What are some of the more interesting crisis management measures that you’ve put in place?

Well, it is remarkable how much experience you can gain managing through the COVID-19 crisis in just a matter of weeks. It’s been quite an experience. We’re doing well under the circumstances, but it has required a lot of creativity and a lot of endurance as well.

One of the most important things is that we have over a hundred plants. In order for us to keep producing, we have to keep the supply chain and the plants running and make sure that they have the parts and labor that they need, as well as ensure the safety of employees. One of the things that’s helped us tremendously is we consolidated our operations function literally at the beginning of the year. We’d been planning it for about a year. We put together a central industry 4.0 hub based in Hartford, Connecticut, which connects to over a hundred plants and their realtime manufacturing execution systems data.

We’ve seen the benefit as we’ve gone through this crisis of having this command and control center — a sort of central war room for global operations — to provide data and information about the operations of all plants. And then to quickly respond as problems have arisen. Solutions that we’ve identified in one particular plant are easily communicated to all the other plants in the system through the central operations hub.

A lot of what companies are doing right now is reacting to the crisis with essential facilities management, supply chain adjustments and hygiene and working at home policies. We’ve proposed that companies also need to think about recessionary strategy, rebound strategy, and re-imagination of the business in the post-COVID world, in a year or so. What are you thinking about or doing in those other categories?

To face the reality that this will be not only a recession, but likely a deep recession. We don’t know exactly how long and how deep, but this was pretty obvious to us early on. So literally in the first week, when it became obvious that there was going to be a dislocation of production in the economy, we immediately put into place scenario planning. We considered a number of scenarios but we finally ended up settling on three.

And in connection with a scenario plan, we put in a phased cost take-out approach, which began with indirect cost reduction measures. We spend 1.7 billion, it’s a meaningful pot of money to go after. But then secondly, as it relates to labor costs and salary comp and ben, we put in a phased hybrid approach where there were some four day work weeks, some 90 day furloughs and some classical reductions. This has enabled us to go in with kind of a base case scenario combining these three approaches.

And then we also have on the shelf a second plan. In a month or two in we’ll be looking at this. Whether it turns out to be a V, a U, an L shaped recession, we can adapt. The more temporary cost take-outs could then morph into more permanent ones as appropriate. Our approach for to recession and rebound readiness has been to go in strong. And then through early action, stay strong and come out stronger.

And as far as the re-imagination of the business, I think it’s appropriate to give it a few more weeks before we get into that full bore. But it does inspire people to be able to work on that. So as soon as the dust settles and we get our cost actions implemented, we will very quickly set up a small group of executives that will bring in some of the best thinkers into a weekly session along with my attendance as well, where we will brainstorm the opportunities to leverage our company’s resources with different business models. We will also look at acquisition opportunities, where other companies have weakened in the process and become more suitable for acquisition.

I guess one really hard thing about going from reaction to recessionary to rebound, is the fact that you’re going to perhaps have to take output from say 100 to 50 and then 120 and then maybe back to 80. How are you thinking about cutting but preserving the option to grow?

Yes, I think that’s exactly what our phased approach does. Because if you have a four day work week but people still are on the payroll and they’re not going anywhere, we can simply put the fifth day back as soon as it’s economically viable to do so. It’s a 90 day furlough and there’s no need to furlough beyond 90 days, then the people come back in most cases. However, if it goes deep in what I’ll call the downside case, then the same number of people won’t be appropriate. The number of people will have to be sized to the opportunity. And then as we look at that, we’re going to have to look at what are the things that really don’t add short-term, medium-term or long-term value. And those activities will have to be discontinued.

Every crisis brings opportunity for some at least, too. I can imagine that in construction, the hardship is more prominent right now. But are you already seeing the signs of opportunity in some parts of your business?

Well, one of the interesting things is what’s happening in the home centers in North America. With all these folks sheltering in place, there’s a lot of people who are in their homes and have decided to do long deferred projects themselves. You might think that when the economic activity is as depressed as it is, the volume in those home centers might be down too. They’re really doing well and so our products are selling nicely into the DIY market right now.

I can imagine that. I’m doing some home repairs myself.

It’s a great pastime. I can’t do much of that because I’m trying to run the company from my dressing room but for the folks that have a little more time, for whatever reason, it’s a great pastime.

One of the characteristics of the virus is its very high transmissibility and therefore its very short doubling time. So the speed of development is really quite overwhelming for most organizations. Have you seen opportunities that have been uncovered by the crisis to improve your organization’s or your broader ecosystem’s agility or resilience?

Yes, we are seeing opportunities on that front. First of all, we get to see people’s leadership styles and to see who are the real war-time generals who have the skills and ability to shine in times of crisis.

One of the things that’s been heartwarming as we’ve gone through this is the willingness and the passion that our people have to jump in and do things for society that take our company’s talent, our resources and our innovation and apply it to societal challenges. One of the things we’ve been able to do to help facilitate that is to set up a company wide global task force, called the Global Community Response Task Force. And we’re working on projects to provide power systems for respirators. We’re coming up with a biodegradable sanitizer that can be produced at scale with one of our venture investments. We’re working with a consortium of companies on 3-D printing medical face shields and masks, which are as effective as N95 masks.

There’s just a whole litany of things that we’re working on. When a good idea comes up, the task force is helping expedite implementation, whether it be trying to accelerate FDA approval or testing or securing the resources needed.

At the same time we’re working on making sure our supply chain is in place, our customers are being served and our people are being taken care of and kept safe. We have this groundswell of activity trying to take the company’s resources and our people and focus them on helping the world get through this crisis.

Do you think a lot of that will stick after the crisis? For instance, I’m wondering what’s going to happen to the carbon agenda after all this is over. We’ve been singularly unsuccessful in our deliberate attempts to reduce our carbon footprint, but now somewhat unintentionally, we’ve been able to reduce our carbon footprint. How do you see the carbon agenda and the sustainability agenda evolving after the crisis?

Well, I’d like to believe that it’s going to fundamentally change, in the sense that it could accelerate and improve on the efforts that are already being undertaken by many companies, which are in many respects under-appreciated by the general public. I am referring to the things that are already being done by organizations like the World Economic Forum the Business Round Table and their member companies.

We’ve been about social responsibility since 1843 when Stanley was founded and as the CEO in the last four years, I have been doing everything I know how to do to inspire our people and our company to step up and be a great corporate citizen. I think what will change now is that perhaps more companies will become more activity in this regard. And I think that’s great. And because I think the power of what corporations can do is being exhibited right now, it will stick. And the trust that people place in corporate leadership will move up over time.

This pandemic, which many prominent people warned us about, was just ignored until it became a crisis. I hope that that lesson is something that we take note of in governments around the world. Just because something isn’t a crisis today doesn’t mean it’s not going to be an existential crisis tomorrow. And if we have smart enough people that are plugged into helping us with some of these challenges, I’m hopeful that we will make more progress on things like the carbon agenda as we move forward.

Do you see any significant and permanent changes in the pattern of demand? Obviously there are a lot of temporary changes. People can’t go to the shops so they have home delivery and they do DIY home repairs. But do you see any sort of fundamental shifts in the pattern of consumer demand over time?

Well, I do think people going through this crisis have learned tremendous lessons about how to apply technology and about the art of the possible. It’s quite possible that lifestyles and work lifestyles will change dramatically in the post crisis period. I think once we get a vaccine, it can be business as usual for the most part, if people want to go back to that. I think humans are social beings and there probably will be a gravitation towards business as usual. But I think the lessons that people have learned about how to apply technology and what we’re learning every day now about the art of the possible, will in all likelihood shift patterns of demand. Our e-commerce revenue was running around 10% of total and it’s jumped the last four or five weeks. And I don’t think all of that is temporary. I think it was a secular trend anyway and I think it’s probably going to be an even bigger secular trend in the wake of the crisis.

Not all parts of the world have seen the full force of the crisis yet. What message would you have for leaders from your personal experience on what they should be focusing on to make their responses as effective as possible?

I think the ugliest chapter is yet to come. And that’s the emerging markets where the vulnerability is much higher because of the weaker healthcare systems and the lack of resources. And also the socioeconomic conditions are really not conducive to social distancing. So, when I look at all the economic growth that we were expecting in the emerging markets over time, my concern is great in terms of the humanitarian crisis that we might see, as well as the economic impact that this is likely to have in those countries. I don’t have the answers yet on this one, but we have a big emerging markets business. I’ve raised this with my senior risk council, which is a weekly gathering of seven executives who talk about issues coming down the pike and what can we do about them. It’s on our agenda and we’re going to do a lot of brainstorming over the next couple of weeks and try to figure out how we can get our emerging market folks ready for what’s ahead. Until there’s a global vaccine at scale, I think that’s going to be a very important issue.

Jim, thank you very much for spending time with me and for sharing your personal learnings on leading through the Covid crisis.

Thanks Martin. Stay safe. Take care.