Crisis Leadership: Geo-Political Side of Business During COVID-19

Corporate Director Podcast Episode 25 with Alex Wolff - View on COVID-19 GovernanceListen to Episode 25 on Apple Podcasts

Guests: Alejandro “Alex” Wolff, Board Member of Albemarle Corporation, PG&E Corporation, JetSmart Holdings, and Frontier Airlines; former U.S. Ambassador to Chile and former U.S. Ambassador to the United Nations shares his insights on crisis leadership.

Hosts: Dottie Schindlinger, Executive Director of the Diligent Institute, and Meghan Day, Senior Director of Board Member Experience for Diligent Corporation

In this episode:

  1. What advice does Wolff have for directors about crisis leadership during COVID-19?  Avoid micromanaging or reinventing the wheel.  Be open to learning and new opportunities.
  2. What can boards do to anticipate and stay ahead of such situations?  Wolff recommends leveraging on-the-ground insights, reading up on world affairs, and keeping in touch with customers, suppliers, regulators, and other stakeholders.
  3. How will corporate governance look different in the years ahead? As the “democratization of decision-making” continues, boards should prepare for more scrutiny and engagement, especially related to parties outside of the boardroom.

Summary: 

People are hunkering down and forced to stay indoors. Law enforcement is being asked to keep people off the street. A great deal of uncertainty exists related to global response and how long the situation will last. COVID-19 is very different from a traditional economics-based crisis or natural disaster.

“It’s more akin to a war zone than a normal crisis,” says Alejandro “Alex” Wolff. 

Wolff brings a unique set of crisis leadership experiences to the situation. He’s a 34-year veteran of the US State Department, having served as the US Ambassador to Chile and to the United Nations during his tenure. Today, Wolff serves on the boards of Albemarle Corporation, PG&E Corporation, and two airlines – JetSmart Holdings – an airline operating in South America, and Frontier Airlines based in the US.

In this episode, Wolff shares his insights on modern governance through the COVID-19 crisis, and on crisis leadership in general with Diligent Institute Executive Director Dottie Schindlinger

What advice does Wolff have for directors on crisis leadership during COVID-19?

For starters, Wolff advises avoiding micromanaging and becoming an additional impediment to getting things done. Management and fellow directors may actually be more prepared to deal with a crisis than they first fear.

Most organizations have addressed crises in one shape or form already, he sayssuch as companies operating in seismic zones or hurricane-prone areas. Plans may already exist for dealing with what happens when operations shut down, adjusting to disrupted supply lines, or how to handle a dramatic decrease or increase in customer demand.

The right talent might be in place as well (or it might not). “Stressful situations often reveal which of your executives have the disposition and talent to manage effectively in a crisis,” says Wolff, adding that tough times might reveal shortfalls in executives previously regarded as superstars.

Crises can be valuable learning opportunities. Says Wolff: “I think the crisis often will reveal frames and weaknesses in your business model, how adaptable your organization is, how resilient your operations are, and how vulnerable you might be to sudden dislocation.”

Another consideration that boards may put on the back burner are the opportunities that may arise in a crisis, “such as M&A activity that may have been unthinkable just a few months before.” But be alert to unexpected risks as well, like the corporation becoming a target for an activist investor.

“Be prepared to assess the unexpected.”

– Alejandro “Alex” Wolff, Board Member of Albemarle Corporation, PG&E Corporation, JetSmart Holdings, and Frontier Airlines

What can boards do to anticipate and stay ahead of such situations?  

Wolff ventures to guess that most companies last year never would have anticipated anything like the COVID-19 pandemic and the related economic devastation. 

Things boards and companies can anticipate in their crisis leadership plan, however, include:

  • Product demand
  • Evolving customer needs (including increases or decreases in demand)
  • Interruptions to key transportation channels  
  • Potential difficulties that could prevent long-term customers and suppliers from making payments and meeting obligations
  • Government actions that may help or hinder your company’s operations

“If you aren’t thinking about the consequences of what’s happening overseas in other countries and other regions to your ability to expand and grow your business, you’re missing out on a huge, huge opportunity,” Wolff says.

Companies with global operations have a lot of in-house expertise already. “The people who are on the ground usually track these things quite well,” Wolff says. Their views can be a valuable complement to individual reading about geopolitics and world affairs. With COVID-19, for example, “If you weren’t following what’s happening in China a few months ago, this would’ve come as an even greater shock and surprise,” he says. 

Being alert to what’s happening in the world today is an essential element to what any executive team should be doing, and certainly the board should be doing this as well.”

– Alejandro “Alex” Wolff, Board Member of Albemarle Corporation, PG&E Corporation, JetSmart Holdings, and Frontier Airlines

How will corporate governance look different in the years ahead?

Wolff anticipates that the current “democratization of decision-making” – a hallmark of modern governance – will expand, with several ramifications for corporate boards. 

Expect more interaction with stakeholders, shareholders, and communities, he advises, echoing the increased engagement today by institutional and individual investors over what a company is doing and how it’s governed. Greater access to data and expert viewpoints will create a greater disposition to challenge boards.

“I think boards will be under greater scrutiny and held to higher expectations,” Wolff says. “They also will have to be more reactive to input and recommendationsnot just from their stakeholders, but from legislatures and government in general, who are taking a closer and closer look at how companies are run and how companies are operated.”

“I suspect that we’re not ever going to go back to business as usual.”

– Alejandro “Alex” Wolff, Board Member of Albemarle Corporation, PG&E Corporation, JetSmart Holdings, and Frontier Airlines

Also in this episode…

Wolff talks about COVID-19 challenges and responses in different industries and countries. With the crisis entering its third week, Schindlinger and Meghan Day, Senior Director of Board Member Experience for Diligent Corporation, vociferously disagree with an article about a supposed “experience gap” on boards, particularly given recent research on the value of board diversity. 

Listen to Episode 25 on Apple Podcasts

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