In a CNBC report a few days ago, a bleak declaration sums up the impact of the COVID-19, “Coronavirus wipes out $1.7 trillion in US stock market value in two days!” I am not fanning an alarmist mentality here, but it is clear that investors are fleeing the riskier assets amid intense fears about the slowdown in global growth caused by the deadly virus. It didn’t help that the World Health Organization already raised the risk of a global spread of COVID-19 to the highest level of alert and another highest level of risk assessment in terms of impact.
It raised the status to “very high” after a week that saw the contagion reach all the world’s inhabited continents except Antarctica. They further justified the declaration that it is a reality check for every government on the planet to “wake up, get ready, this virus is on its way and every government must need to be ready!”
Time to regroup
For business owners, it is time to ponder and ask yourselves: Is my business affected? If yes, how significant is the drop in sales? Have there been cancellations? How many percentage points have dropped? In Hong Kong, hotels are registering single digit occupancy (OCC). RevPAR or revenue per available room is at a historical low. Whether your business is engaged in trading, retail, hospitality, manufacturing, construction or a mom and pop business, you should anticipate significant hits to start compromising bottom lines. Are you prepared to just wait it out or do something now? And what if this uncertainty extends to two, four, six, eight months?
Last year I flew to Europe to facilitate a strategic planning session for a diversified conglomerate with presence in Asia and the European Union (EU). During the three-day planning session, I raised a VUCA challenge to its senior management team. In my opening day speech, I reiterated the critical need for the organization’s SBU (strategic business unit) heads to collectively have a vision, focus, align and measure their initiatives. Additionally, I warned them to brace for impact should any regional or global event happen. That global event is presently unfolding… sales are diving, markets are spooked, lockdowns in China and uncertainty is everywhere. Thankfully the group prepared a plan and contingencies are now being activated. They sent me a message this week that they have moved past the agonizing phase and have started implementing their plan. Consistent with the title of this article: Don’t Agonize, Organize! In the succeeding weeks, we should expect a roller coaster ride!
Volatility: The virus is spreading and revenues are sliding.
Uncertainty: The Unpredictability of the situation is creating fear
Complexity: Many extenuating events, confounding issues leading to chaos
Ambiguity: Unclear and the haziness of reality causing confusion
The antidote of VUCA is to counter it with another version of VUCA but based on positive value driver.
Vision: Create conditions to accelerate growth, explore new drivers
Understand: Manage Expectations, determine risks and rewards
Clarity: Define Roles, Rules, Responsibilities, measure actions
Anticipate: Be agile, adjust, prepare and address threats and opportunities
I also highlighted that reversal of fortune in any industry is happening and any misstep can cause the business to free fall overnight. With the COVID-19 making its way to Europe and the Middle East and with no chance of slowing down, local companies, big or small must seriously plan and prepare. Without a doubt our economies are wired and virtually borderless and any demand and supply issue is directly correlated to a work stoppage somewhere in a factory in China or Vietnam. (To be continued)/WDJ