Build agility into your business in face of adversity

Plan and communicate — internally and externally — to minimise the impact of the coronavirus outbreak on your business

IF the Charles Haughey legacy is in part characterised as Gubu, then this current crisis might well be described as Gurtage. We are experiencing a ‘gargantuan and unprecedented reaction to a global event’. It is quite incredible how the world has changed in the last few weeks.

Like you, I’m sure, I have been monitoring the disturbance and trauma created by Covid-19 and I’m particularly bothered by the economic consequences. Of course I’m concerned about the health risks. I’m being diligent and taking extra but reasonable precautions. And of course I feel for the victims and their families.

In the meantime, and for better or worse, there are mixed government responses. While our government acted quickly, the Cheltenham Festival went ahead and the London Underground is still running. Airlines are still operating while many factories in China are in restart mode. However, I was booked to facilitate a global sales conference this week in Germany. Fifty people from 20 European countries were due in Mainz for three days. Justifiably, the event was postponed.

Spare a thought for the independent family hotel that has no way of replacing a big chunk of lost revenue. I have also spoken to a number of my Irish hotel clients this week and they have similar stories to tell. And of course, the St Patrick’s Day festivals have been cancelled, an enormous hit to those directly servicing the domestic and international tourism trade.

Retailers are at risk at both ends of the supply chain. Inbound supply will be affected for goods from China. Outbound route to market for traditional bricks-and-mortar shops will be threatened by a possible migration to online if shoppers get even more worried about going out and about.

The knock-on impact of these and other examples are real and very serious. And it’s often the B2C sectors which feel it first. But I believe we have to maintain perspective and not let this very unfortunate outbreak cause a macro-economic change of business sentiment. For that reason, I think it’s a good idea to take some time out to consider the consequences for your business and plan accordingly. Agility is key. Some tips for immediate action and to build resilience:

1 Reach out to key stakeholders

Speak to trade associations, suppliers and even competitors where relevant to get early visibility of emerging impacts in your sector.

2 Form a resilience team

Form a temporary cross-functional steering group internally, reporting to the chief executive.

Depending on your business type or size, set time aside for team members from commercial, finance, operations, HR and supply chain to get into a room to talk. First, they should come up with a plan to protect your team against the virus.

Then they should apply a Swot framework — strengths, weaknesses, opportunities, threats — to the key pillars such as people, product, route to market, brand and internal controls. Consider all risks to your business, then rate them in terms of the scale of impact and timeframe. Then make recommendations for corrective actions.

One client of mine imports components for their technology product from Italy. That factory is closed for the foreseeable future, which means my client has to either source the components elsewhere — easier said than done — or reforecast sales targets downwards.

3 Contact customers

Your customers might be just as concerned as you. As you learn more about the implications, speak to your key customers to reassure them you are all over this and planning like crazy.

Reassure them they are still in good hands. Don’t let competitors slip in behind you with some attractive offers.

4 Challenge your cost base

Since 2008, businesses have already built expertise in reducing costs. Public companies in particular have had to do it as shareholders applied pressure.

Therefore you might feel you can’t get blood from a stone. But do look at this again. Some variable costs should scale up and down with sales. But are you on to this? And can you do anything with your fixed costs? Is agility in your culture?

5 Communicate with your own team

Don’t forget to pay due respect to your own people. Include them in your planning. At the very least, let them know what you’re doing and reassure them as much as you can.

Rather than letting people go and reducing payroll, could you work collaboratively with them to reduce cost and/or increase productivity?

One company I’m aware of held a meeting with its full team to discuss the crisis. An idea came from the floor that everyone should temporarily cut their salary by 20pc. That was an amazing gesture. Perhaps this team remembers the challenges of 2008 and is now being proactive.

6 Check your balance sheet

Can you look again at your balance sheet and see if you can unlock some assets or liabilities?

At the start of the global crisis in 2008, many large companies acted quickly and reduced debt. They then sat on their cash and were ready to pounce quickly when opportunities presented themselves. We have no idea how long this crisis will last but if it is protracted, cash will be king as we come out of it and value will be there to be had.

7 Use the temporary downtime wisely

I participated in a webinar this week for conference speakers from around the world.

Cancellations are our new temporary reality, which releases some downtime for research and writing. If you have unplanned downtime, what can you do with it? What about organising that training programme you have been parking?

The last word

In addition to this crisis, there is another reality in our world. Every spurt of economic growth is followed by a downturn.

We’ve had a global economic boom for the last 10 years. You need to listen to senior economists and form your own view of where the world is right now, regardless of the virus.

Don’t bury your head in the sand or wait for your trade association to lobby for support. You are the master of your own destiny so control your controllables and plan for the uncontrollables. Alan O’Neill, author of Premium is the New Black is managing director of Kara Change Management, specialists in strategy, culture and people development. Go to www.kara.ie