Let me start off by saying that a short report by New MarketAdvisors a gist of which I first found on Forbes gives us an excellent
direction for setting up business strategies post COVID 19. Let us get to the
point straight! Very quickly let us understand the 4 phases of disruption that
businesses are likely to face as part of this pandemic.
Facing and overcoming short-term impacts
Coping with the loss of business
Returning to BAU
Adjusting to new market dynamics in the new
changed economic paradigm
There are 4 types of uncertainties that businesses are likely
to face because of the pandemic. These quadrants were defined by former US Secretary
of Defense Donald Rumsfeld:
Known Knowns – In this quadrant we need to
challenge the truths of our businesses as it existed before the pandemic
struck! Some of the acceptable tenets of the business can be that customer ‘X’
will buy certain value of goods and services as soon as the markets starts, regulatory
condition will be favorable, financing will be same as it had been etc. At this point there are certain truths that
we need to challenge such as what if the client who bought regularly has faced
loss of clientele and may reduce or altogether stop buying, what if banks and
financiers slow down regular financing because they had to defer their EMI’s
because of Government mandates etc.
Therefore we cannot go ahead with business assumptions that prevailed
before the crisis struck.
Known unknowns – There are some unknowns that
we know will face every business that does business today. These can be factors
like the clients capability to pay within the existing credit timelines that
exist now, vendors accepting the current terms, will customers have the same
psychology to buy the product and several others. While we know that these
changes can happen but we really do not know the outcome of these events.
Unknown Knowns – These are factors where
there is a certain degree of insights that entrepreneurs have but would require
them to get more clarity. These factors include competition status, is negative
news changing customers behavior, the impact of advertising as sales plummet
Unknown UnKnowns – This is the most
significant challenge quadrant. In this quadrant everything is unknown. Entrepreneurs
have no idea of how long the effect of the business lockdowns will continue, will
demand increase or decline, what will happen if the current situation reoccurs
again etc. As Donald Rumsfield had said that these
unknown unknowns should be considerations or levers for war game simulation.
Therefore businesses should consider these scenarios
these knowns and unknowns, it is imperative that businesses take emergency
steps to sustain in the short term and look for growth in the long term. Short
term sustenance measures include preserving cash by stopping any unnecessary
expenses, generating emergency funds from different available funding channels
and the most important of all to ensure than productivity levels are not
breached below a certain threshold.
important step is to prepare for the growth of the business when the crisis
blows over. At that point in time, every business will try to run as fast as a
jaguar with consumer demand picking up, businesses trying to make up their
losses and move into a new business paradigm that the business world has not
seen before. Infact to tide over this crisis it will require a very
differential response because it is different from the subprime crisis or the
dot com burst. Here the unknowns are much more than the knowns because there is
no real data that the business world has to respond effectively to this crisis.
The best way
to look at the post crisis scenario is to innovate as much as possible so that
you build new levers for your business to move to the post COVID- 19 phase.
Digitization, optimization, consolidation and innovation cannot afford to be
buzzwords anymore. Clients will have to be offered differentiated offerings
that can help them to scale faster than their competitors. We can also expect
to see new business plans evolving in the post crisis scenario wherein
companies can move towards more digitization, developing more differentiated
skills, putting emphasis on training, smarter and more efficient revenue models
stage wherein the world is already in this crisis for almost 3 months,
businesses have already started feeling the impact of the downturn. IMF has
declared that the crisis is more severe than the subprime crisis and the effect
of this will be lingering. Governments are also bringing in huge amount of
stimulus but it needs to be seen how the benefits percolate to startups and small
and medium businesses who remain the backbone of any economy but are the
hardest hit in times of economic distress. The situation remains fluid and the need of
the hour is create dynamic plans to adapt as per the changing scenario. With
hopes that the situation gets better sooner! Fingers Crossed.
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