Corona Crisis Phase 2 — What Next for Companies?

Improve your chances in a L, V or U shaped recovery.

The World is coming through the first phase of COVID-19 and strict Lockdown is coming to an end. This phase 2 will be the new normal until there is less intensive medical treatment, a vaccine or herd immunity is shown to work. What now for Companies to survive?

I have been advising a few Companies, learned from what my clients have been doing, talking to fellow advisors and fellow students with me at INSEAD. I have aimed with this article to give some idea of what Companies out there are doing well but if there is one thing there you have not done and is useful then I will be very happy.

First I want to clarify the economic predictions that are being made. Jeremy Grantham wrote in the GMO Q2 2020 Quarterly Letter “we are in the top 10% of historical price earnings ratio for the S&P on prior earnings and simultaneously are in the worst 10% of economic situation, arguably the worst 1%!”. Depressing to read, yet their will be a Recovery. There are predictions from Economists about what a Recovery will look like. Recoveries shaped liked V where we are back to normal (or near normal e.g. The Economist 90% Economy), W where recovery is in waves and setbacks or L and there is no recovery. They are all right when you add one more piece to the predictions — filter per Sector. The key is to find out which Recovery is for your Sector. Once you know this you will have much more clarity for your course of action.

I want to raise first is the speed of decision making and action that is needed today from Company Leadership and the Board. Of particular note is the speed Private Capital acts on their investments. They are normally quicker to act than traditionally owned businesses in a recession. Retrench once very hard and early during a recession. These Companies generally come out better and grow faster after a recession. So do not put off those unpleasant actions once it is clear and the decision has been made. Yet do this with more compassion than doing it . There are many Companies and individuals who are ruining their reputations by their behaviour. Making redundancies via email or zoom call. Delaying payments to suppliers or delaying refunding customers. This behaviour is noted and remembered by colleagues, employees, suppliers and customers. Wait for the backlash and loss of goodwill.

Look after your Stakeholders

Although relaxation of the Lockdown is good for the economy the biology of the Virus is not solved. There will be more infections. Make sure your people are Safe. If your people have to come back to work do ensure you know which staff want to. Also identify those that have a person at risk in their household as they may prefer to continue to work from home or in a role where they are least exposed.

Now your business relies on your relationship with your people like never before. Their commitment and innovation are of immense value. Compare their salary packages to the market and adjust to reach that rate. Losing a member of staff due to paying them below market rate at any time never made economic sense. Losing them now could be a massive negative event to your business.

Customers want to feel safe too. They are apprehensive. Ensure that expectations and rules of interaction are clear and visible. People will be more reassured.

Suppliers are key contributors to your product. Pay them as quick as you can. They will remember this and co-operate more. Pay them late and you are storing up trouble for the future and damage to your reputation.

Learn Adapt and Change

There is even more agility needed now than ever before. Change is being accelerated now. Trends which were slow moving before will be accelerated.

Learn how your customers requirements have changed and how their customers have changed. Learn how your Suppliers have changed and intend to change. Understanding this key market intelligence will be vital for your Business model change as well as your Product innovation. Adapt Business Model We have all had to change our Business Model in some way. Clients or Customers needed something different now and only part of our offering is now relevant. So keep innovating with your people, partners, suppliers and end users.

Change Office space Review requirements and settle to smaller Office space with remote/flexible working. Rent co-working space when needed for intensive product launch, new market entry, hackathons etc in the geography where that effort is needed. Change processes that prevent change like Procurement and Vendor on-boarding.

Learn Digital Marketing. This is becoming an important skill to have inhouse or your media partner should be very skilled at this.

Stop, Carry on and Start

All those things you read about in management or business emails or magazines are happening now at a faster speed.

Stop Bad management practices such as presentism in the office. Productivity does not improve with a manager looking over the shoulder. Micro-managing Management or employees by tiers above kills accountability, initiative and innovation. Good people won’t stay around long being managed like that and those that do stay do you really want them? Plus you will save Management time.

Carry on with the benefits discovered during Lockdown. Where your people felt happier with their work life balance if they can work from home all or some of the time. Carry on with Digitalization of processes, using more online tools and deploying very good IT Security.

Start Trust your staff more and delegate more. Good people will thrive and contribute more to your business, be more committed and innovate more.

Perhaps you are one of the Companies who are surviving well with your product mix, cash rich or otherwise well placed. This might be a great time for you to find acquisitions, buy less well run rival companies, bolt on smaller firms or extend geographic reach. Time and money to invest for future performance and improve your talent pool.

Even if you don’t go down the M&A path the breathing space you have now can be used to further improve your Operations and your free cash flow. Consider adopting into your Company the new trends. Artificial Intelligence, 5G, Robotic Process Automation, Nanotech, Internet of Things or Blockchain.

Treat your Stakeholders well, trust your people more to create space for you to analyse, pivot and act. Take the opportunities there to change, grow and develop. Something here should make it onto your Action list and help your Company through this phase.

Think of the Climate too. On top of a long list in this article of ideas. I had to add this. Please if you can make your actions benefit the planet too. Thank you from the Future.