We at Solvera Consulting , are closely reviewing the developments arising out of the disruptions caused by Covid-19 pandemic. Our team is closely working with our clients in devising response to this epidemic. With our decades of experience working with SME’s and perspective generated after deep analysis of the current economic situation, we are sharing few thoughts to SME’s and start-Ups on the steps taken in the short and long-term to fight this pandemic.
Amid the COVID-19 crisis, businesses are concerned over the life span of this pandemic and actions they should be taking to overcome the situation. While an optimistic view can be that this is a temporary situation and will pass as some other heath scares in the recent times. However irrespective of this optimism holding true or not, we shall witness a comprehensive restructuring of the economic and social order in which business and society have been operating before this event.
The Threat:
The occurrence of the pandemic is already been termed as a Black Swan event globally. It is expected to create a shift in the socio-economic behaviour and preferences of people around the world in the way they work and consume products & services. These changes will evolve in the coming weeks and months of combating the pandemic. Organisations which can reinvent and internally orient themselves to the changing requirements of the work force and customers, will have an edge over their counterparts in the long run.
What are we facing?
Today in this unprecedented reality the business owners are witnessing uncertainty in the entire supply chains. They are not sure when and how the supplies will become stable? When and how early can the production resume? Will sufficient manpower be available? How to create SoP for safeguarding Covid-19 threat at the production floor or work place? Most importantly will there be demand for the product? And so on.
What can be done?
The current crisis resembles an inflection point where in the world after it is unlikely to remain what it was. Few may find it too harsh an assessment but the reality is that organizations will require to cope with this “new normal.” Although it is difficult to take decisions in these uncertain times, but taking no action and waiting for a complete true facts to emerge before determining what to do is risking existence of your business. On the contrary, an aggressive approach of pushing all resources to take advantage of the situation can backfire and lead to adverse consequences. The other option could be to take a defensive approach and implement measures like cost cutting, manpower reduction, scale down the production etc. But this could be counterproductive in the situation of resumption of the economic activity.
The suggested way out could be that promoters need to strike a balance between the available options. The availability of options will depend on the pre –crisis condition of the organisation. A sound management does not wait till the occurrence of the crisis to start preparing for the situation. In fact organisations which had high debt and struggling with financial indiscipline before the crisis started are facing more challenges and have less options available with them. As we know that fatalities are more in people who are vulnerable to the threat, the same applies to the Organisation as well.
In these times the Organisations may have to employ both the aggressive and defensive approaches. They will have to take a defensive approach to survive today combined with the aggressive planning to invest resources to grow in post crisis era. In these tough times, it’s a herculean task for promoters to decide actionable for both the immediate term and the long run simultaneously.
Businesses must therefore follow the crisis management plan and reassess their businesses and plan for critical actions as explained below:
Business Assessment:
Promoters need to take a thorough review of the business operations and act on the challenges requiring immediate action which include expedite collections, inventory control, debt servicing, reviewing pending contracts etc. Further they will have to make sure that they are able to run their business in whatever capacities possible. This will not provide continuity to the operations but also help explore alternatives in the supply chain. The key will be to manage the cash flows and not think of the bottom line for the near term. Organizations will have to create pandemic awareness through internal communications ie; share information from the government& Health authorities and senior teams to regularly monitor & review the pandemic arrangements.
As a leader of your organisation you’re being watched by your suppliers, agents, employees and customers in these turbulent times. The way you communicate and handle these stakeholders will have consequences in the time to come.
Re-Start:
The uncertainty around this pandemic indicates that the resolution will depend on the intensity of the spread and response by individual countries. However it demands resilience on part of the society and the businesses to navigate through this crisis by devising innovative mechanisms. The resumption of the business post the lockdown will depend on the preparedness and planning of the management. Companies will have to consider hour reductions, furloughs, and performance pay over layoffs. The critical support and communication with the stakeholders and employees during the crisis will have a great impact on resuming the pre-crisis business levels.
Adapting To Change:
The Governments around the world are likely to make key interventions in re-shaping the industrial and economic activity in the post-crisis era. They would consider deglobalisation by reinstating domestic market as the centre of production activity rather than outsourcing from the global market or looking for alternative markets.
The crisis will not just reveal vulnerabilities but also opportunities to reinvent the businesses across the industry. Promoters will have to face the harsh realities their business model is exposed to and plan for complete overhaul if required.
The flip side of this crisis is that it provides an opportunity to encourage the adoption of new technologies and processes into the business environment. Experiences suggests that crisis situation can create wide and visible gaps between the companies in the same industry. Companies will have to take long term decision on business transformation arising out of the impacts created by the pandemic. These will include creation of new processes, hiring employees with key skills, make technological interventions and restructure products & delivery as per customer preferences.
As the world battle the unprecedented health emergency and find ways to conquer the challenge; the crux for businesses lies in their preparedness and response -both immediate and long term. The scale and spread of this virus will challenge global economic order in the coming weeks and month. As business owners contemplate making decisions amid uncertainty an old quote from Louis Pasteur popped into the mind. “Chance favors the prepare mind”
