The Post-Pandemic World Explained by my MBA Operations Professor #RTDCOVID19
#RTDCOVID19 As a business owner, post-pandemic era is uncertain and scary. We are unsure on what the landscape will be like one lockdown is eased and it’s ‘back to normal’ (by the way, it will never be ‘back to normal’). I’ve been constantly on the news, reading literature, consulting with other friends, experts and lawyers to know what to expect in a post-pandemic world.
Rene T. Domingo, my operations management professor in Asian Institute of Management, is an international consultant, author, professor, lecturer, renowned in the fields of operations management, quality and lean management. Prof. Domingo currently helping businesses pivot to address a crisis such as the coronavirus pandemic. The post-pandemic society will put more focus on health, safety and convenience. The sharing economy is going to be put at risk. New products, services and industries will come to address societal problems and new expectations; vulnerable businesses will have to turn pain points to profits. Businesses must innovate or die.
I would like to share some of our professor’s posts because they are very insightful–not only in a business operations perspective–but in understanding the pandemic and the world in a macro level. His posts are post-pandemic world explained with both theoretical and practical insights.
– Top Ten Myths about a Post-Pandemic World
Don’t look forward to the end of this lockdown and this pandemic. You may just be coming out of boiling water and jumping into the frying pan. It’s time to dispel ten common myths about the coming post-lockdown and post-pandemic world.
1. YOU CAN LOWER YOUR GUARD.
This virus doesn’t respect lockdown rules, time-outs, and emancipation speeches of politicians. It will still linger in the air and wait for you to rush out. You could be walking, dining, shopping, and crossing streets with crowds of seemingly normal people who may be untested, asymptomatic virus carriers. Many people will also be desperately begging and looking for food, money, and jobs for sometime.
You may have survived the virus, but with bad luck, you could be a victim of lawlessness by being in the wrong place at the wrong time carrying the wrong thing.
2. YOU WILL SEE LIFE QUICKLY RETURNING TO NORMAL.
You are not waking up from a bad dream nor returning from a long 3-day holiday break. When this long pandemic war ends, the post-pandemic world will be like any other postwar scene of devastation and ruins.
This viral war may not have destroyed buildings, but it caused widespread and worldwide physical, psychological, commercial and financial damage. Any postwar reconstruction and rehabilitation may take years. Meanwhile we shall be seeing long soup kitchen lines for the hungry and jobless.
Expect more sacrifices, hardships and all sorts of discrimination. Some will make money and new enterprises on the spoils of this pandemic war as in any postwar situation. The new normal won’t be normal.
3. YOU CAN GO BACK TO WORK AND START WORKING AGAIN.
This virus doesn’t just destroy lives, it can also destroy products and services together with the businesses and jobs that produce them. If your skill suddenly becomes unwanted under the new normal, your job may be in jeopardy. If there is much less demand for your company’s products and less staff are needed, your job can be declared redundant. It’s also at risk if your employer is in high-touch businesses that can’t be viable with social distancing between customers and between them and frontline personnel. Finally, if your employer goes broke because of the long lockdown or crisis, you won’t have a job waiting for you.
4. YOU CAN GO OUT WITH YOUR FRIENDS AGAIN.
Even your closest friends may decline your kind invitation to eat out and exchange lockdown stories. With no offense intended, they could still be suspicious of anyone including you of being virus carriers. Besides, they may continue to mistrust restaurant foods and waiters, and be paranoid with touching cash and credit cards for payments.
As this virus continues to separate friends, you may have to maintain your on-line or long-distance relationships (LDR) with them for some time.
5. YOU WILL BE BACK IN BUSINESS AS USUAL IN NO TIME.
You can’t just raise the shutters of your shop and expect customers and cash to rush in. You can only start slowly, not jumpstart, your business.
It may take some time for your customers to start buying and your suppliers to start delivering. Before serving you, your suppliers will also have to wait for their own suppliers to restart their businesses.
Your suppliers and B2B clients will have to check their idled equipment, facilities and inventories. Like you, they have to wait for their employees to rebuild and normalize their lives before they can perform normally. If any of your major clients or suppliers goes broke because of this crisis, you may never be back in business at all.
6. YOU CAN NOW VISIT YOUR DOCTOR FOR YOUR USUAL CHECK UP.
Your doctor may have been or continue to be a busy frontliner. Exhausted and wary of visits from infected and asymptomatic patients, he or she may not be in the best mood to see you unless it’s truly an emergency. After the lockdown, hospitals will still be overwhelmed with Covid-19 patients and will be further overwhelmed by a surge of urgent non-Covid 19 cases. Hospitals are also very infectious places to be in even before this pandemic. So avoid visiting your doctor and hospitals for now. Just visit your barber and get a haircut.
7. YOU CAN NOW PAY YOUR BILLS LIKE BEFORE.
Your debts and bills would have ballooned during the lockdown. But thereafter, it’s payback time. These were not waived but just postponed by creditors to reduce your lockdown stress but not your liabilities. You will be suddenly swamped with collection notices with threats of penalties and foreclosures. Your creditors may start knocking at your doors because they think your life and pockets should be back to “normal” immediately after the lockdown. This harassment while you’re still desperately looking for a job or restarting your business will surely give your sleepless nights.
8. YOU WOULD EVENTUALLY BE SAFE BECAUSE OF IMMUNITY.
The Covid-19 pandemic may be long over and would have ran its deadly course before a vaccine and cure are available. They may not even be discovered during our generation. (Currently there’s still no vaccine nor cure for the 1918 Spanish flu pandemic that killed 50 million.) It’s even more farfetched to expect herd immunity for protection.
At least 70% of a population must be infected and must recover to establish herd immunity – a grim solution not to wish for because of the massive fatalities it would entail. So don’t expect a vaccine, cure, or herd immunity to protect you soon from this virus. Just live a healthy and hygienic life and avoid crowds and travel.
9. YOU WILL STILL GET GOVERNMENT SUPPORT AFTER THE PANDEMIC.
After this pandemic crisis, an economic crisis, will surely follow. Though it may the more difficult and longer crisis, the government may not continue supporting you nor your business with subsidies and dole outs. Its war chest is not bottomless. Governments can go broke like individuals and companies if their outflows (due to heavy and endless dole outs) are not matched by inflows (like tax collections which may have been postponed or reduced by this crisis).
There are limits to the use of government borrowings, savings, reserves, and budget re-allocations for emergency purposes. Most national health and social insurance systems are already underfunded even before this pandemic crisis. With limited government funds, some sectors will be prioritized and others sacrificed. During this ensuing economic crisis, most likely you would be on your own.
10. YOU CAN RELAX BECAUSE THE NEXT PANDEMIC WOULD NOT COME IN DECADES.
The next pandemic can come sooner than you think. A resurgence or second wave which can even be deadlier can happen within the next three months after the first wave or outbreak, like in the case of the pandemic Spanish flu. Extreme weathers and other natural calamities have become more frequent because of the environment damage we have done to our planet.
Pandemics could have been indirectly brought about by global warming which altered the migratory paths of virus-carrying birds and man’s destruction of wildlife habitat which brought us closer to them and their viruses.RTD
– How to Survive with Limited Sales is the New Normal
Most businesses break even at around 80% of capacity. With depressed demand or social distancing protocols, they can only sell or operate at 30%-50% of capacity. To remain viable or at least liquid in the short-medium term, they must bring down their “cash breakeven sales” closer to those regulatory or market limits.
CASH BREAKEVEN SALES = (FIXED OPERATING COSTS – DEPRECIATION)/(UNIT PRICE – UNIT VARIABLE COSTS)
Since depreciation is constant, there are 4 strategies to consider:
1. CUT FIXED COSTS
• Increase support operation efficiency and leased asset utilization so that fixed overheads, like management staff, indirect labor, and leased space, can be rightsized.
• Improve the energy efficiency of facilities and equipment that continuously run regardless of load or demand.
• Use the lean approach to spot and stop wastes
2. CONVERT FIXED COSTS TO VARIABLE COSTS
• Outsource inefficient, non-strategic, or high cost in-house processes.
• Review and rethink make-or-buy decisions, policies, and criteria.
• Lease instead of acquiring and managing high-maintenance, high-obsolescence equipment and facilities.
• Use the business process reengineering (BPR) approach to redesign and rationalize operations and supply chains.
3. REDUCE VARIABLE COSTS
• Redesign the product or service using VA/VE to reduce moving parts and non-value adding components or features.
• Explore new materials and process technologies to cut material and direct labor inputs.
• Pass on some processing that use direct labor to vendors, contractors and/or customers.
4. INCREASE PRICE
• Consider this a counter-intuitive move with high potential.– RTD
• Innovate and re-imagine the product or service features to suit the new normal market conditions and expectations.
• Increase value for money like safety, protection, and peace of mind without adding costs.
• Re-launch and re-position products with the enhanced value propositions that justify the price hike, thereby stimulating demand instead of reducing it.
– Survival of the Smallest
In this crisis SME’s have more flexibility and opportunities to pivot to “new-normal” businesses than large firms. SME’s are often run by their owners who report to no one but themselves. Large firms have the following disadvantages:
• Listed firms are subject to governance, due diligence, regulatory reporting requirements (difficult to radically change business model).
• Highly leveraged ones are controlled by creditors (difficult to invest in non-traditional areas bankers do not understand).
• Their assets – land, plant, equipment, inventories, receivables – are mostly mortgaged to creditors (difficult to write off assets as sunk costs in order to move to new businesses).
• They are top heavy with high overhead and fixed costs, high MOQ and high breakeven sales (difficult to serve smaller markets that have become lucrative).
• They have autonomous, highly protective business units which think in silos (difficult to shut down a business unit that has lost its future and customers).
• They have a huge full-time workforce (difficult and expensive to rightsize or re-skill).
Remember, the cockroach and the dinosaur evolved at the same time.– RTD
Another worthwhile reading: Forget Unicorns. Startups should be Camels from Entrepreneur.com
Forget Unicorns. Startups Should Be Camels.
Unlike unicorns, camels are not imaginary creatures living in fictitious lands. They are real, resilient and can survive in the harshest places on Earth. While the metaphor may not be as flashy, these startup camels prioritize sustainability, and thus survival, from the get-go by balancing strong growth and cash flow.Forget Unicorns. Startups Should Be Camels.
– Survival Food For Thought (for Slow Digestion)
1. The new normal is not the old normal plus masks and social distancing.– RTD
2. After the ‘New Normal’ comes the disruptive ‘New World Order’
3. This crisis decides who will not survive and who will rule.
4. Be paranoid about survival but think positive.
5. ‘Wait and see’ attitude without thinking is dangerous.
6. Know who to listen to and when to switch channels.
7. Only your common sense can save your health and wealth.
8. ‘It’s not the economy, stupid’
9. Butterflies cannot become caterpillars. Forget your post pandemic past.
10. Reinvent yourself or be reinvented into something you don’t want to be.
– 20 Most Popular Global Understatements on the Crisis
1. “Don’t panic, everything is under control.”– RTD
2. “We have released the funds.”3. “We will have this vaccine before the year ends.”
4. “The curve seems to be flattening.”
5. “We have enough ventilators (or PPE’s) for all.”
6. “This crisis will make us stronger.”
7. “We will soon jumpstart the economy and be back in business.”
8. “We will get through this like any other crisis.”
9. “The seasonal flu is more dangerous and killed more, why worry?”
10. “We are all in this together.”
11. “This lockdown will soon be over (or the end is near).”
12. “We heal as one.”
13. “Let’s not overreact.”
14. “These are experts in their fields – we are in good hands and we shall prevail.”
15. “Just wear a mask, any mask and you’ll be safer than wearing none.”
16. “Our people live and survive with poor hygiene – this virus won’t affect us.”
17. “Once summer starts this virus will go away and we can walk free.”
18. “We’re better than our neighbors, we have less deaths.”
19. “I am fit and healthy and I’m not afraid of this virus.”
20. “The money is on its way (or the check is in the mail) and all will get their share.”
– Business Continuity 101: Pivot or Perish
After the economy reboots with a new operating system called “the new normal”, many businesses will just cease to run like legacy, incompatible apps. Governments can temporarily lockdown companies, but customers can permanently close them down if they stop buying their “old normal” products or services which have suddenly become UNSAFE, EXPENSIVE, or NON-ESSENTIAL.
Even if it takes two years to return to pre-pandemic economy and for these to be desirable and affordable again, few companies, if any, would have the staying power to burn cash without sales that long.
RETHINK AND REPURPOSE
Businesses usually pivot for strategic growth. With this crisis, they must pivot in order to survive and retain customers. To pivot into the “new normal” businesses, one must get out of comfort zones and think outside the box. For example, if you can productize a pain point, why not a fear point? Why not gamify your boring or commoditized products or services? Pivoting can entail repurposing or retrofitting business models. Throwing technology (like going on-line) at your product problem is not a panacea. Often social, rather than digital, innovation is needed to change consumer behavior.
GREAT BRANDS CAME FROM GREAT PIVOTS
Business history teaches us many strategic, lifesaving, pivots. If industry leader Toyota did not pivot from looming machines to cars, it would have perished in the sunset textile industry. If Nokia did not pivot from pulp mill to telecommunications, nobody would know about this Finnish brand.
Other great brands would not be around had they stuck with what they started with: Coke (nerve tonic), Pepsi (dyspepsia medicine), Kia (bicycle), P&G (candles), Chanel (hats), Shell (sea shell trading), and Samsung (dried fish and sugar).
BUSINESS CONTINUITY IS ABOUT INNOVATION
Surviving the novel coronavirus is no assurance of surviving the novel demands of the post pandemic world. Corporate leaders should not just pilot the company out of the woods but also pivot its business into market relevance in the new normal. Only pivotal innovation, not government dole-outs, can assure business continuity, sustainability and job security in this crisis.RTD
|BIG BRANDS WHO PIVOTED||ORIGINAL BUSINESS|
|COKE||Headache cure or nerve tonic|
|Starbucks||Coffe beans and machines|
|Procter and Gamble||Candles|
|Wrigley||Soap direct selling with free gum|
|Western Union||Telegraph service|
|Rolls Royce||Electric cranes|
– Leading and Lagging Indicators
A declining death rate does not mean one is getting out of the woods. It’s a lagging (or late) indicator that does not reflect current reality.
We should keep an eye on the leading indicators of real progress and situation such as the testing rate and infection rate.
Good news can be bad or the other way around. While the death rate is coming down and/or the recovery rate (another lagging indicator) is improving, the infection rate can actually be rising or getting worse.
Conversely, a rising death rate is not necessarily bad news if the infection rate is dropping at the same time. Death and recovery rates are greatly affected by the health system capacity and the underlying vulnerability of admitted patients. They are remotely, belatedly related or not at all to the actual increase or decrease in transmission rate or spread. Areas with sufficient capacity and less vulnerable population may see their death and recovery rates improve faster but their infection rates may not necessarily be any better than those of other less equipped and more vulnerable areas.
FAKE NEWS AND FALSE HOPES
Celebrating the flattening of death rates is reckless optimism and often a politically motivated fake good news.
A word of caution – the flattening of the infected case curve is a valid indicator of progress only if the testing rate is sufficient to make the infected case statistics reasonably accurate and representative of the current spread.RTD
– 3-in-1 Crisis – Redefining the New Normal
This pandemic is not just a health crisis that developed into an economic crisis. It’s also rapidly turning into a social crisis with telltale signs of a humanitarian crisis: social dislocation.
As waves of the urban jobless troop back to the poor countryside like refugees, migrant workers and thousands of other people marooned at sea and elsewhere. Widespread starvation, social discrimination, inequities, and unrest may soon follow. This crisis is going to be complicated with an unknowable end game.
THIS IS NOT A RECESSION
Explaining and treating this pandemic mainly as an economic crisis or recessionary cycle is an unwise and dangerous oversimplification.
Economic solutions (throwing money) – subsidies, dole-outs, tax and interest rate cuts, loans – will not speed up a U or V shaped recovery back to the former economy because we’re not going back there anymore. We’re not returning to our pre-pandemic past but leap into an unknown new normal, a new dimension in uncharted hyperspace – thanks to this viral game changer.
THIS IS WAR
This pandemic is a multidimensional crisis like a war. Any post-war world has little semblance of its pre-war past. Post-World War II saw social and political upheavals:
• The break-up of countries and formation of new ones
• Social dislocation resulting from these geo-political changes
• The fall and rise of world leaders
• The end of colonialism but the start of modern slavery
• New political and ideological alliances• re-balance of power• new social classes
• New morality
BEYOND HAND WASHING
We may witness something similar in our post pandemic world, something much more inconvenient than wearing masks, walking at two arm’s length, and obsessive hand washing and deep cleaning.
Brace yourselves for the real new normal and “interesting” times.RTD
– Asking the Wrong Questions is Fatal to Businesses
For a business in trouble in the “new normal”, asking the wrong questions can lead to more trouble, lost time, inaction, procrastination, false hopes, wrong solutions, and its ultimate demise.
WRONG QUESTION: When will the economy improve so that my business can recover?
RIGHT QUESTION: How should I adapt my business to the new economy?
WRONG QUESTION: How can I sell my existing products in the new normal?
RIGHT QUESTION: What new products should I sell in the new normal?
RIGHT QUESTION: Which products should I stop selling?
WRONG QUESTION: What other different things can I do to earn more?
RIGHT QUESTION: How can I do things differently to earn more?
WRONG QUESTION: When will my customers start buying?
RIGHT QUESTION: Why are my customers not buying?
RIGHT QUESTION: How can I help my customers to start buying again?
WRONG QUESTION: How do I recover my costs and cash?
RIGHT QUESTION: How do I recover my customers and their confidence?
WRONG QUESTION: How do I get more government assistance?
RIGHT QUESTION: How do I make government assistance unnecessary?
WRONG QUESTION: How do I get the money to survive this crisis?– RTD
RIGHT QUESTION: How do I make money out of this crisis?
– The Great Divide
This crisis splits people into two groups – and it’s not those infected and uninfected. It’s an attitude divide, not a health one. Find out where you belong. It should be easy.
• Those who don’t stop planning and those who don’t stop complaining
• Those who would survive with their plans and those who would die with their complaints
• Those who ride the events and those who would be run over by events (like roadkill waiting to happen)
• Those who look for the solution and those who look for the scapegoat
• Those who move forward with the found solution and those who stop doing anything with the found scapegoat
• Those ahead of the curve and those outside the curve• Those who look forward to the advent of the new normal and those who long for the return of the old normal.
• Those who found the right question and those who found the right answer to the wrong question
• Those who feel blessed with the wisdom to survive and those who feel unlucky with their wealth lost
• Those who plan and pray and make changes and those who hope and pray and watch TV.
So are you part of the solution or part of the problem?– RTD
– On Crisis Management and Leadership
In this crisis, may our leaders be guided by these 10 timeless words of wisdom.
1. “Anyone can steer the ship when the sea is calm.” – Publilius Syrus– RTD
2. “I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.” – Abraham Lincoln
3. “The ultimate measure of a man is not where he stands in the moments of comfort, but where he stands at times of challenge and controversy.” – Martin Luther King, Jr.
4. “The secret of crisis management is not good vs. bad, it’s preventing the bad from getting worse.”- Andy Gilman
5. “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”- Theodore Roosevelt
6. “It is better to offer no excuse than a bad one.”- George Washington
7. “Conflict builds character. Crisis defines it.”- Steven V. Thulon
8. “The crisis you have to worry about most is the one you don’t see coming.” – Sen. Mike Mansfield
9. “A good leader is a person who takes a little more than his share of the blame and a little less than his share of the credit.”- John Maxwell
10. “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” – Charles Darwin
– Top Ten Things to Do During Lockdown
“An idle brain is the devil’s workshop.”
Avoid lockdown depression and domestic violence. Keep your minds and hands busy while doing something worthwhile. Here are 10 of them:
1. Clean, organize and de-clutter every part of your house. You would likely find things of value, unused new items, long lost items and duplicate items buried underneath the clutter you have accumulated with your pre-pandemic everyday shopping. You may also find long overdue or unreturned items and start making peace with their owners. You may even discover a desk, a window, or a room concealed by clutter. Make this exercise a fun competitive treasure hunt for family members.
2. Lose weight with diet, fasting, and exercise to stay healthy and fight lethargy and this virus. Eat slowly and chew your food – there is no rush to get back to work. This lockdown may be a once-in-a-lifetime opportunity to do what everyone is telling you to do but you had all the excuses not to. Consider every day you are healthy during this pandemic a daily gift to celebrate.
3. “What is not measured is not improved.” This is the only time you have the time to record your health statistics and plot them daily, even hourly – your weight, waistline, temperature, body mass index, calorie intake, blood pressure, pulse rate, etc. Set targets to achieve new lows. Proudly show your graphs of achievement to your family doctor or cardiologist after they’ve finished fighting in the frontline.
4. Read unread books in your library before you went digital, including those you haven’t finished reading. Then donate them to free up valuable space.
5. Write your daily diary. Record your present and past activities especially the trivial and mischievous ones, and your reflections about what the future might and should be after your detention. If you take your diary seriously, you could become a best-selling author like Anne Frank.
6. Repair broken things and items – your car, gadgets, tools, doors, sink, furniture, etc. Time to save money because the repairman won’t be around for a long time.
7. Learn a new skill or hobby like the Birdman of Alcatraz. Learn how to play a musical instrument, survival skills, mental telepathy, first aid, or even calculus so you can better understand the meaning of “flattening and peaking of the curve”. After 40 days and 40 nights you may become a subject matter expert or a teacher.
8. Gear up for videoconferencing. Learn how to communicate online with many people with Zoom, Skype, etc. Prepare the necessary equipment in your bedroom or one peaceful corner of your house. You’ll never know when you may have to make life-critical decisions with others online during this lockdown.
9. Set up a negative pressure room in your house in case a family member must undergo home quarantine, or you want to protect a very vulnerable member. You can construct this with internet search, household appliances like electric fans, and a spare room.
10. Meditate a few minutes a day. Think of nothing, do nothing, say nothing, worry about nothing. Be with no one, be no one. Silence, peace, nothingness, emptiness. Reset, reboot, re-energize. Be ready to fight another day.On top of all these 10 things to do, don’t forget to pray for and support our heroic frontliners and send them messages of love, encouragement, and gratitude.– RTD
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