Structure brings order to Chaos: What is COVID all about?

Would the coronavirus pandemic bring out the new order or merely restructure the present order to make way for the business world to adapt well?

For a world to fully overcome the pandemic and emerge towards the future, it would indicate the end of the old order which failed to protect all businesses from the violent shocks that the pandemic has unleashed. The pandemic had put a strain on the weak apparatus on which businesses have been built, implying the strength of a chain depends on the weakest link. Whether the link will snap is a matter of time and the structure it is made.

This has put a stark contrast with the SARS outbreak in 2003, which made only cosmetic changes to the system and the cosmetic changes soon fell apart as the need for the smooth functioning of businesses with hidden cupboards full of skeletons to gloss over the issues and move forward, expecting that the skeletons would vanish as the costs in the supply chain, manufacturing, designing and labour would fall and the revenues would increase exponentially, making the stock prices to shoot up. But the cracks which had been present always in the system have led to earth-shattering ruptures, yet the balancing act still persists.

Yet if faulty policies still exist and increase pressure on the labour to contribute more as humanity still suffers, it would make for a poor view and lead to businesses with such policies to be viewed with scepticism and to a huge extent, dissent and boycotting. An example of a known car manufacturing company which had forced its employees to work in their factories has received wide criticism even though the company has enjoyed much fame, stellar performance in balance books and huge confidence in its stocks.

An economy with cracks:

Almost all national economics have suffered greatly and recovery is only possible at best 6 months after the pandemic is gone. The US which had been one of the main epicentres is expected to face a negative impact of up to 13% since the end of the Second World War (Source: McKinsey report). This is also seen as the Q2 2020 reports of all major economic spheres have shown poor performances with the Eurozone bearing the most at -10.1% to its real GDP.

The effect of this pandemic has also been seen in sectoral analysis as the impact on industries ranging from Commercial Aerospace and Air & Travel are bearing the most and Pharma and Consumer services bearing the least. This impact is reflected in their falling stock prices and negative returns. This negative growth is expected as the industries have become more specialized and the growth of inflexibility in its structure to withstand shocks is prominent as seen in Air & Travel Industry which only caters to the demand by the customers who would travel without any allied services should the customers fear travelling in a group to avoid any chance of probable infection.

Calming the waters – Business Structural Reform

The business world which bears the full assault of the pandemic has led to huge unemployment, poor sales due to low demand, ships bearing merchandise which are rotting in the docks, services halted due to fear and panic. This chaos is at all fronts – political, social, economic, health-wise, structural in business which has been a ticking bomb over the years. However, if the business fails to understand that the ladder of opportunity is from chaos, all is lost.

The McKinsey report advises all the businesses to adopt the 5 R’s – Resolve, Resilience, Return, Reimagination and Reform supported by A Nerve centre. These steps are seen as sweeping, but the nature of its interpretation and its implementation lies in how the business is built from the ground. The zeal and the spirit which guides the implementation are crucial as morale is one of the greatest aspects to changing history and the present.

As the old saying of attack is the best defence goes by, it would be implying that having a brave face without substance is akin to a house of cards. It requires sweeping reforms which must target the 3 critical aspects – the customer, the supply chain and the employee. If the reforms merely affect the employee and the supply chain, it bears no impact as the fear and panic has taken over the mindset of the customers represented by the public and the electorate.

Changing the Business nature - an adamantine fortress with blitzkrieg tactics

A major tool has appeared over the years which would see the true extent of its power – the digital augmentation supported by artificial intelligence and other predictive and preventive models. This has helped companies which have a small space in digital to see the future and heralds the words of either adopting the digital or dying with disgrace. This has proved prominent for the organizations whose bureaucracy is riddled with red tape and slower procedures bleed money and poorer HR practices have sapped the businesses of skill, labour, value and morale. If digital augmentation is required, it must start within the business like moving towards digitalisation. Setting up a new-age HRMS software like Darwinbox, or other legacy systems like Workday, SAP Successfactors etc which will not only help the employers to control the costs, promote transparency and provide employee with more ideas and solutions within specific constraints and aim for a targeted approach to any problem they have to deal with. Then only it is possible to move forward, knowing that the foundation is strong enough to withstand shocks.

The second most prominent factor is the catchy phrase of “work from home” which has been installed in the most prominent way without knowing the impact on the companies’ performance and how it would affect the employee’s motivation and productivity. However, according to many sources this trend will persist for long and would be beneficial to the employee and the structure, if the companies start to monetize it with reduced costs in commercial rent and other resources which otherwise would have been spent, should the company commit the workforce in that physical space. This will prove effective only if existing technologies like a new age HR Software help to ensure the trust factor in the entire system by promoting transparency. Leaving the improvement of employee’s morale behind, the process would help the companies to reduce costs, balance their books and even provide a source of income through sub renting etc.

Thirdly, response is the thing which provides flexibility to any organisation. Response should not only remain towards customer-centric and supply-chain centric; it must involve another factor, the revenue angle. This will be key to companies in B2B and B2C if the company adopts rapid revenue response teams to progress. These teams would study and adopt trends and build on value propositions, build better marketing and sales moves with lower costs.

Restructuring the supply chain is a herculean task, but if done well, it will be a streaming juggernaut. This restructuring must be helpful both in short term dealing in exposure control and protecting employees and suppliers and in the long term in reliability in supply chain stability and improved collaboration with regular updating.

To incorporate resilience in the internal structure, the business must establish specialised teams in order to search and mitigate specific risks, build and manage financial strength with a good war chest behind, establishing a series of intervention systems to mitigate any possible situation. This would make companies to be internally strong and deal with any major situation. This practice is seen prominent in top US banks like JP Morgan who managed to come out of the 2008 financial crisis by using their financial assets judiciously and brought out other companies from the crisis..

Businesses to return back to normal and scale from such a catastrophic situation, it must rebuild and reform the supply chain, build up health measures and training facilities to encourage and ensure employee health safety and public hygiene.

If reformation is to take place, it must take place in all fronts, whether it is policy or social, political or economic. The vision must be clear in order that businesses will start with a roar and leave behind the crisis.

From Panic to hope:

The COVID -19 crisis has shown the entire world, the disparities which emerge from the cracks in the businesses of the present system. These hard times have provided grounds to deep-seated fear and panic, but have also blown a new hope. This situation will not only spark radical change in the customer’s mind, but also make businesses adopt radical and gradual change. The change will  strengthen the businesses with only the right guidance, the right response, right restructuring. Only then the business will bear hope and come out of the chaos to be adaptable and well resourced.