Keep Resilient in Crisis and Seek Opportunity for a Better Future

The COVID-19 pandemic has shown businesses around the world how important it is to respond to crisis and uncertainty with flexibility, resilience and perseverance. Spencer Stuart met with leaders of member companies of the Shanghai Foreign Investment Association (SFIA) to exchange views on how to better organize and lead a company toward a fast-changing future with uncertainty.

In April and May, we spoke to nine CEOs of Shanghai-based multinational companies, including medical supply companies, service providers and retail establishments — some of which had to jump into crisis mode early in the pandemic, providing services around the clock and some that had to temporarily or permanently close locations. These organizations employ from a few hundred to several thousand people. While every CEO felt mounting and overwhelming pressure in late January and early February 2020, they are now in a fight to continue recovering their business.

The report comprises the following:

1. Our observation: How these interviewed CEOs have demonstrated leadership in crisis
2. CEO response: Critical measures in crisis management
3. CEO insights: Changes brought or accelerated by the pandemic, and key factors that define the future of leadership

1. On the Front Lines: Leadership in Crisis

Many of the leaders we spoke with knew exactly how to step up to the plate in a time of crisis. Hironobu Taketomi, president and CEO of Fujifilm (China) Investment Co., Ltd., was one of them. In January Taketomi had to attend a meeting in Shanghai, but was told not to go, because the outbreak was already well underway in China. He decided to return to Shanghai anyway.

“When I flew from Tokyo on January 29, there were no other passengers,” he said. “And it was on that day that the Japanese government chartered a plane to evacuate its nationals from Wuhan.”

The next morning, Taketomi gathered company leaders and asked them to list “what they think matters” on a whiteboard. He took a photo of that whiteboard — and he still carries it on his cell phone. The scribbles on that whiteboard quickly turned into a crisis management brochure for Fujifilm’s leaders around the world.

“As a company leader, you must know where you are when a crisis occurs,” said Jeff Zhu, senior vice president and president of the Asia Pacific Region for Cabot Corporation. “When I came to realize this [pandemic] could be huge, I immediately decided to skip the Spring Festival holiday in Singapore and go back to Shanghai, before my family did.”

In crisis, leaders must also know how adapt to business interruptions. Chen-Jiang Phua, CEO, Business Unit Mobile Device & Substrates of AT&S (China), saw what was coming when COVID-19 cases started to rise in Wuhan at the beginning of January. He provided face masks for employees returning home for the Spring Festival, and every day during the holiday, he video-conferenced with employees. After the holiday in Singapore, he flew back to Shanghai, making sure to be present among the approximately 8,000 AT&S employees — providing a sense of safety and striking a balance between preventing the spread of the coronavirus and resuming work. With nearly 100 unique procedures involved in the company’s production lines, not all workers can be replaced if they become ill and cannot come to work — and those workers are needed to ensure business continuity.

Kamran Vossoughi, president and CEO of Michelin Greater China, had been in Shanghai for six months when his wife asked if they should take their children back to their home country of France. Vossoughi told her that they needed to stay in China, settle down and make a contribution.

“The moment I started living in China, I assume it is my home and we will leave for nowhere,” he said.

Like Vossoughi, Daryoush Ziai, CEO of Schindler China, was scheduled to celebrate the Spring Festival with his family in Xi’an, the capital of Shaanxi Province. With COVID-19 cases rising there, he decided to stay in Shanghai and not return to the United States. Daryoush understood the situation that China might confront and called for the global procurement of two million face masks for Schindler’s staff of more than 10,000 employees.

When leaders place their employees’ best interests first in times of crisis, there is an opportunity to demonstrate true leadership.

Seizing the Opportunities Presented By the Crisis

The companies that continued to operate as normally as possible, despite the pandemic, are the ones surviving now. Michelin, for example, has over the years focused on developing its consumer business and expanding its tire replacement market. By launching the Tyreplus brand, Michelin has a nationwide network of brick-and-mortar stores that offer maintenance services throughout the entire lifecycle of the tire. As a result, the company has been less affected by the decline in business for complete vehicle manufacturers.

Dr. Weiming Jiang, president of DSM China, believes that the pandemic outbreak has proven that it is a trend for the large chemical company to develop into a global science-based company in nutrition, health and sustainable living. The virus is testing the crisis management, corporate philosophy and resilience of a company.

“DSM started to transform over a decade ago and has come to see customer satisfaction as our top priority while maintaining the original ingredient production techniques,” he said. “On the B2B2C business model, we emphasize how the middle B reaches customers.”

Over the 14 years since Jiang joined the DSM China, the company has undergone a massive change, with new employees who find it hard to picture what the company used to be like.

“I think a company needs a force constantly driving its transformation, and the most important part of that is the way we see the market, analyze its trends, and find our position,” Jiang said. “By the position, I mean basic competency, restraining us from following fashion trends and engaging in marketing hype.”

Daryoush Ziai told us that he did not expect people to resume work this quickly, adding that the pandemic has changed people’s behaviors so they are move at a faster pace. Schindler China has already studied the impact of e-commerce on its future product portfolio. As working from home becomes more prevalent, the company has to work faster on identifying new demands — the possible impact, for example, that expanding the living area will have on residential elevators.

Chen-Jiang Phua told us that the industrial chain has been greatly influenced by the pandemic, but companies that respond quickly to a crisis and resume work by leveraging production factors across the industrial chain and timely meeting customer demand can continue to create more business opportunities. Despite weak market demand, AT&S continues to see customers requesting samples and technological assistance for their new projects. This has stimulated the company to spare no effort in continuing to develop its medium-term strategic plan.

Hiroshi Takahashi, chairman and president of Sony China, told us that Sony identifies opportunities for growth amid the current touch-and-go business environment in two ways.

“One is the sales opportunity brought by the surge in new consumption-driven demand, while the other is higher efficiency fueled by a change to the way to work, he said.

Takahashi also told us that the pandemic has changed the way we work in a way that allows them to review procedures and efficiency, and technology has a vital role to play.

“It is our hope that accelerated technological development and application would help boost consumption needs and make work more efficient,” he said. “The online services involve new sales channels and the fronts of education, entertainment, and fitness. Most of Seizing the Opportunities Presented By the Crisis 5 our new product releases have now been live-streamed or had short videos, replacing written messages as much as possible since these are the most accepted ways for consumers to be informed.”

Like most retail establishments, many of Sony’s retail stores have been adversely affected by the pandemic, but the company still posts growth in online business. The demand headphones, for example, is on the rise due to people working from home and students attending remote school. Takahashi wants to continue to stay on top of new product trends and continue to seize growth opportunities for Sony.

For Fujifilm, changes and setbacks have never disappeared. Two decades ago, its core business of photographic film suffered a plunge with the emergence and popularity of digital cameras. However, its subsequent dramatic transformation and reform, together with years of technological efforts, have turned the business around. Even today, the company is still in transition as it dives into such industries as healthcare, high performance material and electronic image, with about 15 business lines in China alone. To date, the conventional medical X-ray film represents one of the core operations of Fujifilm, serving large hospitals.

Hironobu Taketomi, president and CEO of Fujifilm (China) Investment Co., Ltd., believes that thinking differently is what the company needs in the post-pandemic period. China is a market completely different from other countries, he explained. What really matters is not the way to sell, but how to address the issues customers have through products and services.

Kamran Vossoughi also regards China as a land of opportunity, particularly for high-end products, as the market is focused more on quality than quantity. Michelin produces its most advanced products in China, with the high-tech tire made in its Shenyang plant and supplied to Tesla’s Shanghai facility. More than a tire supplier, Michelin also positions itself as a solutions provider. For example, it works with airlines to calculate the cost-per-landing, negotiates with bus companies on the agreement to provide tire-related services by mileage and improves the relationship with dealers to keep data about end customers and tires sold close at hand.

At some point, crisis is bound to happen for every company, whether by frequent market fluctuations or a global pandemic. But CEOs who respond positively, identify opportunities, and take practical measures show that they are committed to shaping an atmosphere open to employee innovation and exploration.

Trust is a Fundamental Element of Leadership for CEOs

As CEOs discussed how their organizations tackled the challenges of COVID-19, it was clear their employees, customers and suppliers had great trust in them.

Fuliang Xia, president of Evonik Greater China Region, emphasized the role of corporate values. “The trust is not just between management teams or between employees and superiors, but between our partners and suppliers and us,” he said. “I called Evonik’s president for Asia Pacific, informing him of our intention to take some strict protection measures. And he told me, ‘you have my full support.’ He believed that whatever action we took was necessary to ensure business could run as normal as possible. If an employee was infected with the virus, we would have had to put our operations to a halt. As a regional management team, we are authorized to handle a wide range of regional affairs without asking permission from the headquarters, particularly when it comes to launching a contingency plan to battle a pandemic. But with power comes responsibilities,” he added.

Kamran Vossoughi had a similar experience at Michelin. “After 18 years of work in Michelin, the headquarters has granted me trust and power,” he said. “Given this, I know what needs to be reported and what doesn’t, and our headquarters did not have any clue about what was happening in China. So across global markets, we in the headquarters of Michelin Greater China would take the same approach to delegating power to the right person.”

Now that China has emerged as the most important overseas market for many multinational companies, the appointment of CEO in China is a critical decision. The CEOs all have a proven track record and are deeply trusted by the headquarters. Of the nine interviewees, six worked for their company for nearly (or more than) 20 years and three worked for five to 15 years. At a critical moment, a relationship of trust built over time pays off. By delegating some decision-making power to the local management team, organizations are able to act independently and swiftly when a crisis occurs. Likewise, the Chinese management team should grant certain authority to its local leadership.

Corporate Culture Serves as a Company’s Anchor in Times of Hardship

A company’s values are the core of its culture, which is the soul of the company. Corporate culture defines the proper way to behave within an organization, especially in times of hardship. The company’s culture, as Takahashi said, is so real and familiar that it is like the air we breathe. Putting people first, encouraging innovation and staying open-minded are fundamental elements of Sony’s corporate culture. During the pandemic, Takahashi would regularly keep in touch with the company’s staff through company blogs and end each with the same words – “Please put the health of you and your family first.”

Dr. Scott Zhang, president of Honeywell China, said an N95 mask producer under Honeywell had donated face masks to hospitals in Wuhan and Hubei Province. Finding the working environment in hospitals poor, the company also offered 3,000 air purifiers, a gesture that generated pride in Honeywell’s staff. When the company was understaffed to deliver the donations, office workers offered to help load trucks in the warehouse. The “One Honeywell” culture has been championed by the company and has helped to integrate Honeywell’s four affiliated groups, bringing employees together for a common cause.

Even today, Schindler stays true to its time-honored culture that was developed when the company was family-owned. Daryoush Ziai told us that loyalty should be a two-way street — when a crisis occurs, a company should put the health and safety of its staff before management costs or layoffs.

Chen-Jiang Phua agreed that corporate culture is modeled from the top, adding that the quality of the company’s leadership would have an impact on the company’s performance. Reliable and firm leadership is enabling AT&S (China) to better promote corporate culture and to build a bond of trust among people. Ultimately, these qualities will contribute to the overall performance of the company.

Corporate culture has been particularly close to Hironobu Taketomi’s heart.

“I have been in China for three years, and being a self-starter is what I always stress, he said. “Each and every employee should figure out what his or her mission is, what he or she is obliged to do, and what the society expects from us.”

Forty percent of Fujifilm’s operations are healthcare related, and in the early stages of the pandemic, the company was asked to help with urgent deliveries by several hospitals. Some of the company’s employees drove their own cars to deliver needed medical supplies to Hubei’s hospitals, more than 650 kilometers away.

A company’s real culture is not the slogans on the walls or mottos on its website. It is about the practices the company encourages in the real world and the personnel it puts in important positions. The right culture can enhance employee engagement and encourage greater contributions. Leaders are in the best place to model corporate culture.

2. Preparations Will Pay Off

The nine companies of the executives we interviewed collectively employ about 46,000 employees in China. These companies, including Michelin and DSM, are century-old brands with proven experience in crisis situations. Michelin, DSM, AT&S and Evonik have established their own crisis management system and crisis management team, and conducted regular emergency drills, allowing them to react calmly to the sudden virus outbreak.

Values matter

The interviewees have respectable organizational values and culture, such as “putting people first,” “caring for employees,” “transparency,” “trust” and “sharing and symbiosis with customers and partners,” so that the stakeholders could pull together in difficult times.

The manufacturers included in this interview have a tradition of putting worker safety first and were in a good position to fight the virus. Fuliang Xia, president of Evonik Greater China Region, exercised his responsibility to ensure worker safety with utmost caution. Evonik’s contingency plan prepared the company for possible adversities, including pandemics, by holding personal protection supplies on major production sites and conducting internal auditing and drills on a regular basis.

Chen-Jiang Phua also highlighted the importance of “caring for employees,” an organizational value that was pursued even more vigorously by AT&S during the outbreak. The employees had been alarmed about an unidentified viral pneumonia in Wuhan via WeChat as early as January 6, 2020. Some were placed in a designated quarantine hotel with meals served before going back to work. The company also offered emotional support for those who felt depressed about the quarantine and distributed preventive health packages to its employees in Hubei. Given the logistical challenges during the lockdown, the company made special arrangements to rush the packages to employees in Hubei. When the company began to resume operation, only about 100 Hubei workers had not been recalled to their jobs. To relieve their worries about their job security, the management issued a clear message that they remained an integral part of the group and would be brought back in due time upon negative test results.

DSM China has a well-developed “safety, health and environment (SHE)” crisis management system and process. The DSM China management team met January 21 and issued guidance on worker safety, established an internal tracking and reporting mechanism as well as an emergency response team to closely monitor COVID-19 developments.

For Kamran Vossoughi, it was almost an instinct to prioritize the protection of employees in the first two weeks of the pandemic, even at the expense of performance. The company distributed government grants to employees and special subsidies to Wuhan workers and their families. The company also paused personal performance targets to ease the burden.

“Quick response” is always the best choice

All the leaders agreed that responding quickly was essential. “We first set up an emergency response team, led by China headquarters, on January 23, said Scott Zhang. “It consisted of eight or nine department heads of HSE, HR, government affairs, communication, IT, administrative facilities, etc.

Zhang and his team soon realized that the outbreak affected everyone in some way, so they expanded the team to include the heads of the four business lines and of 21 factories across China.

“We met every day for the first four weeks; there were too many issues on the table,” he said.

According to Chen-Jiang Phua, a quick response only happens under a supportive organizational framework. In AT&S, the medical office is directly managed by the HSE department which reports to Phua. It spares the trouble of going through a multi-level hierarchy to report any emergencies and enables fast decisions.

Jeff Zhu identified worker safety as the paramount concern for chemical companies, where protective supplies are always in place. What impressed him most, he said, was the dedication of the middle management team. The Chinese factory GMs collected and shared all useful information immediately after the outbreak, and established a standard operating procedure that spelled out management details. They also made a dashboard for all product orders, stocks, shipments and transportation. These toolkits were later replicated in other factories outside China.

Digital technologies can be used to collect and analyze information

All the interviewees recognized the huge positive role of digital technologies in accessing the COVID-19 developments, evaluating employees’ health conditions and resuming work and production.

Zhang and his team were informed on January 26 that 162 employees were in Hubei, which was more than the previously known 38 employees. The company was able to collect the employees' information, which later proved to be very useful. They issued notices on WeChat about three or four times a week to share safety tips. When operations resumed, the company shared information about local policies via WeChat. On February 10, 18 of the company’s 21 factories fully resumed operations, and the remaining three partially restarted operations, eventually achieving 100 percent work resumption.

Multinationals facilitate the sharing of global resources

Leaders told us that the multinationals played to their strengths in the pandemic response by importing masks and other PPE from all around the world to China in January and February when the country reported the most cases, and sending PPE from China to other countries in March and April.

Organizations also shared information across borders, which turned out to be even more important. On February 24, Honeywell China headquarters set up an emergency team to help with the COVID-19 prevention and control in Japan and South Korea. Through daily online meetings with the heads from Japan and South 10 11 Korea, the team learned about the latest coronavirus developments in the two countries, trying to find a way to better protect the employees without compromising business operation and production.

“Our solid experience in responding to COVID-19, including the special arrangements we made on the production lines to minimize the risk of infection, is of great relevance to Honeywell’s overseas operations,” said Zhang.

Frequent and transparent communications help build consensus and confidence

Communications. Dr. Weiming Jiang recalled that celebrating AT&S’ CEO succession in February, where the two CEOs delivered a video speech, calling on the world to contain the COVID-19 virus by respecting geographic borders. Their remarks encouraged Chinese employees at a time when most of the known COVID-19 cases were reported in China and when most international airlines cancelled flights to China.

“Back then, our management team met every day,” said Jiang. “We passed our discussions and decisions down to the grass-root level to keep everyone informed.”

On the day they resumed work, Jiang and the management team made a video to deliver a clear message that business was recovering, jobs were secured and life was improving.

“Confidence is the name of the game,” said Daryoush Ziai

In addition to sharing daily communication minutes of the emergency management committee with all departments, Fujifilm employed an internal communication channel on WeChat to keep everyone updated on problems and countermeasures, and to facilitate discussions. This was a common practice adopted by several of the companies included in this research.

Companies must pay attention to upstream and downstream suppliers and customers to ensure the soundness of the industrial ecosystem

The COVID-19 outbreak put supply chains to the test. Companies have to ensure sound operations for itself and for upstream and downstream partners. As previously mentioned, Honeywell resumed full operations in 18 of its factories in February; the next challenge was to restore the entire supply chain. Because some suppliers were so small, Honeywell negotiated with government authorities on their behalf, explaining the importance and necessity of these raw materials and products to Honeywell’s supply chain.

The soundness of the supply chain is guaranteed by two factors: the right suppliers who attach importance to safety issues to ensure business sustainability and minimized operational risks with “eggs put in more than one basket.” Long before the outbreak, the global supply chain had been heavily dependent on China. As the coronavirus outbreak forced China to shut down its industries, the country was running short of supplies, especially PPE like masks, causing global attention and in some places, panic. Political considerations aside, every company must reevaluate the operational risks of the supply chain.

Schindler (China) operates some projects in overseas markets, and when China shut down its industries, Daryoush Ziai and his team began communicating with customers nearly every day. Once work resumed, the company made every effort to ensure overseas supply, and restored logistics service.

3. Will There Be a Very Different Post-Pandemic World?

Remote conferencing and working are the most implemented changes

There is no question that the pandemic has changed the way we behave and work. Remote conferencing and work-from-home (WFH) will likely become routine practices in the post-pandemic workplace, and CEOs are looking for ways to improve work flexibility and efficiency.

Hiroshi Takahashi told us that employee surveys revealed that, with the exception of sales-related trips, the company should greatly reduce business trips. The surveys also showed that WFH employees can stay close to their family without compromising work efficiency. The company is working on how to continue improving efficiency, without having to increase staff.

Daryoush Ziai said his past experience of traveling to the headquarters in Switzerland every two months to attend a two- or three-day management committee conference will likely be replaced with video conferencing.

Though video conferencing is not perfect — participants cannot glean the same information they could otherwise get in face-to-face conversation, like subtle changes in body language — it is a great tool for small-group discussions among people who are familiar with each other, and looks to be the trend of the future. Because of this, Schindler anticipated a falling demand for high-speed elevators in office buildings, but a growing need for larger living spaces.

But with new trends, come new challenges. How do you encourage team cohesion among employees when WFH becomes the new normal? How do you establish and maintain mutual trust when people seldom communicate face to face?

Companies plan changes to increase their agility and ability to respond quickly

The priorities include developing new management approaches, improving management efficiency, increasing organizational flexibility and encouraging more cross-departmental and cross-organizational cooperation.

Most companies have established a cross-functional crisis management team, which can greatly improve the efficiency of decision-making and problem-solving.

Honeywell has four business lines, which normally operate in parallel. But in an emergency, their supply teams work together. The management team of Michelin (China) communicated more often than before to effectively identify and solve problems during the coronavirus outbreak. At the daily management meeting, which are now routine, any problems that require cross-functional cooperation and coordination can be discussed. One example of this is changes to workspaces. Instead of conventional, individual offices, mobile offices are becoming a new option.

Kamran Vossoughi set this example by transforming his office into a meeting room. He said he believed that such changes must be implemented from top to down. He also established a monthly “day of cooperation,” where about 20 executives work together in a single space, allowing any problems that require cross-functional efforts to be addressed.

The pandemic has accelerated the pace of digital transformation

Digital transformation is not only the responsibility of a company’s IT department or chief digital officer, but a systematic strategy that involves the entire organization — and it has been in process in many companies since well before the pandemic. But COVID-19 made it logical for companies to move their business online.

Hironobu Taketomi said he was concerned about potential impacts that the behavioral changes of the customers might have on Fujifilm’s business model. Will hospitals change how they operate? Will people visit hospitals less than before and want remote diagnosis? The senior population also realized the convenience of B2C e-business platforms. The process of digitalization and e-business reform needs to be accelerated.

Every crisis comes with a cost, but also promotes changes. A wise leader knows how to take this opportunity to accomplish a reform that would otherwise be very difficult to achieve.

CEOs’ Thoughts On Leadership

1. Resilience is the foundation of good leadership in dynamic times

Several CEOs mentioned the importance of resilience in leadership. The sudden outbreak of COVID-19 meant tremendous challenges to the resumption of work and production. Daryoush Ziai told us that employees in Taicang (Jiangsu) were placed in an awkward position: if they returned to the company, which is located between Shanghai and Jiangsu, they wouldn’t be allowed home — and the company had to provide accommodations for this. The managers were also confronting the problem of having to redesign their plans to match constantly changing local policies.

The CEOs anticipated short-term adjustments as the pandemic sparked fears among some countries of being dangerously overdependent on a global supply chain and on China. Despite having navigated through these rough waters, globalization remained the long-term strategy, requiring leaders to persevere through difficulties.

2. Accountability and influence by example are measures of good leadership

Kamran Vossoughi told us that employees who are willing to assume responsibilities and serve public interests at moments of crisis should be rewarded and promoted. When problems persisted across Michelin’s 200 service centers in China, the local managers had to make prompt decisions before reporting to headquarters.

“I’m glad that no one flinched,” said Vossoughi. “They all stood up to their responsibilities.”

Daryoush Ziai added that many times, employees had to step out of their comfort zones.

Fuliang Xia also recognized the importance of leading by example and having an excellent team in place, especially in times of crisis. All members of the team have to assume their respective duties whenever an emergency takes place, leading by example. “The management team has to wear masks before asking the employees to do so,” he said. “Whatever the employees are asked to do has to be done properly by the management team first.”

3. Leaders must meet higher requirements on work scheduling, communications and team cohesion

The rapidly changing pace of work also places new requirements on leadership skills. Hiroshi Takahashi said that WFH environments require leaders to learn how to schedule work, to properly assign tasks and to evaluate the ability of one’s own team. Since team members do not meet every day, the leader has to manage work progress effectively.

As more flexible employment options and more virtual teams will arise in the future, leaders must possess effective online/offline communication skills, considerable insight and empathy to encourage teamwork and working effectively.

According to Jeff Zhu, the growing China presence in global business has called for top management teams in China to take more thoughtful approaches to communicating in an effort to reduce worry and build trust. China is no longer seen as a special market. It may contain unique Chinese elements, but it will be assessed in the same way as other markets.

4. In the long run, leaders who properly assume social responsibilities and attach importance to sustainability will take the company further

The virus respects no borders, proving that issues confronting all human beings are real challenges to the world. DSM focuses its strategies on global shift, climate change, energy reform and digital transformation. Its leaders believe that a company has to see afar before it can go afar, and it is important to share with all partners on the value chain. That requires the leader to look and think beyond the interests of the company.

Kamran Vossoughi learned from the pandemic that a capable leader cares for employees and exhibits love and passion for his or her own country. A leader who loves his or her country will act in the best interest of the country. For Michelin, making contributions to society matters more than making profits. Organizations should have a clearly defined purpose and values for life: proper behavior (more important than skills) and a focus on long-term sustainability, he said. Michelin has blazed new trails, from zero-emission production to novel sales models and business reform. Their purpose is to protect the environment, improve business ecosystems and increase efficiency. Only leaders who think beyond immediate business interests can identify these opportunities and pursue longer-term sustainability gains.