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by Ritesh Shahi 30 April 2020
COVID-19 has put public health systems of countries across the world to all sort of tests, to contain its spread, measures to ensure social distancing and restrict movements are in place. As a result, economic activities have come to a screeching halt, and this unanticipated disruption has forced many businesses to worry about their very survival. In this backdrop, we need to reflect upon the present and anticipate what lies ahead for the corporations.
So, where are we now? If we lose our way to a destination, it is crucial to take a moment, look around and find out our exact location. Even if one opens google map on mobile, and search for a direction, it will ask for current location, and then only it will show various options to reach the desired destination. For the same reason, it is crucial even for the businesses to know exactly where we stand today in the economic and social sphere. How grim is the current situation, and if it is a crisis?
One thing we are sure about the current situation is that it has hit us from nowhere. Nobody anticipated it, and if we go by the opinions of top economists around the world, it is already the most severe global economic crisis in a century. A very gloomy outlook for the worldwide business emerges from the current data. For the year 2020, the World Trade Organisation (WTO) expects a downturn in global trade to be between 13-32 per cent. International Labour Organisation (ILO) suggests that 400 million workers in the informal economy are at risk of falling more serious into poverty. International Monetary Fund (IMF) says the world economy is on the path to the worst downturn since the great depression of the 1930s.
Moreover, UNTACD fears that the ongoing war against COVID-19 may have a devastating effect on global food security. If we look at the individual countries- almost one million in the United Kingdom have applied for welfare payments in the space of just two weeks, which is ten times the normal amount. In Germany, a whopping 470,000 companies have applied for German state wage support in March. The United States of America is experiencing an unemployment rate up or equal to levels of Great depression, and some even predicting wiping out of more than 30 million jobs. World bank has reduced estimates of India’s GDP growth to 1.5 per cent from 6 per cent for the year 2020-21.
These figures paint a picture of a world which is not just dealing with a monumental health crisis, but also simultaneously battling with a grave humanitarian, and economic crisis. Moreover, no country across the globe is immune to this. It is impacting all the countries and almost all the business around the world.
Does this mean we are in a hopeless situation? This pandemic is indeed causing grave and global pain, but how its trajectory shapes in a country depend upon actions of a particular government. Also, the story of evolution and history of humankind demonstrates how through their capability to adapt fast and mass cooperation, Homo sapiens have left all species far behind despite initially being somewhere very low in the food chain. Observance of lockdown during a current pandemic is one such example of mass cooperation. No other species are capable of this kind of collaboration for a common cause. It should give us confidence that if it is needed, as species, we are capable of adapting to new challenges in a coordinated way.
Sometimes, especially when the present scenario is very bleak, looking at past may offer some hope. It is not the first time when we are staring at a doom. We not only have survived but also have managed to thrive after two world wars, the great depression of the 1930s, the financial crisis of 2007-08 and many health crises like SARS, Ebola, Spanish flu. However, survival does not mean we are going to remain the way we are. The battle of survival exposes us to new realities, unleashes new potential and open new opportunities. For example, some of the most excellent companies were founded during recessions- Apple and Microsoft (the 1970s), Airbnb, Instagram, Uber (2008-09). The outbreak of SARs is seen at the root of picking up of online shopping and the growth of Alibaba in China.
Even during this ongoing battle with COVID19, many of the India companies have already ventured into new spheres that they might not have thought even few months backs. They are trying new business models, unleashing new capabilities and discovering new opportunities. For example, Mahindra, a leading car manufacturer, has stepped into the manufacturing of low-cost ventilators, and in future, who knows if it may continue to have this new business line of medical equipment in its wing. Similarly, companies like Swiggy and Zomato, which were in online home food delivery have realised the potential of delivering of FMCG products. Apparel makers (for example, Arvind Mills) have stepped into producing masks and protective clothing. Healthcare companies also see a spike in the area of telemedicine. Many liquor companies are producing bottled sanitizers.
Does this mean it is going to a bed of roses and is everything going to be beautiful? No, not at all. It is going to be painful. Some businesses will shut, and many will lose jobs. In fact, as per reports, Uber is already considering 20 per cent layoff of its workforce,
However, the impact may not be uniform across the industries. Firms operating in high-contact service spheres like tourism, restaurants, movie theatres, even beauty parlours and saloons must face more challenges in comparison with the likes of manufacturing or education where practising social distancing is comparatively more straightforward.
Though we might not be doomed, we need to accept that Post-COVID-19 world will not be the same as the old one. So, what is the way forward for the businesses? Response to any pandemic has mainly three phases: first Non-pharmaceutical Interventions like enforcement of social distancing and lockdowns to contain the spread and to prevent public health infrastructure from getting overwhelmed. Once the curve is flattened, the next course of action is gradual opening up of economic operation with some social distancing measures in place, and lastly mass vaccination. By all estimates, as of now, we are far away from manufacturing a vaccine. Hence, a business will have to learn to operate in this kind of environment. They are required to put on crisis manager’s hat and anticipate, detect, react, mobilise and invent to steer the business away from this troubling Phase. Managers will have to concentrate on only managing the day to day operations but also have to manage for the future. Clear communication will help in addressing the anxieties of the employees and understanding the evolving needs and gaining the confidence of the customers.
Companies should also be mindful of the fact that some of the changes like remote work are going to gain more rapid traction in Post-COVID times. Work from home is not a new phenomenon as technologies to facilitate remote work existed for some time. Even a 2018 survey by International Workplace Group (IWG) revealed that about 70 per cent of professionals globally are telecommuting at least once a week; 53 per cent work remotely half the week or more. However, the current crisis has forced even reluctant ones to explore it. So, in all likelihood, new technologies facilitating remote works are going to be adopted in a big way when businesses will focus on reaching out to their employees instead of the earlier approach of bringing all the employees under one roof. As a consequence of the more geographically distributed workforce, new supervisory mechanisms are set to emerge; executives will have to adapt accordingly. History tells us executives who do not evolve and change with time, are swept aside.
Many experts believe that Post-COVID 19 world will see a lot more development and faster adoption of automation solutions. Although in the atmosphere of deteriorating job options and rising global unemployment, this may fuel anxieties amongst working as prospective employment seekers, according to The World Economic Forum (WEF) estimate emerging professions resulting from automation could account for 6.1 million jobs globally between 2020 to 2022. However, to do those jobs requires up-gradation of skills, and that is what job seekers should keep in mind. Building on expertise, improving competence and gaining fresh perspective through diversification of experience and acquisition new skills may open new doors.
As once one former U.S. top army general said: “a problem has a different solution on different days”, businesses should be ready to reinvent, refocus and strive for not just to survive but also to take advantage of emerging opportunities. History tells us that trying times open new opportunities to spur innovation and creativity in the areas never imagined before.