How to define your Business Strategies in these difficult times?

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 etc.

·         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

With all 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.   

The next 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 etc.  

At this 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.