“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
― Rahm Emanuel
The situation that all Indian businesses face today has all the six characteristics of CRISIS. That is, it is rare, is significant because of its spread and has high impact. Most businesses today face ambiguity that calls for urgency in decision making despite high stakes. There is no clarity on how long this current disruption or should we call it discontinuity will last. There is even more uncertainty of what may happen once the lockdown is lifted. Would the customers honour their orders? Would the customers respect terms of contract and pay in time? Would all the labour come back? How many man days we may lose in the coming two quarters due to the virus?
The classical prescription to tide over crisis is
- Form a team
- Develop a crisis management plan
- Communicate
But we at Mentors, given our experiences have developed process to manage the crisis. Our recommendation to crisis managers is to,
- Assess: Assess the situation. Take stock of customer orders, customer receivables, open contracts with vendors, vendor liabilities, inventory, cash, assets that can be quickly converted into cash etc
- Imagine: Imagine different possible risks and scenarios. Risks like daily wagers not returning in full strength, customers cancelling orders, vendors not able to start and ramp up their operations. Build scenarios or what if situations based on the risks.
- Plan :– Based on different scenarios, project financial numbers and decide on possible actions to take. For example, different cash projections, payment schedule to vendors, schedule of purchases etc. The plans are plans and not cast in stone. Actuals will always be different from what we plan. We have to plan and re-plan.
- Re-process – revisit operations to make things work with limited resources. Explore sub-contracting and outsourcing of some of the works, partner with competition. For example, e-commerce companies have come together to partner with each other so as to ensure deliveries given limited number of delivery boys
- Re-negotiate– Business is about optimisation and not about maximization. We have to make best use of our resources. Work within our constraints and build on facilitators. This requires us to continuously negotiate. Negotiate with employees, with vendors and customers.
- Communicate – Communication is important for any change. It prevents rumours, it removes anxiety and calms people down. More importantly an open and honest communication can help improving trust levels and hence get buy-in or support from employees, vendors and customers. Communications have to be periodic or tied to events.