IMPROVISING BUSINESSES IN TIMES OF COVID-19– Shalvi Prasad
As the world goes into lockdown and countries, struggle to combat the threats of covid-19, policymakers across the globe have sprung into action, taking a range of approaches to deal with the economic fallout from the coronavirus.
As per news report by Reuters, India could face between 1- 1.3 million confirmed cases of the disease by mid-may if it continues to spread at the current pace. The virus not only continues to impact millions of lives daily but has also brought significant changes in the businesses and economies around the globe.
The near-global lockdown and travel restrictions have brought into the hindsight, the times of recession: low consumption and low business spending. While companies shift their operations to online spaces, the markets continue to experience record falls with no signs of early recovery.
This calls for Businesses to adapt to the growing susceptibility and reform to bring about both short and long-term changes in their business design. According to a report published by KPMG discussing implications of COVID-19, the businesses face significant problems due to lack of contingencies and proper planning:
- No proper plan in place to respond effectively to such situations,
- A pandemic plan that is out of date and too generic for COVID-19 response, and
- Roles and responsibilities designed for crisis management are often not tailored for pandemic response.
To ensure that businesses can continue with minimal disruptions, these problems must be highlighted, and tailored action plans must be developed for every critical process.
AN APPROACH TO CRISIS MANAGEMENT:
An approach tailored for crisis management that focuses on five horizons can be adopted by companies, leading them from the crisis of today to the next normal that will emerge.
- RESOLVE: Address the immediate challenges posed by COVID-19 to the general functioning of the institution, the workforce, the technology, customers, and the stakeholders as a whole. This, as a whole, will provide institutions to identify key affected areas and develop action plans specifically tailored for these areas.
- RESILIENCE: The ability to adapt to disruptions only comes with continuous planning. Institutions should have in place a crisis control management system specific to pandemic reactions. A proposed multidisciplinary resilience development, crisis management solution can be followed by institutions according to their particular requirements:
- INCIDENT MANAGEMENT: Categorize all events that fall outside the general business processes as incidents. These events should be such that require management interference and also disrupt the normal cycle of the business.
- EMERGENCY MANAGEMENT: develop an action plan to manage time-critical threats. These threats could be to the lives of individual stakeholders, protection of assets under threat e.g., inventory, and manage risks of broader environmental impacts
- IT DISASTER RECOVERY: IT Services are indispensable to the company in times of crisis management. Thus it is imperative to focus on the maintenance and recovery of IT systems and assets from several failures or degraded services.
- BUSINESS CONTINUITY MANAGEMENT: This focuses on the continued delivery of products or services of the organization at an acceptable level despite the disruption caused. It also focuses on the aftermath of the event and guiding the company from a stage of recovery to full functionality.
- CRISIS MANAGEMENT: This focuses on defining the strategic impact of the incident on the business. It focuses on the specific repercussions like; sever financial damages reputational damage or curbing the ability of the company to achieve its strategic objectives. All of this can be compiled to analyze the overall Business impact.
All these resilience disciplines are discrete functions, and organizations must ensure these functions are in place, only then can efficiencies be achieved in staffing, response resources, and shared services.
3. RETURN: when all the disciplines of resilience practices are followed, it is easier to create a detailed plan to return businesses to its standard scale quickly as the crisis surpasses.
4. REIMAGINATION: Businesses need to maintain positive foresightedness to overcome the adversity. The team leaders should always focus on the bigger picture and then make effective decisions. Simulations can be run to identify necessary trade-offs to be made to meet customer demand, supplier capability, etc. These will help draw a clear picture of how a discontinuous shift from the business cycle looks with its implications drawn. Always try to reinvent solutions by analyzing past events and hypothesizing future threats.
5. REFORM: By analyzing past events and hypothesizing future threats, organizations can identify strategic and concentrated supplies that are at risk in major crises, and most importantly, recognize when current internal risk capacities prove insufficient. This helps the organization to imagine the shift in the regulatory and competitive environment in the industry. The organizations can adopt a more flexible but, problem-specific risk management strategies and put them to place for abating future threats.
Perquisites that make the crisis response by companies easier:
- The up-to-date staff that is well versed with technology and best management practices.
- A clearly outlined communication approach helps stop the spread of any misinformation and ensure effective operations.
- A well-initiated plan that covers all pointers of the strategic impact assessment and the necessary business impact assessment and has clearly defined business process and the dependencies for each process
- Flexible working arrangements for the workforce with adequate technical support
- Maintaining a critical third party contact list that ensures effective communication for the completion of business processes.
ACTION PLAN THAT NEED IMMEDIATE IMPLEMENTATION:
- WORKFORCE PROTECTION: It is more important than ever that companies leverage whatever resources they have to ensure the well being of their workforce both physically and mentally. Most of the industries have put Basic Protection Protocols in place that compose the physical-distancing-at work for some and no-travel, to work-from-home for others. Leveraging HR expertise to guide employees living in impacted areas and reassessing work policies. A majority of staff also face stress regarding success in extended environments; they worry that staying remote could render them less productive and thereby less valuable in a recessionary environment. Thus the challenge has been ever-evolving. Companies should keep in mind the essential goals to ensure the physical and mental well being of these employees. Companies need to increase communication, balancing the needs of the business with expectation setting and morale building, so employees know that their well-being is top of mind. They also need to change working norms, making remote work practical and simple whenever possible. And of course, they must protect people’s health, with whatever measures are appropriate to the workplace: positive hygiene habits, personal protective equipment, amended sick-leave policies—whatever it takes to ensure health and safety.
2. SUPPLY CHAIN STABILIZATIONS: It is essential to understand how the effects of COVID-19 may affect your supply chain. If your business has exposure in the affected areas, you should appropriately assess the exposure and support the key stakeholders. Critical areas for managing the supply chain effectively include an end to end supplier life cycle management, the evolution of cognitive decision centers, and developing agile and adaptive value chains. Increasingly investing in the development of micro supply chains that are less vulnerable, more flexible, and decentralized in nature and deliver maximum customer value can facilitate an easier shift to such value chains. Companies can also develop models to understand post crises customer behavior to predict market demand
3. STAKEHOLDER ENGAGEMENT: A successful crisis management plan should ensure clear and effective communication that conveys the ability to provide confidence and understanding regarding the organizations’ actions and responses. Proactively keeping the stakeholders engaged and informed of the ever-changing situations will enable the organization to navigate developing challenges
4. FINANCIAL STRESS TESTING: Cash flow profiles, earnings profiles, balance sheets, or credit profiles are likely to be impacted by the effects of COVID-19. Current funders may be expressing concern about providing additional liquidity, resisting to renew commitments or seeking to re-negotiate key terms and conditions, including pricing. Understanding the alternative funding options that are available during times of volatility and how to access these are prudent to help businesses thrive in times like these. Pro-active and sound treasury risk management over, foreign exchange, interest rate, and commodity exposures are paramount to protecting cash flows, help manage liquidity positions, and provide boards and executives with confidence in decision-making. Businesses are also beginning to anticipate the potential for impacts on revenues, funding, and liquidity. Thinking through the impacts of specific products or markets experiencing disruption and the flow-on effects of this too short term business performance and also to the potential longer-term results will be essential. It is necessary to monitor the situation and also maintain communication with key stakeholders
5. TECHNOLOGY UPGRADES & CYBERSECURITY: In line with the technology-enabled business climate we currently operate in, organizations should rethink the way their employees collaborate and customers – within the office, regionally and globally. With the ever-increasing use of remote technology and the employees working from home, companies must move to ensure cybersecurity into their contingency planning. Phishing through malware using COVID-19 as bait, online scams installed via social media campaigns can endanger the safe working space and work to the advantage of Cyber Criminals. Companies should invest in providing appropriate training and facilitating the safe exchange of sensitive data via reputable sources on the internet
Like COVID-19, climate change, biodiversity loss, stock market crash or financial collapse, do not observe national or regional boundaries. Actions initiated as a whole will benefit the economy globally. But for the sustenance of businesses and to combat future crises, economies must evolve and change the bottom line of a functional business. COVID-19 represents a broader trend; more planetary emergencies are coming. If we muddle through each crisis with the same economic model that got us here in the first place, future shocks will eventually exceed the capacity of governments, financial institutions, and corporate crisis managers to respond. Economies should increasingly engage in R&D to design systems that can mitigate the threats. Organizations should start investing in green circular economies that are anchored to nature-based solutions and are geared toward the public good.
About the author(s) Matt Craven is a partner in McKinsey’s Silicon Valley office; Linda Liu is a partner in the New York office. COVID-19: Implications for Business. www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business.
FACTBOX-The Economic Remedies for the Coronavirus. 10 Mar. 2020, www.reuters.com/article/health-coronavirus-economy-policy/factbox-the-economic-remedies-for-the-coronavirus-idUSL1N2B305L.
Sheppard, Martin. Business Implications of COVID-19. 12 Mar. 2020, home.kpmg/au/en/home/insights/2020/03/business-implications-of-covid-19-coronavirus.html.