What has just happened?
“Corona virus just destroyed my business”, a CEO exclaimed! This is true for many CEOs and their businesses, whether partially or totally. There’s been a halt, a shock and an unseen enemy attack on your business, your customers, suppliers, employees and their families.
In many cases where businesses have been forced to crash land, job, contract and business losses have occasioned. Business partners and alliances that had fuelled business travels have suddenly crashed. How apt is the celebrated poem by W. B. Yeats and Chinua Achebe’s book – “Things Fall Apart” …the centre cannot hold; mere anarchy is loosed upon the world…” Nothing seems normal or makes sense again! Lockdowns have brought lockouts and many CEOs are also either locked in or locked up! This is a tragiconomy (an economic tragedy) presenting further volatility and uncertainties and hopefully not, suicides.
The corona virus plague pandemic is not just a health crisis of monumental proportion— but also a business crisis or a nation’s economic crisis. It portends an imminent restructuring of the global economic order (Sneader and Singhal, 2020)
In a recent business review, Lagos Business School (LBS) opined that the Covid impact could be dimensioned into four major issues or challenges. We have however made additional practical points.
- Demand and supply side economic shocks – depressed consumers, users, clients, patients and suppliers of products and services, logistics trauma especially for imported raw materials, multiplier effects of lockdowns causing scarcity and vulnerabilities.
- Global recession – resultant low demand for goods and worse for services, oil and gas shutdowns occasioning shortage in supply, hyper-inflation.
- Increased economic vulnerability – more volatile market situation, deepening uncertainty, poorer liquidity and investor apathy will raise interest rates and more challenges for SMEs to access funds.
- Desperation of lead firms (firms that drive the value chain in terms of value addition and distribution) – they will resort to unorthodox means to survive e.g. price cuts, overproduction as evidenced by Saudi Arabia’s oil giant Aramco.
- Crowding effect of SMEs and entrepreneurs – leading from above, survival actions of lead firms and multinational companies and large local enterprises (LLEs) will hit the cottage businesses and SMEs most. Additionally, as customers and clients reprioritise and rationalise their needs, certain frills and luxuries will be cut out. We hope this works for the over-bloated ‘weddings and event business market’ – event centre rates, “aso-ebis”, exquisite decorations etc. may likely be areas to rationalise (but don’t dare Nigerians!)
- The health-economy propinquity – simply expressed as life-money connection (a Catch 22). Which one comes first? We’ll bet you know it is life! Now dawning on us is the gross neglect of the health infrastructure, personnel and services. No economy (or business or family or military) can thrive without a healthy workforce. Without mincing words, we need to reprioritise and fund vulnerable pillars like health, education and food sectors of the economy as basic givens to improve wellness of the populace and rack up with the developed nations.
Therefore, in this new reality, we should witness a dramatic restructuring of the economic and social order in which business and society had hitherto operated. Whoever heard of *social distancing* in an era that is wholly anthropological, creating juggernaut platform businesses the likes of Facebook, Amazon, Alibaba, Twitter, WhatsApp etc.
Following recent events, it thus seems that Quarter 1 (Q1) goals or results are already in the bag by many businesses but Q2 going into Q3 looks certainly hampered. We have to lower our expectations as the month of April is now totally locked out with Nigeria now locked down for total 30+ days, meaning no revenue or income earned by businesses and people. The economy should possibly crank by middle May before hopefully stabilising towards June. Chinese economy is bouncing back, Denmark wants to return gradually and US is debating when its economy will return. With several layoffs and innovations of working from home (WFH), a lot of changes in perceptions, work attitude and human resource management will present a new normal that was hitherto unprecedented.
Finding a Path out of the Maze
Sneader and Singhal in similarity with the recent works of Boudet, Gordon, Gregg et al (McKinsey & Company) claim the answer is a call to act across *five stages* or 5Rs, leading from the crisis of today to the “next normal” that will emerge after the battle against corona virus has been won i.e. post-viral era.
In summary, they opined each business must –
- Resolve – Recognise and manage the crisis in the new realities of social distancing working from home and improving employee health and wellness. We must support our strategic resources – employees and customers. The times call for more understanding and market research should be timely to know what motivates your people and customers. Some folks who were technology averse are already embracing online shopping habits. The technology savvy ones will be more relevant and expected to lead in the new normal.
A proper and holistic risk assessment will be valued to dimension the current situation and the future.
- Resilience – Need to build cash reserves. Cash is still king! Avoid loans and heavy exposure at this time. Drive revenue generation and limit spending. These are not times for frills, luxuries and business pleasures. You might want to reconsider your premium highflyer status – first class etc. Astute management of cash or its investment can be a big revenue line outside main operations. Your customer service must be superior to competition. This is the time to sustain current clients and not lose any.
- Return – Plan ahead for the recovery. Anticipate that it will come quickly by planning all scenarios to push button stage. While top two stages are survival, this is a good attempt to expand your view or seek new customers or line of business.
Returning businesses to operational health after a severe shutdown is extremely demanding and challenging. It needs a healthy CEO or Business Manager to manage the pain and surprises. Additionally, you might need veterans (experienced young retirees) to help re-enact success.
Plan for that expansion because a crowding effect would have forced some competition out of the market. Research is quite relevant to understanding market dynamics. Secure funding and financing options. Liquidity and financial health are a sine qua non for growth and sustainability. New normal will add employee health.
- Reimagination – new ideation, new thoughts, think across industries and countries to leapfrog competition. Use of technology is playing out now even for old folks like us. You will master your customer and business insight to seek a new foresight. Who knows, the era of social distancing may now be permanent. Online habits will be well formed (ask the faith-based organisations) and video conferencing allows some non-operation staff to work from home (WFH). Perhaps contracting employees will present a higher number than permanent staff, thus reducing pensions, etc.
To reimagine creatively, you must think and see beyond your industry and country. Lean, Learn and Leap!
- Reform – after a deformation, a new approach and understanding brings reformation. The familiar term is Change! Articulate changes to leadership, management, policies, products and services and operational model. Anticipate and influence regulatory dimensions that will shape the industry.
Now businesses must see how they are connected to the national health system. In Nigeria, the healthcare system is practically non-existent. What can firms begin to contribute proactively to the system to influence their world? This should no more be a mere corporate social responsibility (CSR) activity slipped into a strategy document for the Head of External Relations or Head of Human Resources to achieve, but a vital corporate strategy line driven by the CEO. Policies on critical healthcare infrastructure, strategic reserves of key drugs and supplies, and contingency production facilities for critical medical equipment will all need to be addressed. Imagine a bank sponsoring a pharmaceutical manufacturing company (not a loan!) in order to sustain societal health. Indeed, banks now have to wake up to develop this economy!
Infrastructural investments must be a more strategic front for banks and investors. How about funding and/or investing in a drainage infrastructure project in Lagos (solution still elusive to Lagos State for over three decades) a project that could prevent flooding and human disasters, the likes we saw in the United States, where drainage systems that are several meters deep down into the earth with sifting systems that proactively prevents clogging. Imagine the disappearance of pure water sachets in our drains. How about a rain-water collection system that ensures water is not wasted but collected, treated and recycled? How about the wastage of the sun in this part of the world and our inability to harness it to contribute to the national grid? It is a thing of joy to convert sun energy into electricity and enjoy this God’s gift and distribute to homes (death of estimated billings). Nigeria supplies less than 20 percent of energy demand by Nigerians. When shall we wake up in Nigeria to see how all these things connect? We have not mentioned the transportation system that needs to show solid thinking behind public and decisions. Where are the supersonic electric trains like in Japan or China? How many cars would be off the road as the need for driving or parking cars become non-existent. Every move made by decision makers (private and public) is suggestive of personal agenda and not that of social agenda, to better the lives of citizens or workers.
When shall Nigeria be blessed with visionary leaders who want to serve selflessly? Imagine the great business fallout if Lagos for example has a vision like “a city with a home for everyone”, thus occasioning building about 20 million homes. Further imagine the volumes of cement, granite, iron, paint, air conditioners, gas cookers etc and attendant employment and business opportunities for builders, welders, plumbers, furniture makers etc. We should study China that built 200 million homes within ten years and revolutionized home ownership.
Finally, please note that the duration of each stage will vary based on opportunities, geographical location and industry. Firms may truly find themselves operating in more than one stage at a time. We also don’t know how long lockdowns will last or be restaged. Nothing is certain anymore!
Business transformation is the ultimate goal or end-point of all the above. Businesses go through turn arounds to evolve or transform.
The Chief Marketing Officers (CMOs) or Chief Operating Officers (COOs) as the case may be, must lead in these times as marketing people being the representatives of customers, must ensure the business empathises, understands and gets immediate handle on customer motivations and behaviour. While many companies believe they have a well-developed sense of their customers, circumstances will now be so radically different that marketing people should be questioning everything they previously constructed and conjectured to be true. It is crucial that this insight be understood not just by marketing team but by the CEO, the Board, and entire company.
Creative communication and engagement of staff should be paramount. Physical or virtual “Thinking or Chit-chat” rooms or platforms can be created. Crisis Response Teams can be formed to focus on revenue generation and business health priorities in the short, medium and long terms.
Some basic marketing questions to challenge thoughts and research in driving insight and foresight should ultimately drive revenue and new business. Some of these might be –
How has the Covid pandemic affected our customers or clients? A “snail analytical approach” question will make you also ask, ‘How are our customers sustaining their families or what factors are affecting their own businesses?’
How should we communicate with our team?
How should we approach Marketing efforts in the new normal?
How should we allocate spending in view of the changes or trends?
How can we stay in business without being locked out or locked in (Business Continuity Plans) e.g. can we operate from the CEO’s official residence or from a remote portal?
How should we support our communities and government focusing on health, education, food and shelter (as non-profit CSR or corporate strategy)?
Very importantly, companies and governments need to engage and embed reputable and well-grounded consultants or business coaches to guide their thoughts and people on strategy and operational direction to survive, thrive now and win in the post-viral era.
Nothing is the same anymore…you and your team must understand or create your new normal!
Onadele is the CEO, MPower