COVID-19: CRISIS OR A SPRINGBOARD

When the world was celebrating the eve for the New Year 2020 with pomp and show, little did one heed to the small news ticker at the bottom of TV screens of an undiagnosed condition similar to pneumonia. Many didn’t bother because it was very localized in a specific city in China – Wuhan – a name that many would never have heard of, had it not been for this episode. In the days and weeks to come, the news assumed larger real estate in news channels, and the internet almost linearly as the impacted population rose. Parallels were drawn with other viruses, in the recent past. Videos of the health workers in Personal Protective Equipment (PPE) and stringent containment measures went viral. On the other side of the globe, leaders wrote off COVID-19 – the name that the virus came to be known by – playing down the undue attention it was being given. 

Fast forward – 3 months to the last week of March. Wuhan in the Hubei province in China reported factories getting back to business and life resuming normalcy – albeit on a limp. But the virus had now traveled across the globe – and the pandemic affecting in colossal proportions across Italy, Spain, UK, France, Iran, South Korea, the US, Singapore, Japan, and India. In about 100 days, the virus had traveled to more than twice as many countries. The world sat up to take notice. The numbers grew exponentially, casualties turned scary, and then depressing. Horror stories of how healthcare systems being overwhelmed beyond capacity – didn’t just impact individuals but also research agencies, policymakers and governments. Corporates were nimble to get into the act – and issued advisories: employees were asked to work from home, where possible, and avoid non-essential travel. 

Response:

As the emergency was acknowledged, the Disaster Management code was activated by Governments, and by extension, by organizations and establishments. Within days, different countries chose different options – full lockdown of commercial air travel to partial operations – but the overall air traffic plummeted to levels unheard of. Railways and other mass transport followed suit. Lockdowns meant people stayed homebound, and the city traffic almost dropped to nil and so did the consumption of petroleum products. The gas stations practically ran their operations only to sustain emergency services and supplies of essential commodities. Factories, warehouses, travel and logistics, universities, tourism, entertainment – went into a grinding halt overnight. The only segments that were operational were those offering essential services. Even hospitals advised patients to defer elective procedures. Banks had to switch into an emergency mode. Air traffic was predominantly used only for transporting healthcare equipment, medicines, test kit, and related paraphernalia. Railways became the lifeline for food supply across the country. 

Consequently, barring a few segments most businesses have been pushed to the brink – with many announcing downsizings of operations, lay-offs, and salary-cuts. Because of the reduced viability and lack of clarity on the bounce-back timeframe, investors have started pulling out. Stock markets went bearish and tanked to record levels. With huge cost overheads, businesses are under pressure to resume operations.

Recovery:

As countries managed to flatten the curve, albeit with the fears of subsequent waves of infection still lurking, governments are forced to striking a trade-off between life and livelihood. While policymakers in the government think tanks are brainstorming lockdown exit strategies, corporates on their part have been trying to recoup and evaluating the way forward. 

In the intervening time between countries going into lockdown and planning to reopen the economy, a lot has happened. Social distancing norms – for instance – have come to be accepted as the norm. This has large ramifications for most industries. Hence, even as organizations are putting in place “return to office” plans, there is also a need for a long-term plan to review the products, projects, services, or practices. While it’s still unclear if these measures would be temporary, or are here to stay – there is clearly an opportunity for Corporates, Start-ups as well as Governments. 

As enterprises dabble with the priorities at hand, here are few recommendations that could help draw up an emergent strategy. It touches upon a range of players from customers, business portfolios, employees, vendors, and shareholders. Functionally, this touches upon Sales & Marketing, People, Operations & Finance, and Strategy.

Sales and Marketing:

When life throws lemons at you, make a lemonade! 

• Repurpose: This is best exemplified in the B2C segments, where the customers may have a change in priorities in the post COVID world. Take the example of Wildcraft in India. Wildcraft has been in the back-packing business for almost two decades, having established a brand for themselves. Over the years, online channels have been a power multiplier – given the reach and access to the millennials – their target audience. Myntra likewise has chiseled its image as a preferred fashion outlet online, with a huge customer base. COVID-19 has redefined the personal hygiene and safety radically – to such limits that it’d create a new apparel category altogether. Wildcraft grabbed the opportunity created by the crisis and added high quality personal protective masks to their product line - that would be marketed exclusively through Myntra. Through that, they made sure that their capacities are repurposed to address a new need in the market. The questions that Marketing and Sales need to ask are 

What do my customers consider essential? 

How I can solve that unmet requirement? 

Are there synergies with my business?

Are there partners, existing or otherwise, willing to scale up fast?

• Customer Engagement: What if you got a call from your favorite restaurant assuring of rigorous hygiene in the kitchen and the restaurant, renovated seating with social distancing, robotic waiters to take orders and serve food? What if the restaurant assures a touchless takeaway option with an audit trail of the food served to you? What if they have pre-packed meals prepared in a sanitized contactless environment? While times are challenging for one and all, it’s these times that customer engagement and empathy matter the most. The questions that marketing and operations need to as are:

What do my customers consider essential? 

How I can solve that unmet requirement? 

Are there synergies with my business?

Are there partners, existing or otherwise, willing to scale up fast?

• Trust: Trust is so quintessential to doing business. However, complacency breeds contempt. Sales reps represent the face of the organization before the clients, and it is their responsibility to draw up an interim engagement plan consultatively with the client. It is a tough job but with the kind of relationship they have nurtured, they need to strike the balance between the imminent loss of revenue against loss of trust. The customers are yours until you lose their trust. And it’s crises like these that can differentiate the great partners from the good. The questions that operations/ product management and marketing need to ask are:

What changes are required to assure customers of safety?

Is a re-pivot essential – for instance – contactless warehouse/ supply chain?

What needs to be done across channels to win the customers’ trust?

Are there systems or processes available in-house that can be leveraged for this?

How can digital channels enable this, in the fastest possible time?

People:

People are the building blocks that organizations are made of. They are the human face of organizations. A small mistake in dealing with people especially during crises can mark the beginning of the end. Employees spend a third to a half of their lives trying to create value for the organization, the customers, and in turn for the shareholders. They do this with a relentless passion, often making sacrifices when the organization so needs. No recognition can substitute the need for empathy when they are dealing with a crisis that touches their personal lives, families’ well-being, and mental stress. From a business standpoint, it is easy to let go of people, but very cumbersome not just to hire the people but be able to skill them for a changing world, let aside the motivation levels and their loyalty.

The operations team should draw up a people forecast for 6 – 12 – 18-month windows. This needs to take into account projections from respective functions. It’s recommended that the People function draws up multiple options in the following lines:

• Sabbatical: Many employees are overwhelmed with the changes, for instance, the long-term lockdown affecting their socializing needs, the restrictions due to health hazards, and additional chores at home – all of which affect the mental health. This affects their productivity and ability to concentrate at work. Compounded with all of this could be the fear of losing employment. Many of these employees need time to adapt to change. Being handed a sabbatical for 6-12 months with full employment benefits could be a welcome change. On top of that, a paid mental wellness program could be the icing on the cake.
• Upskill / Reskill Opportunities: There can’t be a better time than these for offering opportunities for academic improvement, re-skilling for newer technologies/ soft skills, or certification opportunities. This needs to follow a systematic competency assessment and benchmarked against plausible demands of the future. Further, this could be done as a strategic partnership with specific universities/ partner organizations – so it can unleash mutual value. When freeing up people from revenue-generating opportunities, there can’t be a better way to invest their time for future opportunities. 
• 3-Day Week: Thanks to some of the sectors which experimented with reduced working hours, the 3-Day week has arrived. This can be a game-changer. For an overworked industry plagued with productivity issues due to traffic menace, switching to a 3-Day week would be a welcome change. This can complement a remote working scenario where an individual’s productivity increases due to low travel fatigue. Likewise, it will offset the need for additional real estate with the enforcement of social distancing norms. 
• Reduced Pay: The scenario of a lay-off has ramifications larger than just the month-end cheque. Unlike a routine layoff, which is often a right-sizing measure, or an outcome of organization restructuring, the driving factor an imminent retrenchment affects the entire industry sector, and often globally. In a highly skewed supply-demand scenario, the ramifications are far too large. It would hence be a gracious move to offer a reduced pay for a specific duration with continued employment benefits, as an alternative to lay-off.
• Public Service: Many organizations – private, non-profit, and public sector – are taking up unprecedented scale-up of operations to address different requirements due to the pandemic. Be it in management of healthcare facilities, running of the healthcare machinery, supply chain planning, and logistics of the protective gear for the health workers, patients, etc, drug and vaccine development initiatives. These activities require stellar management skills, entrepreneurial leadership and a deeply patient-centric empathetic culture. A lot of senior executives in large corporates can add immense value in these roles, and help in turning around faster – given the proven leadership, execution experience at scale, and customer-centricity. Organizations can encourage senior executives to take a temporary break from work for say 12 months to contribute to these causes pro-bono. Besides enriching them with some field experience, that’d be a great way to give back to the society

Operations/ Finance:

The onus of holding the functions in balance lies with Operations, be it with optimizing the costs, reviewing overheads, managing cross-dependencies, etc. Each initiative needs to be reviewed with a view on the impact on the P/L. 

• Conserve Cash: If there is one key takeaway from COVID-19 at a personal level, people started to prioritize the needs with a fresh pair of lenses. The same can be replicated in organizations - review expenses budget to classify them as Vital, Essential, and Desirable. Stop the Desirable ones, explore if the Essential items could be deferred to the following quarters, and evaluate items in the Vital category if anything could be downgraded. It is important to conserve cash and use it to the most deserving use. For instance, non-essential spend must stop – and this could apply differently to different functions and departments. A month-end/ quarterly party can wait. An off-site is desirable but evaluate if it can be creatively restructured. Leverage technology to conduct business operations, thereby reducing travel spend. Marketing spends can be drastically cut by moving events online and choosing digital formats over physical ones. 
• Review & Renegotiate Contracts: Real estate rates are among the big-ticket commitments for any organization. Review the workspace demand rigorously. Defer pending demand by 6-12 months. Call for re-negotiation of existing contracts. Release facilities if applicable. The corresponding actions apply to all the existing vendor contracts. 
• New Products/ Services: When enterprises deal with any threat, the natural response is to operate the cost levers. That cuts off funds from existing projects, capacity expansion, R&D, and even growth prospects. In the process, they shut themselves to profitable growth. On the contrary, what if there are insights that can translate to high conversion rates? What if one can secure reliable trends of demands in sharp-segmented micro-verticals? An Indian IT Services player did just this on the face of the economic downturn in 2008. They launched a new service that appealed to the discretionary spend of enterprises and equipped the top management with an Executive Insights framework. The outcome was amazing – huge accolades from analysts, several back-to-back deals, and consequently a new multi-million-dollar business.
• Contactless: The CIO/ CDO organization will need to take a lead in developing a contactless supply chain solution to get the customers’ confidence back in the business, and hence helping wringing in cash. The need would be felt across industry segments – and more so for the Grocery and Farm Produce, CPG, and F&B industries. 
• Monetize: Very often, it’s noticed that individual functions develop solutions that have been built in-house or procured but specifically to address the needs of that function. There could be other use cases for the same solutions (or with minor modification), that can deliver value in other businesses. These assets can be monetized. For instance, a robust helpdesk system used by customers of a CPG Company – can be used by internet start-ups as a service management platform.

Strategy:

Many start-ups are faced with existential crises – be it because of funding, or for the overheads (e.g. rental, employee experience overheads). In spite of the innovation and disruptive capabilities, they are the threat of going due to the crises.

• Incubation: Corporates can open incubation hubs, where start-ups can be invited to compete to access the hub facilities. The sponsor can offer a range of benefits in exchange for a stake – ranging from the vanilla office environment to mentoring opportunities, to becoming clients for their products, to offering the sales/ marketing support for expanding the footprint. This can generate strategic value for the corporate, as well as the start-up.
• M&A: Given the prevailing markets, acquisition targets could be valued pretty attractively. Organizations can execute acquisitions should there be a strategic value generated by the same.

Conclusion:

A crisis can be a watershed opportunity in organizations’ lifetime. It can define or redefine their businesses. It takes pivotal leadership to turn crises into a springboard. While enterprises have ample opportunities and levers for achieving competitive advantage, they should execute the same without losing the trust of the employees. Among the key leadership values that are put to test are Customer Focus, Operations and Finance Rigour, Strategic Value and Empathetic Enterprise

Disclaimer: Views expressed are personal