensure business continuity.
  • And second, as quickly as possible, they must transfer the management of the "very short-term plan" to others so that the senior leadership team can begin planning for the business conditions that may exist in the relatively near future.
Senior marketing leaders should play a major role in scenario planning, and I'll have more to say about that in a future post.

Top image courtesy of Naval Surface Warriors via Flickr CC.