Rewiring will be needed to sync with ‘circuit-breaker’ economy
No one wanted to be in this position. And it is certainly possible to argue that it is not the right policy anyway. It maximises uncertainty, there is no conclusive evidence that it works, and it may well turn out to be virtually impossible to enforce. And yet despite that it looks as if we will be stuck with a “circuit breaker” economy – a repeated stop-start cycle of opening and closing down business to keep the virus under control.
That may last until we get a vaccine, and that could easily be at least a year away. But how can companies cope with repeated lockdowns? It isn’t going to be easy. In the end, we may find that more businesses and livelihoods are broken than circuits. Still, if that is what we are heading into, companies can at least make the best of it. Like how? Try to sync the business and health cycles; plan for the breaks; work out how customers and staff can cope; and keep furiously innovating to move as much trade online as possible. It won’t save every enterprise over the next six months, but it may rescue a few.
With Covid-19 infections rising at an alarming rate across the UK, as they are in the whole of Europe, local lockdowns are being imposed right across the country. With London added to the list as of this morning whether we have a national circuit breaker is now largely beside the point. More than half of the UK economy has been restricted. So far as business is concerned, we are already there.
That is going to be a struggle. Companies, and small ones in particular, that just about managed to get through the spring with the help of a bounce back loan and with staff on furlough, may well decide it is not worth carrying on through the winter. It might well make more sense to close down, stop racking up more debt, and see where you are when the epidemic is finally over.
It would be hard to blame any business owner who made that decision. Even so, it might still be possible to survive a circuit-breaker economy. Like how? Here are four places to start.
First, get the timing right. For most companies, it would be better to lock down for a month now if it meant restrictions could be lifted towards the end of November. After all, there is a big event towards the end of December which often drives a lot of traffic to the shops, restaurants and bars (for anyone who hasn’t guessed already, it starts with a C and features a lot of elves). Then, if it proved necessary, cities could lock down again after the January sales, close for the dead month of February, and open up again in the spring. Businesses have peaks and troughs, and the more lockdowns are synced to that cycle the easier it will be for companies to cope.
Next, plan for the breaks. When lockdowns are lifted, get the staff back into the office to renew contacts with their colleagues, hold those crucial face-to-face meetings, make sales calls, and collaborate on new projects. It might only last for a month, so there needs to be some urgency to it; deadlines are always important but they will be more important than ever before. And then make sure everyone is ready to work from home again for another month or two. In the hospitality industry, whether it is a bar, restaurant or concert hall lay on some big events or special menus for when restrictions are lifted and try to make that time as special – and lucrative – as possible before the shutters go back down again.
Thirdly, keep adjusting. Talk to the customers, and work out what they need and when. Sometimes production can be postponed, other times it can’t be, but this isn’t a sudden emergency anymore, and there isn’t any excuse for not seeing a lockdown coming.
If you plan ahead, you can work out a schedule that works for what the customer needs.
Likewise, work out a stop-start system with the staff. They might have to work like crazy for a month, then take a month off, and they might need to be sharply reminded that with mass unemployment looming they don’t need to be paid overtime rates for the month when their hours are increased. Oil rig workers live with that schedule, and so can many other people. It isn’t
perfect, but it is better than nothing. Finally, accelerate that digital transformation. In the first lockdown, lots of companies discovered there were different ways of delivering their product. Legal services, financial advice, and some medical and fitness treatments could all work on Zoom, hairdressers could visit your house, and we could order clothes, food, and drinks online, and stream concerts and shows that we used to have to go out for. Sure, some of the novelty has worn off, and not everything that worked in April and May will be quite so compelling in November.
Still, plenty of companies innovated furiously. The more they keep that going, the safer they will be – and a lucky few will stumble across a far more successful business model they didn’t know existed.
There is, unfortunately, no escaping one harsh fact. A circuit-breaker economy is going to be very challenging. Companies that got through Lockdown 1.0 are not necessarily going to make it through 2.0 or 3.0. But if there is one thing a free market is very good at it is adapting to change. And so are most companies, at least the good ones. Stopping and starting commercial life as we struggle to keep infections under control is far from ideal – but if that if what we are stuck with, we can at least make it work as well as possible.
‘Staff might have to work like crazy for a month, then take a month off, oil workers live with that schedule’