Covid19: Navigating in Uncharted Waters
By : Mike Largent -
Without doubt, we are in uncharted waters thanks to Covid19. Few events in America’s relatively young history inflicted the extensive degree of damage, death and uncertainty like that of this Coronavirus. Thankfully, pandemics are rare events due to rapid medical technology advances of the last 100 years. The problem is there isn’t a template from modern times for governmental leaders, business owners and private citizens to follow that inform us how to respond and what to expect. We don’t know how long this pandemic will last. We don’t know how exactly how to provide maximum protection to the country’s population to facilitate the most expedient eradication of the virus. We don’t know how long immunity lasts for those affected, and we don’t know if the virus will act like the seasonal flu virus and return next fall & winter. We don’t know when an effective vaccine will become available or when the population will become vaccinated. The fact that we don’t know so much, deeply troubles human beings, because human beings have an infinite yearning to learn, to know and to understand. It is that very knowledge that enables humans to navigate life with as little uncertainty as possible.
Governmental and business leaders are expected to guide their organizations successfully through times of turmoil and uncertainty. At the beginning of 2020, the economy was booming, unemployment was 4.1% and the Dow was flirting with 30,000. Consumer confidence was very high and they had plenty of money to spend. Then came Covid19 – FULL STOP, INTERRUPT. Slowly but surely, governors shut down all 50 states’ economies at the behest of the President and from counsel from medical industry experts. For the first time, the American economy and the economies of many other G7 countries were intentionally shut down for weeks.
In college, I recall one of my economics professors explaining in micro-economics how shocks to the economy cause step-function changes to supply and demand curves. Examples given included sudden shifts in the global oil supply, shifts in the supply of labor in a global economy, and the sudden imposition of tariffs. I’m certain nobody ever dreamed about the magnitude of the shock caused by the shutting down of an entire country’s economy. Indeed, these are uncharted waters we’re in.
The relevant question to businesses becomes, “Where do we go from here?” As most have guessed, the answer depends, to a great extent, on each business’s industry sector, state, and the real wild-card – “When will people feel comfortable going out and re-engaging with society and resuming normal economic consumption?” As governmental quarantine restrictions are eased in each state and industry-based safety practices are implemented, I believe the 80/20 rule will prevail. 80% of the people who used to patronize a business will return to normal consumption practices as soon as they’re able. The other 20% will be wary and will likely continue to abide by “Safer at home” beliefs. Then, as restrictions and protections gradually ease over time, 15% of former patrons will eventually return. There’s always going to be that 5% in any crowd with extreme views and are highly likely not to return to their former consumption patterns. For the record, these are my beliefs on how consumption will return to normal. I don’t believe Americans will fully return to their usual consumption patterns until a highly effective vaccine is widely available. By most estimates I’m hearing, that’s not likely to be until Spring/Summer of 2021.
Over the last 6-12 weeks, business leaders have been trying to assess the damage, establish a new set of assumptions for how the rest of 2020 will play out, taking a conservative perspective, and revisiting their 2020 business plan’s strategies and goals. Based on their assessment and revised assumptions, they will recast their 2020 operating plan with updated or new strategies and revised performance goals & objectives. From this revised plan (once reviewed and approved by stakeholders), they will socialize the revised plans with company leadership, the leadership will then inform the rest of the organization, and execution against the revised plan will commence.
What’s going to separate the winners from the losers for the rest of 2020? I think a couple key factors will differentiate the two:
- The companies that will outperform their industry peers will be those that take the time to thoroughly review, challenge and re-evaluate market and competitive conditions within their industries of influence and do so in the context of actual and expected future changes in consumer/client behavior. The most accurate assessment of expected consumer behavior will be derived from a solid, behavioral-based customer segmentation exercise.
- The companies that utilize a bottom-up approach to recasting their 2020 plans & forecasts will operate with the greatest degree of “reality accuracy” and will be best able to proactively manage their business.
- The companies that best sympathize and provide the most reasonable degrees of flexibility with their employees, vendors, channel partners and customers/clients will experience the best employee & customer retention and will strengthen relationships/partnerships with vendors and channel partners.
- The companies that best monitor, manage and forecast cash flow will develop a distinct advantage for obvious reasons.
- The companies that make investment and business performance improvement decisions based on a quantifiable ROI will outperform.
- And finally, the companies that best refocus and reengage employees, especially those who had extensive time off or away from the business, will outperform. Focused employee performance incentive programs that reward employees for the achievement of a specific set of key goals will be highly effective in focusing and maximizing productivity and ROI.
If your company hasn’t done the kinds of things outlined in this article, it’s not too late to get started. The key is to do them thoroughly yet swiftly to maximize your FY 2020 performance.
And of course, Agility Growth Partners consultants are here to help you refocus, recast and reclaim lost and expected future revenue, profit and ROI opportunities.