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Classic analysis published by the Harvard Business Review finds that companies that emerge from a downturn in a leading position, find a balance between cost-cutting with investment in future growth.

As veteran European board director Barbara Kux explains “identifying and leaning toward sources of growth cannot wait until the “next normal” arrives”.

Our CEO quizzed some of the CFOs on how they are striking this balance in the wake of Covid-19. How are they playing the long and short game? And are they focused on cutting costs or investing for growth?

Coming from a manufacturing business with heavy exposure to two of the most affected industries, healthcare and aerospace, another CFO echoed the theme of shifting focus. This company is cutting costs in segments where customers are hard hit, but in other areas, such as healthcare equipment and technology enabling remote work, demand is up and resources, including capital, have to be shifted to meet it. A strong balance sheet and liquidity is helping, and attractive valuations have opened options in M&A too—an opportunity for acceleration.

At an investment management and banking company, the CFO reported that in the early days of the pandemic, they focused on internal metrics such as costs and liquidity. Supporting its small business clients was another early concern, that has grown to take centre stage as the company looks to the second half of 2020 and then 2021. A law firm CFO reported focusing on digitalization and remote work as opportunities to reduce costs. While on the growth side, business development will pose new challenges in a world without conferences and in-person meetings.

In telecoms, investment in growth is following the acceleration of digital trends— towards greater use of online transactions, on the web and in apps. New practices such as encouraging self-setup for home-based products and services are likely to persist beyond the pandemic because they deliver a better customer experience. Long-range investment in infrastructure for new technologies, such as 5G, continues regardless of the pandemic.

What are CFOs more focused on?

A survey of our CFOs found just over half were more focused on investing for future growth than in keeping costs down. One leads an organization focused on infrastructure investment, which has a mandate to stimulate the economy post-Covid. The crisis has encouraged them to enlarge some of their initiatives, and to start others. Their long-term mandate means they’re thinking about which investments will make a positive impact on the economy after the pandemic and into the decades to come.

The CFO of a government organization in the financial sector described competitors in the banking sector setting their differences aside to work with government to ensure the swift rollout of digital services so Canadians could access emergency benefits.