‘We Threw Out Any Plans We Had’: C.E.O.s Are Forced to Embrace Uncertainty
In normal times, there are few words that C.E.O.s like more than “certainty.” Certainty allows executives to issue sales forecasts with oracle-like conviction. Certainty instills leaders with the confidence they need to invest $500 million in a new factory, or spend $20 billion buying a competitor. Certainty gives them the verve they need to preside over virtual town hall meetings with their employees and discuss race relations, furloughs, remote work and more.
But at companies large and small, new and old, public and private, 2021 was a year that played havoc with expectations. Through it all, C.E.O.s swapped some of their favorite tropes — timelines, confidence, strategic plans — for something new: saying “I don’t know.” Or even: “I changed my mind.”
Take Daily Harvest, the food delivery service. It had a major advertising campaign ready to begin this week. In the works for months, it would highlight the problems with the global food system and invite customers into the woes of modern farming. Then, days before Christmas, Rachel Drori, the chief executive, considered scrapping the campaign.
“A week ago it felt right,” she said. With Omicron cases surging, the stock markets tanking and a pall cast over the holiday season, “it’s definitely not the right moment,” she said a few days before Christmas.
The Daily Harvest team began a frenzied attempt to create a new set of advertisements that spoke to the nation’s unease while also encouraging potential customers to buy premade mulberry oat bowls and turmeric soup.
Then Ms. Drori reconsidered. The original campaign would continue, after all.
The myriad related crises of the second year of the pandemic — including a supply chain gone haywire, a topsy-turvy labor market and constantly evolving public health guidelines — turned executives’ projections into estimations and return-to-office dates into fairy tales.
Companies that had prized their in-person collaborations went remote forever, with the share of Americans fully working from home rising 27 percentage points from prepandemic levels, and others remade their business models to try to stay afloat. Those decisions demanded agility: In one IBM study, 60 percent of executives surveyed had changed their approach to management during the crisis.
“I’ve been in retail for 30 years now, and this absolutely feels like a uniquely disruptive time in modern business history,” said Kelly Caruso, the chief executive of Shipt, a same-day delivery service owned by Target and based in Birmingham, Ala. “Nobody has come out of the last two years without feeling the pain of the pandemic. The level of uncertainty in business right now — that takes a toll on all of us.”
‘Shoot, move and communicate’
Ryan Petersen, the C.E.O. and founder of Flexport, right, with Sanne Manders, the chief operating officer, at their office in San Francisco.Credit…David Paul Morris/Bloomberg
Ryan Petersen, the chief executive of Flexport, which arranges international shipping, has spent recent months navigating the supply chain crisis. He toured backlogged ports hoping to understand why shipping containers weren’t moving. Then he hired a boat so he could observe firsthand the megatankers marooned off the coast of Los Angeles.
Understand the Supply Chain Crisis
- The Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.
- Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.
- Gifts Arrive on Time: Fears that a disrupted supply chain could wreak havoc on the holidays turned out to be wrong. Here’s why.
- Car Shortages: The limited supply of vehicles is forcing some to go to great lengths to find them, including traveling hundreds of miles.
- A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.
Now, as a year marked by unceasing disruption comes to a close, Mr. Petersen is confronting a distinctly of-the-moment disruption: On the Tuesday before Christmas, he tested positive for the coronavirus.
“I wasn’t sure if I was sick or if I ate too many Cheerios last night,” he said, adding that his wife, who tested positive a day earlier, usually looks after his diet. “My wife is really sick, and I just gorged myself.”
Mr. Petersen said that his symptoms were mild and that he expected to return to work in a matter of days. But his brush with Covid — nearly two full years into the pandemic — highlights the unrelenting chaos facing companies, their workers and their leaders.
“It’s been several years of uncertainty,” Mr. Petersen said, adding that because of the Omicron variant, Flexport had delayed its return-to-office plans again. “We try to embrace it.”
There was once a time when annual planning was anchored in reality. At the start of the year executives could determine, with some accuracy, what made sense for budgets and hiring, which made bold decisions easier to execute.
“As the leader of an organization, you want to give your employees as much certainty as you can,” said Jeff Boss, a former member of the Navy SEALs and the author of “Navigating Chaos: How to Find Certainty in Uncertain Situations.” “It’s very basic, Leadership 101 stuff.”
Mr. Boss, who runs a personal defense training company that teaches special-operations combat tactics to ordinary people, said those wartime principles were just as relevant to executives in the C-suite.
“In the military we had a key saying: ‘Shoot, move and communicate,’” he said, preaching the virtues of forceful decision-making, a determination to keep pressing forward and maintain transparency. “That same sort of strategy translates into business.”
John Waldmann, C.E.O. of the work force management platform Homebase, learned early in his career the primacy of plans, first in management consulting and then in private equity. As someone who had never built software but decided to found a software company, he practiced making promises and then figuring out how he could keep them.
When Covid hit, that approach collapsed. Homebase temporarily lost 60 percent of its customers, which were mostly small businesses and hourly workers. The company laid off 30 percent of its staff. Mr. Waldmann sat in meetings with his board of directors presenting wildly varying forecasts of how many clients he could ultimately lose, or when the country’s economic recovery might begin.
Other organizations were charting similarly tumultuous territory. At Bombas, the sock company, executives instituted a raise and hiring freeze, and had to be honest that they weren’t sure whether at some point they would have to do layoffs. At large tech companies, return-to-office dates have been postponed as many as four times.
“We threw out any plans we had, any budget, any road map,” Mr. Waldmann said, and with those went the sense of rigid confidence that had previously been at the core of his leadership. “It made it easy to say, ‘Let’s not kid ourselves.’ We have no idea when this is going to end.”
The curveballs keep coming
There’s nothing quite like falling ill to bring home the immediacy of the crisis, and Mr. Petersen, of Flexport, wasn’t the only C.E.O. in isolation.
Gary Kelly, the chief executive of Southwest Airlines, tested positive this month, just days after testifying before Congress that masks “don’t add much” to the quality of airplane cabin air.
How the Supply Chain Crisis Unfolded
The pandemic sparked the problem. The highly intricate and interconnected global supply chain is in upheaval. Much of the crisis can be traced to the outbreak of Covid-19, which triggered an economic slowdown, mass layoffs and a halt to production. Here’s what happened next:
A reduction in shipping. With fewer goods being made and fewer people with paychecks to spend at the start of the pandemic, manufacturers and shipping companies assumed that demand would drop sharply. But that proved to be a mistake, as demand for some items would surge.
Demand for protective gear spiked. In early 2020, the entire planet suddenly needed surgical masks and gowns. Most of these goods were made in China. As Chinese factories ramped up production, cargo vessels began delivering gear around the globe.
Then, a shipping container shortage. Shipping containers piled up in many parts of the world after they were emptied. The result was a shortage of containers in the one country that needed them the most: China, where factories would begin pumping out goods in record volumes
Demand for durable goods increased. The pandemic shifted Americans’ spending from eating out and attending events to office furniture, electronics and kitchen appliances – mostly purchased online. The spending was also encouraged by government stimulus programs.
Strained supply chains. Factory goods swiftly overwhelmed U.S. ports. Swelling orders further outstripped the availability of shipping containers, and the cost of shipping a container from Shanghai to Los Angeles skyrocketed tenfold.
Labor shortages. Businesses across the economy, meanwhile, struggled to hire workers, including the truck drivers needed to haul cargo to warehouses. Even as employers resorted to lifting wages, labor shortages persisted, worsening the scarcity of goods.
Component shortages. Shortages of one thing turned into shortages of others. A dearth of computer chips, for example, forced major automakers to slash production, while even delaying the manufacture of medical devices.
A lasting problem. Businesses and consumers reacted to shortages by ordering earlier and extra, especially ahead of the holidays, but that has placed more strain on the system. These issues are a key factor in rising inflation and are likely to last for months — if not longer.
Verizon’s chief executive, Hans Vestberg, said on a company webcast that he had tested positive for Covid this month, adding that his symptoms were mild and encouraging employees to get vaccinated.
And Rich Handler, chief executive of the investment bank Jefferies, shared this month that he had tested positive for the coronavirus and was isolating, days after the bank sent its employees to work from home and mandated booster shots for all those returning to the office by late January.
“The one thing that keeps growing (besides your beard) when you are in isolated lockdown is a very long list of fun things you want to plan to do once you and the world are healed,” Mr. Handler wrote on Instagram. “The trick will have to be that list remains a vital priority once all of the uncertainties pass.”
With the virus spreading as rapidly as at any point during the pandemic, more C-suite infections are all but inevitable. And for some executives, falling ill themselves has reinforced the unpredictability of the moment.
The staffing challenges emerging as workers fall sick, stacked on an environment of already soaring resignations, has made it hard for business leaders to anticipate what the coming months might bring.
Chuck Robbins, the chief executive of Cisco, was supposed to be in Davos, Switzerland, next month for the annual meeting of the World Economic Forum. But as Omicron cases rose last week, he emailed Klaus Schwab, the head of the forum, and told him that Cisco would not be attending. Two days later, Mr. Schwab postponed the gathering, which was set to draw thousands of politicians and executives to the Alps for a week of canapés, cocktails and speeches.
“We’ve had ongoing challenging situations since I became C.E.O., from tariffs, to the ongoing political situation in the U.S., to the pandemic, the lockdown, the social justice issues, and now the pandemic that won’t seem to end, and the supply chain issues,” Mr. Robbins said. “Just when you think you’ve got it figured out, you get another curveball thrown at you.”
‘Am I being punked?’
Charity: water — a nonprofit — used to hold its annual plans almost sacred. Advancing its vision of clean drinking water for all meant thinking within the widest time horizons, thought the chief executive, Scott Harrison. But looking back at 2021, he realized that some of the organization’s biggest decisions couldn’t have been predicted in its start-of-the-year plan.
There was the move to begin a Bitcoin trust, which will hold on to its funds until at least 2025, in the hopes of an exponential leap in value. There was the announcement that the team would end its TriBeCa office lease, giving staff members more flexibility in where they worked and lived.
With the world and the virus in a state of constant flux, Charity: water has shifted its approach to annual reports.
“We’re now moving to six-month goals and even more of a quarterly sprint cycle,” Mr. Harrison said. “It’s so hard to imagine where we’ll be 12 months from now.”
And some are finding humor in the tumult, whether in broken-up Zoom calls or meetings interrupted by hungry pets. It may be an interminable mess, but at least everyone is going through it together.
Lisa Osborne Ross, U.S. chief executive of the public relations firm Edelman, said she had gotten an outpouring of sympathetic notes from her staff after she led one of the rockiest meetings of her career this month.
She tried to display an end-of-year memory video, which somehow ended up visible only to her. The audio cut out. Murphy’s Law prevailed. Everything that could go wrong went wrong — and her employees loved it.
“I was like, ‘Am I being punked?’” she recalled. “But people said it was the best town hall ever because it was human and funny.”