Don’t waste a crisis, part 2: Is your company ready to restart?
It was another incredible week!
Much of my days were invested finding ways to keep safe and finding our front-line heroes the personal protective equipment (PPE) they need to do their job. All our collective efforts look like they’re working — the trends are positive — yet it still remains to be seen what damage we did with the in-person election last week and holiday gatherings over the weekend. The projections look like we will stress — though not break — the medical system’s capacity. Keep up the good work!
In the coming weeks, we will be in position to safely restart our economy. If you are not thinking about what’s next, you are wasting this crisis and the opportunities it will create. Think about what you will do next. History shows that the best companies come out of downturns ready to act. They invest in technology and people in a way that positions their operations for the future. Don’t be fooled by the unique cause of this pause. Most of the restart will echo past recoveries.
New data and past experiences predict that the best companies will act quickly. We all read the headlines about companies in trouble, especially in hospitality and travel, but three pieces of data offer us a different story. First, I participated in an online course on crisis management that attracted 2,000 executives from around the world. The professor posted a flash poll with three choices:
- My company has an immediate cash crisis.
- My company will need a cash infusion later this year.
- My company has enough cash to make it through 2020.
To my surprise, over 80 percent of the people on the call were in categories two or three. I was expecting more companies to be in dire straits, but then an interview with a New York investment house reinforced that finding the next day when they reported that 20 percent of companies were facing bankruptcy.
A third piece of data came from our friends at the Brookings Institution. On a podcast, Mark Muro discussed how investment in technology and automation increases during — and coming out of — a downturn. That’s a bit counterintuitive but makes sense when you consider the explanation. As revenue falls, labor becomes incrementally more expensive. At the same time, technology becomes cheaper as general demand softens. Add to the picture the availability of more talent and the puzzle comes together. The best companies use downturns to take advantage of lower costs for new technology and the talent available to implement it to improve their competitiveness.
These companies accelerate their way out of downturns and take advantage of slower companies’ inertia. They come out of the gate ready to engage around new opportunities, using their improved capabilities to expand their markets. Their talented teams blaze the trail and set the tone for other companies.
Are you one of those companies facing bankruptcy or an immediate cash crunch? If so, that puts you in the bottom 20 percent. Two major challenges face you and your organization. First, you must find the cash to survive until the economy restarts. Then, you must do some deep soul-searching to discover why your business model put you in such a tough spot. It will be easy to blame the virus and see yourself as a victim, but don’t! Use this time to make the hard decisions and vow to come back stronger and healthier than ever before. If you can’t do it yourself, find someone you can trust to guide you through to the other side.
Don’t be left behind! Take time out of your scramble to anticipate what’s coming next. You have the opportunity to engage your employees and prepare for the economy’s restart. If you’re not at full capacity, take advantage of the programs in the CARES Act and do those things you’ve postponed. Be one of the companies who leads the charge.
Looking ahead, safety must come first. Infection rates must fall and we must have a plan to contain future infections before we move forward. It’s not reasonable to keep the economy closed until the virus is defeated. It’s also not reasonable to trade lives for profits. Hopefully, we will have the adult conversations necessary to make the best decisions about next steps.
Ultimately, the crisis will subside and we will reopen the economy. It will be an uneven start as we figure out how to take care of our people while operating vibrant businesses. The most prepared organizations will make the strongest starts. The world will be different and these companies will be ready to react.
I fear many companies will be left behind — again. Don’t be one of them!
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