Insights from Private Equity Review –
How Business Can Handle The Covid-19 Impact
According to the Harvard Business Review, the Covid-19 crisis has now reached a new critical phase where public health systems need to act decisively to contain the growth in new epicenters outside China. Clearly, the main emphasis is and should be on containing and mitigating the disease itself. But the economic impacts are also significant, and many companies are feeling their way towards understanding, reacting to, and learning lessons from rapidly unfolding events. Unanticipated twists and turns will be revealed with each news cycle, and we will only have a complete picture in retrospect. Nevertheless, given the very different degrees of preparedness across companies, the further potential for disruption, and the value of being better prepared for future crises, it’s worth trying to extract what one can learned so far. According to Harvard, there are some crucial lessons for responding to unfolding events, communicating, and extracting and applying learnings, which include:
1) Update intelligence on a daily basis.
Events are unfolding with astounding speed, and the picture changes on a daily basis.
2) Beware of hype cycles / news cycles.
News organizations often focus on what’s new rather than the big picture, and they sometimes don’t distinguish between hard facts, soft facts, and speculation.
3) Use experts and forecasts carefully.
Experts in epidemiology, virology, public health, logistics, and other disciplines are indispensable in interpreting complex and shifting information. But it’s clear that expert opinions differ on critical issues like optimal containment policies and economic impact, and it’s good to consult multiple sources.
4) Beware of bureaucracy.
Controversial, sensitive, or high-profile issues will typically attract review by senior management, corporate affairs, legal, risk management, and a host of other functions. Each will have suggestions on how to best craft communications, leading to an overly generalized or conservative perspective and a slow, cumbersome process.
5) Make sure your response is balanced.
These could include dimensions such as communications, employee needs, travel, remote working, business tracking and forecasting, and etc.
6) Start to prepare now for the next crisis.
Covid-19 is not a one-off challenge and one should expect additional phases to the current epidemic and additional epidemics in the future.
Preparing for the next crisis (or the next phase of the current crisis) now is likely to be much more effective than an ad hoc, reactive response when the crisis actually hits.
7) Prepare for a changed world.
Everybody should expect that the Covid-19 crisis will change businesses and society in important ways.
It is likely to fuel areas like online shopping, online education, and public health investments, for example. It is also likely to change how companies configure their supply chains and reinforce the trend away from dependence on few mega-factories.
When the urgent part of the crisis has been navigated, companies should consider what this crisis changes and what they’ve learned so they can reflect them in their plans.
Meanwhile, the London Business School say almost all sectors will be impacted with some sectors likely to be more deeply affected.
According to its report, the macroeconomic policies that will likely help would be:
A. Government spending on public health sector.
B. Tax relieves, tax cuts, tax holidays , tax
C. Tax rebates and temporary universal income to households; cash grants to firms.
D. Cut interest rates launch QE programmes and lending schemes Out of the above, C is most likely to stop the immediate economic damage.
The hope appears that if a vaccine can be found in the next six months (and the scientific community seems to agree this looks very unlikely), then suppression (i.e. countries lock down) is a dominant strategy.