The speed with which Covid 19 has hit us all has left us all working through how to come to terms with this sledgehammer blow of Covid 19. At a personal level, through to government ministers are working through what we have before us and considering solutions to events that are unfolding daily. Business leaders are asking themselves, their peers, customer, and vendors what steps are they taking. Action is needed as well as responses to critical questions that may have been in the past avoided but they need to be addressed soonest as we all come to terms with the plan for today, and its support for planning for the future business world.
Above all else, we need to understand:
- Empathy. Unlike other organisations, no business is going to survive without a market, customers to supply and your vendors, all have been hit hard to varying degrees. Kimmeridge Group understands business value chains are interconnected and each component is reliant on each other. A dog eat dog world is something that will be counterproductive to stabilize, manage and to recover into an operating environment was are all unsure of. Central to all of this is the impact and the reliance on one and other, all employees will need to understand the sharing of the burden for short term survival to longer term ‘thrival’.
- Create a rapid response room. Every leader needs daily, in some cases hourly updates about the state of the marketplace, the state of operations, and the key issues the organisation is facing. What is considered for review and update may change as the current situations change and scenario’s become clearer, make accountability for tracking across the organisation such that the burden is shared, and make it all visible, but make it understandable. Have it shared through business networks and make it as dynamic as possible? Establish some semblance of order, (getting it done) before overburdening it with rules, that may come later in a ‘thrival’ stage. Establish the frequency, who, what, when, and how as well as why. The audience will not be everyone, but at least the broad leadership team, key customers, and vendor partners.
- On hand cash and cash flow. Establish detailed modelling of your top six markets to estimate how they will develop and to gauge key sensitivities in the P&L. As with the critical-issues list, this needs to be an agile model. It must be updated daily as monies move in and out with projects against scenario’s, do not bet on one horse! Kimmeridge Group recognises the importance of this and is willing to work with clients with deferred and reduced invoicing during these times.
- Create heightened commercial activity in the front line. Even in this severe downturn, there are opportunities. Where are they? Online, geographical regional? Apply some thought to alternative markets and product modifications to create markets/products, bring forward R&D and design engineering that can exploit the business pressures that are in play currently. Get creative with innovation and. Look for new channels for sales distribution and partnerships for resale or B2B opportunities. Behind all this ensure that the production and supply chains are primed to become agile and always looking to shorten them and make capability to produce available.
- Get close to your customers. You need them, no customers is a dooms day scenario, communicate empathetically, understand their difficulties and work with them. The business leadership team must at all the customer touch points understand how important they are and feedback any information to the response room, it might be essential and provide a pre-emptive piece of knowledge that becomes a differentiator for the future business. Become close to your customers, to lose one is costly, working to gain a new one is even more expensive.
- Operational plans for the unplanned. The resilience of critical system operations is vital to your organization’s mission and survival. Even if you have closed or downsized many of your operations units, your back end and online systems need to continue functioning to achieve your customers’ expectations and needs. Understand what it is going to take to maintain supply chains direct and indirect. Included in operational planning is the management of people and the steps required to mitigate the possibility of zero passing of infection one employee to the other, re-think shifts, breaks and where people take lunch. Isolate as much as you can. Plan for the worst-case scenario, have a team on standby to deep clean.
- Protect the assets you have within your people. The tacit knowledge and skills that sits in a business is where a lot of the business value sits, in its people and it will need to be protected. Health and hygiene come first: if your people do not stay healthy, you do not have a company. Where possible, establish remote-working practices, not just home office but in machine operating areas, warehousing, security, reception, finance. Relearn what efficiency is when you cannot sit and work as closely as you did before. There is an opportunity.
- Communicate with your staff. Exploit the tacit knowledge, the experience and show empathy when engaging with your staff and teams. The levels of uncertainty for everyone is off the chart is we were to be honest. Address their concerns commit to open communications and be transparent with them. Even though the future currently is very opaque it’s imperative that you provide the best view that you can and share with them what it is you are seeing and that it may well change from time to time.
- Slow as much as possible the burn rate. Stop salary increases, freeze hiring, reduce the head count of low performers, use funds from cancelled events for the war chest, marketing spends on the positive not just for the need to, be selective. Remember, costs not selling price determine profits, look hard at your costs, and attack them with a vengeance. Look extremely hard at any future ROI on products and what’s steps can be taken to mitigate getting it wrong with any new investments? Look at the real estate you have, need it, want it, can you do without it? Challenge everything in detail. Work with vendors, be empathetic as they will need you as a customer as you need your customers. Plan multiple scenarios and do not back one horse.
- If there is a long-term opportunity seize it. It is not only your frontline people who should be looking for pockets of opportunity. Even in difficult times, you should look for ways to capture market share where you can. If there is opportunity, capitalise on it, at the closing down sale is the best time to buy distressed assets that will enhance your business offerings.
- Beef up your IT systems. There is a possibility that your IT platform might be taking strain with remote workers putting it all under stress. Look at the networks people are using, reliability at this time in a disaggregated working environment will rely more and more on connectivity. Just check it and do a risk mitigation exercise, including security.
- You have customers for a reason. In times of unprecedented business pressure, be consistent in your delivery and be empathetic in your dealings but be firm in the interest of your organisations current state and future modus operandi.
All the notes above are actionable and behavioural in context and being experienced currently. They will move up and down the levels of importance scale as the situation moves, stabilises, and matures. That is looking at the now, what about the future, it will change:
- What will recovery look like, how will you know it is happening or happened?? What recovery are you looking for anyway, society, business, humanitarian? Having some level of awareness of these is going to determine what recovery is and will look like, its trajectory and is flattening the curve recovery? What timeline are we putting to recovery, is it an ongoing measurable and will change? The rapid response room may morph into a business feature that we don’t necessarily have yet, a business command centre that through this current business state we realise it gives us a competitive advantage and a new operational dynamic that gave us survival that migrates into giving us a ‘thrival’ dynamic.
- Will change be inevitable? Yes, for sure in the short-term given what has been experienced and tested and applied successfully, most certainly it will. The longer this goes on and the forced changes become habit forming and then there is more chance that these new norms become new futuristic lifestyle and business styles of conducting commerce. There is always a yearning for the old things we use to do, the ones that were easy, such just going to the mall, they were easy, and we were geared for that. If we realised, we could live without it, can live without it, then its less likely to return. If our business tools changed and were proven to be efficient and contributed to an improved life balance, why would they go back? If our supply chains stabilised and the improved cadence sustained the levels of agility, releasing working capital, why would they go back? The jury is out for now.
Kimmeridge Group see’s the future at best as opaque Right now, none of us can say what the future holds. Acting swiftly with purpose, whilst uncertainty reins, is imperative. Actions taken today in line with ongoing scenario planning without backing a single horse is important. Those that start to show stamina will put organisations in good stead. Remember empathy, be consistent in your dealings, actions and communications and switching from the short term to long term thinking will prepare you for the future, all be it unknow.
Kimmeridge Group is empathetic and given the drive for business survival is imperative, its our intent to support or clients in these times and are willing to support operationally and financially with deferred invoicing and payment terms, we are all in this together.