Covid-19: Turning Down into Up!
Having weathered the storm of the Global Financial Crisis, I know that motor industry managers have developed great skills in managing transitions. But Covid-19, is not a transition. It’s an abrupt disruption which can result in a swift and catastrophic loss of cash flow. We’ve seen this result in the failure of airlines, retail chains and countless small businesses.
In 2019 few people outside the United States knew of Johns Hopkins University in Baltimore. Its website was ranked at 4,769 in the world by Alexa. The last time I looked it had jumped up to 1,911 and was getting 2.84MN hits per day. Almost 20,000 other sites link to it. Why? It’s the most accurate record of Covid-19 cases on the planet. So, we’ll start with the most likely outlook based on the global growth of Covid-19 infection.
Change is not new. In fact, management researchers have been studying it for years and two different approaches have emerged. One group of researchers focus on making a change, setting up a new facility or changing direction. It looks at change from the point of view of the business itself. The other research focuses on how to get people through the change. How to get them to adapt and how to support them. That approach seems more applicable to Covid-19, so we’ll take a look at how one researcher – Bill Bridges – suggested that we help people to manage transitions successfully.
McKinsey signalled that it would bring major business challenges. Volatile demand as cities and countries went into ‘lock-down’. Global supply chain disruption as output from China and SE Asia was hurt. Loss of employment, as businesses and activities where people gather were closed. And, Stock market gyrations. What they couldn’t know then was that there would be a major conflict among oil producers that would send yet another tremor through commodity markets.
Taking a look from where we are now, a Quick Recovery from Covid-19 by end of Q2 looks increasingly unlikely. Although China is over the worst, infection is running apace in Europe. Italy is the epicentre, but Germany, Spain and France are not far behind. The US too has significant and fast-growing infection clusters. McKinsey’s ‘base case’ forecast is that, outside of China, there will be lock-downs and other counter infection measures in place until end Q3 2020. Recovery will start in earnest in Q4 2020, although retail and automotive should recover earlier. Their ‘worst case’ is that high infection rates persist until Q3 or Q4, which suggests that the recovery will not start until 2021. The indicator to watch for is when infections peak. Recovery will be 4 to 6 months after that.
During the next 3 to 9 months people will experience significant change to their daily lives. According to Bill Bridges, adapting to change takes place on two levels and at two speeds. In terms of practical reality, change comes fast. One day, the workshop is open and you’re a productive team leader; the next, it’s closed and you’re laid off. People adapt to the practical change immediately. But that doesn’t mean that they’ve transitioned to their new situation psychologically. Transition takes time and during it people experience a wide range of emotions which affect their performance.
Bridges focused on what managers should do to get their team through the transition phase. He said, first, do nothing by memos. Go and see people and talk to them directly. Hold lots of meetings. Second, identify who loses what in a change and understand how to minimise losses. Third, explain the problem and why the solution has been chosen. He wanted managers to realise that staff were at a lower hierarchical level than managers, they had less information, not less intellect. One of his maxims was: ‘Say what you know. Say what you don’t know and commit a time to get back with more information. He argued that there were few secrets in organizations. The grapevine already has the news – be it good or bad. Bridges worked out that people can deal with understandable change, especially if it’s part of a larger picture. The manager’s job is to communicate the big picture through plans and information. Stay close to the people through the transition. Listen a lot. Inspire and motivate them don’t just carry
Ironically, the technical aspects of defeating Covid-19 are the most straightforward: The experts are known, resources are being allocated, and increasing amounts of data are being gathered to guide the creation of a vaccine. Sure, there’s no instant fix, and many more jobs to complete, but the path is well clear. Keeping services and businesses functioning is more challenging. So, is getting people to change the habits of a lifetime, even if it’s only for 3 or 6 months.
People come first. Right now, your people are uncertain about the future, and that means they aren’t focused on being their best and perhaps doing their best. More than that, other people are talking to them, particularly social media. Some of the information they get is fact. Much of it is rumour or exaggeration. In uncertain times people more easily focus on threats, not opportunities. In any event, unless you take the initiative, they’re not getting information from you. The first task is to set up a weekly meeting. The aims are simple. First, Keep people safe. So, show safety videos. Take people through hygiene policies – again. Check what is happening with hygiene supplies. Make lots of space for listening to people and getting them to air their concerns. Second, once you’ve dealt with personal safety, focus on business plans and developments. Be realistic. Paint a vision of where the business is going when it gets to the other side of Covid-19. Talk in terms of scenarios with probabilities, not absolutes. Make sure in advance that you can deliver on any commitment you make. With the number of patients seeking treatment rising every day, hospitals and medics are facing tough choices if their facilities become overwhelmed. While businesses don’t face life and death decisions, their choices will be life changing for some.
In many countries legal and government guidelines for employees and firms are unclear or non-existent when faced with central government policies which have never been applied before, such as curfews, closures of businesses and border restrictions. Yet, managers still have to take decisions which treat staff fairly while ensuring business survival in a situation of no clear duration. So, how can you take a balanced approach?
First, agree a realistic scenario and timeline for your operation, in your market. Keep in mind, Covid-19 infection can move fast and governments are responding fast as well. Work on the assumption that infections will rise and try to anticipate what may happen and develop your responses to events. Second, create a plan for each month of your scenario. Base it on looking after both the people and the business. Plan to implement steps progressively, in line with the threat to people and the business. If your judgements are based on sound values, the decisions will almost always be good ones. Third, explain the plan and listen closely to the feedback. Adjust the plan and implement it. You will make mistakes; admitting to mistakes and adjusting the plan shows integrity. Last, what’s the plan if you get sick? Who steps into your shoes? How do they know that you’re unwell? And…if your deputy gets sick too… now what?
It’s easily overlooked, but as Covid-19 takes hold, traditional marketing channels become weaker. People go out less. People are staying at home more often and for longer. They limit or reduce their shopping trips, so they see fewer billboards. They don’t see your showroom. Maybe, some of your staff are off sick, working from home or working fewer hours. One result is that your customers are getting spoken to less often. Your marketing spend may remain the same. It just doesn’t deliver as well as before. Now is the time to get in touch with them. Start with the obvious. Are there signs at the entrance to your department telling customers what you are doing to keep them safe? Does it tell them what rules are in place to ensure your staff can’t infect them? Reassurance from you, a trusted source, will never be more welcome. If that’s already done, think of what customers are doing and thinking. Almost certainly they’re checking their social media accounts more often. So, now is the time to talk to them. Tell them what you’re doing to help the community. Tell them about your staff. Give them offers they can use now or soon or when times get better. Keep the messages light and positive. Entertain them. Get their opinions. But keep the messages flowing. Be proactive, not reactive. One more thing, check the competition. Go onto their websites and social media. Make sure that there is nothing new being offered that you don’t match. After all, we’re still in business, aren’t we?
If this virus continues for months, rather than weeks, we will need to learn to operate in a virtual and digital world now more than ever. While screens can’t replace handshakes, they can provide a means for continued business success. We are here to look out for our customers and do what we can to keep business going. We’re still are available via phone, email, video chat or even in person. We’ll just make sure everyone washes their hands afterwards. Keep in mind that your personal abilities and judgements will be more important than any plan you produce. Three abilities will get you through the challenges of Covid-19. The first is Your Adaptability. Crises evolve over time, especially long-duration events like this. It started in December 2019. How long ago was that? As a manager, you may have to pivot the organization more than once as facts on the ground change. The second is Your Resilience. While some people become defensive during a crisis, there is an opportunity to be aspirational as well. Keep messages positive. Focus the team on life after this phase. The Last is Your Trustworthiness. Trust is the fuel for cooperation and collaboration This infection tests how many people trust us. If they do, we have the chance to be a hero to the team, the customers, and the neighbourhood. Trust is developed through what we do, not what we say.
Sadly, this is not the first business crisis and it won’t be the last. In fact, Crisis Planning started back in the 1960’s when businesses began to rely heavily on automation. Managers swiftly learnt that a breakdown in power or software could shut down their operations for weeks, so they began to plan for ways around the problem. As businesses have become digital, integrated with global supply chains and international, their planning for business disruption has become even more sophisticated. Covid-19 is not just a new virus, it’s a new type of breakdown. Virus pandemics have been threatened in the past. This is the first to happen since 1918.
Seven steps are listed on the graphic. These guide you through a thinking process to create a business continuity plan. A ‘BCP’ is a plan to get you through the Response phase, handling the immediate crisis, and into the Recovery Phase, where you begin to shape the business for whatever will be the future ‘business as usual’. So, the steps are oriented to ensure you consider the distinct impact of Covid-19. As you try to answer each question refer back to what is happening on the ground. Not just in your market, but across the region and across your supplier’s regions. Concentrate on Covid-19, but bring into your analysis wider issues than as well. Four key areas where other risks may arise are politics, economics, social changes and technology. For example, right now, oil producer countries are dealing with a fall in oil demand plus over-supply. If the situation lasts, it could lead to reductions in government income, which in turn may reduce government spending. If that happens, the incomes of many regional businesses could fall. This reduction would be on top of losses due to Covid-19. The steps lead to questions. Your challenge is to provide the answers. The more answers you supply, the more robust your plans will be and the more likely your business will recover.
Business managers are, by nature, optimists. So, its no surprise that they focus on the positive. Business continuity planners, like risk assessors and surveyors, do the opposite. They focus on the negative and try to plan a way out of it or a way of minimising the negative impact. As many of you may be managers, here are some planning checklists to get you started in creating a plan, while keeping your optimism in check. At the very least, they’ll help start your thinking process on how you should plan to respond. You can’t prepare for every single eventuality, but what you can do and should be doing is building the framework to respond. These checklists will help you to do that. One is from the US Department of Labour and was issued in March 2020. It focuses on how to keep workplaces safe. A second is from Canada, the Canadian Camber of Commerce. It looks at business preparedness and also provides links to further checklists. The third is from the Singapore Government and is in two versions: the first is the government guidance with clear examples of processes and procedures; the second is a completed example by a logistics company who used the template.