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COVID-19 – Blessing or a curse

 

How is your business doing this year? We guess quite different from what you expected at the beginning of January.

Hopefully your business is doing great. Sales are increasing to an extend that event you cannot ship goods quickly enough, so you have to hire people and onboard them quickly.

In a recent study called Global Talend Development Index™ Covid-19 Edition by Silega less than 13% of companies experienced growth in demand. The rest faced different reality. Declining sales, combined with supply chain interruptions or government mandated closures lead to budget cuts, pay cuts, putting all initiatives on hold and even layoffs in 22% of the cases. Maybe this is the reality you are experiencing.

No matter if you are experiencing the first or the latter scenario, probably you are experiencing a variety of emotional responses also from adapting to working from home such as: stress, anger, frustration, sadness, fear and even problems with sleep.

In this article we will try to answer the most common questions about COVID and instead of alarm or neglect the problem, try to present you with actionable insights that you can apply.

How is this pandemic unique?

In 20 century there were four worldwide pandemics (1) of larger scale and impact than the COVID-19 with death toll in the millions. Because of our lifespan however, it is likely that we experience through a pandemic only once, and for us this is it. We don’t have previous experience to recall or recent knowledge how to react. The Hong-Kong flu claimed from 1 to 4 million lives from 1968 to 1970. However, most of today’s workforce is too young to have a recall of that event and its impact.

Today however we have tools that a generation ago were not available. Tools that help us stay informed, connected and continue working from home. We can use them to our advantage, or disadvantage as with the case of fake news or people organizing clandestine parties to get infected on purpose.

When will it end?

Each pandemic has a beginning and an end. Years from now we might not even remember it.

A very interesting article (2) from New York Times argues that there is the actual ending of a disease and the “social” ending. Even before a virus is eradicated, people might get tired and decide to learn to live with the disease instead.

Business simulations are quite accurate in predicting when infections and disease will decline significantly to almost “normal”.

For most of Europe it will be end of July. For Latin America, including Mexico sometime in August (3). The only exception is Brazil where infections will continue way behind that date.


Of course the model for simulating a pandemic is very complex and depends on peoples behavior.

How will it impact the economy?

Global economy and most national economies will enter in recession. Like pandemics, recession is not something new. One of the first recessions was documented from the times of Hammurabi. In 1792 BC he forgave all debt of his citizens.

So the questions is not if there will be a recession (a decline of more than 6 months), but how long will it last and if it will lead to an economical depression.

 

There are 3 possible scenarios:

V – Shape

Decline followed by regained growth. The crisis is followed by a growth that compensates for the loss of value. For this pandemic it is possible but little too optimistic. Many analysts expect V-shape recovery for this virus based on the idea that previous pandemics followed V-shaped recession. However, this one is more severe and in no previous pandemics was the economy of so many countries completely shut off for so long.

 

U – Shape

In this scenario eventually growth will be recovered, but the lost time will never be recovered. This is plausible and the most likely outcome.

 

L – Shape

Economy shrinks, loss of productions is not recovered and is followed by a stagnation.

 

How COVID it impact my company and industry?

A key question is how is the current pandemic impacting the demand for my product or service? Is it growing or declining?

If your sales are declining, the question is how long it will take to recover, and will you compensate for the loss of value or not? And after the crisis is over will your sales in the “new reality” be higher or lower.

 

Similar logic to the V, U and L curve apply to your revenue. Basically, the question is to what extent will you recover and how long will it take.

On the other hand, if you are experiencing a growth in revenue, the question is how long will it last and will it become sustainable in the future?

The following chart ranks 35 industries based on that information.

The red companies are at most risk due to Covid-19. They experience decline in sales, and the recovery period could be lengthy.

Purple companies are too experiencing decline in demand, but this decline might be recovered faster without lasting damage.

Orange companies are experiencing growth due to COVID-19, but they might struggle to turn it into a sustainable one.

Green companies are benefiting most from the COVID-19 pandemic, as they see increase in demand combined with high growth potential after.

Of course, even within the same industry there is a variation in the variables. Take restaurants for example. While 1/4 of small restaurants might never re-open, big chains those with stronger positions before the crisis can use it to extend and move to better locations.

 

What do you think? How impacted is your industry and in what way?

Stay connected! In the following articles we will cover the following topics:

  • 21 strategies should my business focus depending if it is a green, orange, purple or red company?
  • What are the four common priorities all companies impacted by COVID are working on?
  • What are the top 10 skills companies bet on develop during the pandemic according to Silega’s recent global study.
  • How safe is my job during the Coronavirus pandemic?
  • What the new reality will be like?
  • How to change the culture towards new ways of working
  • How to motivate and engage and increase resilience.

No matter which group, there are risks but also opportunities, Lets learn together.



Links:

(1) Not counting the HIV/AIDS https://en.wikipedia.org/wiki/List_of_epidemics

(2) https://www.nytimes.com/2020/05/10/health/coronavirus-plague-pandemic-history.html

(3) https://covid19.healthdata.org/mexico