“Is this the time to look ahead and start thinking about the post-pandemic era? Or are we still focused on addressing the needs arising from the crisis it has caused?” asked Pedro Arnt, Chief Financial Officer (CFO) of Mercado Libre,during the online conference “Decision-Making in Uncertain Environments.”
The event took place on Thursday, July 20, 2020. Arnt spoke about how to adapt decision-making processes and strategies to a new context, based on Mercado Libre’s experience. The conference was part of the Management and Business Lecture Series.
The answer isn't the same in every case. Some companies haven't yet begun working on their reinvention and are still "putting out fires,"while others have already taken that step or are about to do so. The latter must consider what they expect from the post-pandemic era.
In the case of Mercado Libre, the onset of the pandemic forced the company to enter what Arnt calls “a phase of retrenchment” in the final weeks of March.
“We had to prepare for the worst-case scenario—that the March figures would persist over time—but at the same time, we did so while hoping for the best.” This broke with traditional patterns, because we had to plan for entirely different scenarios in the short term.
Regarding the criteria Mercado Libre used to make decisions, the company considered the impact and reversibility of each action. In that regard, they maintained investments in initiatives that could be easily reversed and that had a significant impact. As an example, Arnt cited initiatives in the area of digital marketing.
In this process, they faced the challenge of deciding on actions that would have a significant impact but would be difficult to reverse. In such situations, they had to determine the appropriate course of action in each case, carefully analyzing each one.
In this initial phase, standard operating procedures were set aside, and plans were developed to suit the new reality: “We made significant cost cuts and, at the same time, made decisions based on how flexible each action could be,” he explained.
In this way, in less than 10 days, Mercado Libre managed to “change course” and develop a new work plan covering the next two months.
Flexibility and a long-term perspective
Although we still don’t know what the future holds, there are certain lessons to be learned from the pandemic that every leader should keep in mind, the expert noted. One of them is to continue working flexibly.
“Many CEOs felt like they were back to working the way they did when they first started out, making decisions quickly and with agility. That has given them a great deal of freedom to act,” said Arnt.
On the other hand, it is essential to understand what the company did well during the crisis so that it can continue to build on those strengths: “In our case, we realized that the surge in demand for online platforms was going to put our logistics under extreme strain, so we focused on that, and that’s how we’ve been able to meet the growing demand.”
Arnt believes it is time to return to long-term thinking and reconsider what companies, industries, and the world will look like in the future: “The best approach is to develop plans A, B, and C for plausible scenarios.”
He also emphasized that, in order to develop a vision for the future, it is important for leaders to take on a new role: “It is essential to remain vigilant and recognize that every decision made must allow for the necessary degree of flexibility.”