Covid-1929: Are You A Wartime Or A Peacetime Leader?
“Hey Greg, you misspelt the name of the virus, you dummy - it’s Covid-19”. Well, did I now? Actually the 1929 reference is more accurate. Wall Street crashed and the chain reaction pushed the whole world into a miserable recession, that destroyed lives and businesses. In my view, that is what we are looking at here and the question is, as a leader, are you ready for the commercial carnage?
Launching a start-up, maintaining market share and seeking rapid growth escalation are all different requirements and not all leaders can do all three with equal flair. China’s retreat from markets has thrown a lot of business plans straight out the window. Now the virus contagion goes global. We are entering an economic war zone and are your leadership skills ready for the challenge?
As a leader, focusing solely on the health aspects is to join the media led sensationalist panic. If you have an existing health condition or are over 70 years of age, then you have a very high mortality risk from the virus. For everyone else, the biggest risk is that your company goes down and you are out of a job. Are you the leader able to make sure that doesn’t happen?
In 1929 the stock market tanked and everyone, including the Government, started scrambling to preserve cash and stop spending. This just drove a stake through the heart of the capitalist system, as people’s panic stopped the wheels of commerce. This will begin to seem very familiar to everyone very shortly.
Japan is the first major capitalist country, apart from Hong Kong, to really suffer from the virus. The pain starts for small medium sized (SME) businesses. Here, these SMEs account for 99 percent of all enterprises, 70 percent of employment, 50 percent of the value added manufacturing sector and 60% of the nonmanufacturing sector. According to Government statistics 70% of companies in Japan don’t make a profit, so many will be SMEs and be in that situation.
The virus is curtailing commercial activities. Abe closes the schools and people focus on what to do with the kids at home. The other issue that doesn’t get enough attention is what happens to all those businesses who have revenues tied up in supplying schools with lunches and other services? Events get cancelled and that means everyone who had revenue potential in that event, gets zero income or maybe even loses money. Tourists, both domestic and international, are stopping their activities in Japan, so the entire industry takes a huge hit. This affects thousands of businesses directly and also those who were looking at supplying goods of services to that industry. Hokkaido gets locked down to avoid the virus, but what about avoiding the corresponding loss of cash flow?
This is how we recreate a 1929 scenario. I would guess that right now, almost all SME enterprise leaders in Japan, are focused on preserving cash. This is the oxygen of business and without it you don’t last long. The way to do that is stop investing, stop spending and stop paying other people for the bills they have already sent you. This chain reaction leads to an economic meltdown and it won’t be contained in Japan alone. Like the virus, it will envelop the entire world, as it creates the same domino effect on all businesses.
You are the leader. What are you going to do during this mass slaughter of fellow SMEs, to make sure you don’t go down for the count? The war time leader doesn’t try and tart up the reality for the team. They tell them straight where the firm is positioned now, regarding cash reserves and are totally transparent about the stages the business will go through. Stage One is stop all unnecessary spending. Stage Two is stop paying other people, including the Government. Stage Three is cutting salaries, starting with the President, who leads from the front and goes down to zero, while the others take a progressive haircut of firstly 10%, then 20%, 30%, 40% etc. Stage Four is to throw in the towel and declare bankruptcy.
During these four stages on the way to the Apocalypse, the leader must be constantly communicating where we are right now and that we can survive this. The team will not be conveniently gathered in the office anymore, because they will be scattered to the winds at home. Are they actually working at home? That is a question, because with the downturn there may be less for them to do.
Suddenly they have time on their hands and can brood about how bad things are and how fragile this company they have trusted with their livelihood is. Constant media bombardment with bad news wears people’s spirit down. Watch for signs of depression and stress in the team and get them help if these appear. The leader must be a beacon of raw hope and optimism and more importantly must keep communicating that to the team.
The leader needs to keep them all busy too. Meetings that were face to face, can still be had by video conferencing, as the tech is very accessible and inexpensive today. Scheduled meetings should continue to offer some normality, routine and opportunities for good internal communication. Don’t stop holding them because everyone is at home, hold them anyway, but now do it remotely. Offer remotely delivered training for your clients or for your own team – it could be product knowledge, technical hard skills or soft skills training.
Create projects and get them involved. It might be focusing the sales team to take the opportunity of decision makers being at home and contact them there, sans the usual bevy of brilliantly talented gate keepers, who frustrate our efforts to reach the boss. It might be developing marketing campaigns that align with the current situation. For example, drop the usual key search words for pay per click leads and go after different terms and phrases. It might be to clean up systems and projects that have been kept in abeyance, because previously there wasn’t the time available. Plenty of time available now if there is no work going.
Be positive and radiate belief that we can come out of this long dark tunnel. Brainstorm what can be done in the new environment, start executing on that plan, constantly communicate, be totally transparent and provide massive hope of a better day coming. Be a war time general for your team.
Free Live On Line Stress Management Sessions
On a separate note, we are running public Live On Line Stress Management classes, which will be free to all attendees on March 19 (English) and 24th (Japanese) and April 16th (Japanese) and 17th (English). We are also offering the same thing as an in-house programme, delivered Live On Line for our existing clients and for prospective clients. This allows us to help our clients and our community.
The registration process for these free stress management sessions is being offered on our website, so please go to this specific page: http://bit.ly/dale_stress_e
