The world will never be the same again. At the time of writing, over two million cases of Covid-19 have been reported worldwide since the first recorded case was revealed in November last year – and industries are reeling from its effects.
In March 2020, the Young Presidents’ Organisation (YPO) – a non-profit, global leadership community comprising over 29,000 chief executives, surveyed over 2,750 respondents across different industries to get a sense of the impact of the virus on businesses. Due to the rapidly changing circumstances of the pandemic, a second survey soon followed in April with 3,534 respondents across 109 countries. The results were largely expected of any global crisis: growth slows or grinds to a halt.
What’s truly significant, though, was the outpouring of strong, inspiring leadership from across the globe that was based on decisive action, clear, open lines of communication and, perhaps most importantly, empathy.
Predictably, in a time of closed borders and social distancing, hospitality is one of the hardest hit industries. Arne Sorenson, president and CEO of Marriott International, released an emotional video addressing employees on the issue. He displayed vulnerability and honesty while revealing the unprecedented devastation of the pandemic on the company and the measures it will be taking, and ended on a note of hope.
“I know we as a global community will come through to the other side and when we do, our guests will be eager to travel this beautiful world once again. When that great day comes, we will be there to welcome them,” he told the Marriott employees.
Both Sorensen and executive chairman Bill Marriott are forgoing their salaries for the rest of 2020.
Walk Japan, an organiser of luxury walking tours, has cancelled all tours scheduled to start before May of this year and is offering those guests priority bookings once travel restrictions are lifted. “This was done to protect guests, tour leaders and the communities our tours are intricately linked with. Additionally, we have arranged for our tour leaders to use their free time by taking part in our Walk Japan Community Project in Kunisaki Peninsula in Kyushu to help villagers with crop growing,” shares CEO Paul Christie.
“This is our new norm. First and foremost, we’re going to acclimate,” says Elizabeth Zucker, YPO’s Chairman for 2019-2020. And doom and gloom seem to be the last thing on everyone’s minds. In a YPO discussion between Zucker and the organisation’s CEO Scott Mordell, one of the key points highlighted was the pandemic as an equalising force.
“This is a humanitarian challenge. A lot of things that used to seem important aren’t so important right now because we are all concerned about health and safety,” says Mordell. To that end, helping one another is the best way to see this through. Mordell calls for those with the ability – both companies and individuals – to support small and medium enterprises, which might not have the financial reserves to cushion a loss in revenue, by continuing cashflow relationships. This can be something as simple as not pausing a gym membership even if the gym might be closed.
While the world works together to overcome this crisis, what is interesting to consider is how the end of the pandemic will shape the coming economy. “We’re not going to be stuck sitting in closets and talking to each other on handheld devices. We’re going to start engaging again – it’s innately human. Everybody [will] reconstruct opportunities and values based on the new habits that society will create [as a result of the pandemic],” adds Mordell.
CLOSER TO HOME
Since April 7, Singapore has been under circuit-breaker measures to minimise social contact. Business leaders have taken action to fight the pandemic by putting into place solutions to safeguard livelihoods while also banding together to support those on the front lines. For example, Motherswork, together with Gourmet Food Holdings, Zouk Group and Grab, have donated thousands of meal packages to medical staff.
One of the pioneers of speciality coffee here, PPP Coffee, which runs Chye Seng Huat Hardware cafe in addition to other coffee-related businesses, has had to implement salary adjustments across the group to ensure no one loses their job. “It’s one of the toughest decisions we had to make to sustain the business,” shares group CEO Marcus Foo. The management at PPP Coffee is taking a 50 per cent pay cut over three months, while other employees will have their salary reduced by a third, spread over three months.
Business models have also had to be adjusted. Nelson Loh, executive chairman and co-founder of Singapore-based Novena Global Lifecare says: “We had to rethink shifting front-line staff to focus more on e-commerce sales and product/ service delivery. Our medical professionals are also providing more online consultations. This is a global problem that will require all governments, institutional bodies, corporations and every single human being to come together and work as one.”
KEY RESULTS FROM THE YPO SURVEYS DONE IN MARCH AND APRIL
Things will get worse before they can get better – if companies can even pull through.
A lack of ability to do so was the most common negative business impact reported in the march survey. Other strongly affected areas are revenue, the chance for business development, and ensuring a stable supply chain. In the five weeks between the two surveys, 56 per cent more chief executives reported a “significantly more negative” business outlook, while 11 per cent of all respondents have said that their business is at risk of not surviving the pandemic.
Negative impacts by region. For both the march and april surveys, chief executives from america were the least likely to be pessimistic about the situation. Compared to other respondents worldwide, american leaders were the least likely to view the crisis as a “severe threat”.
China, meanwhile, seems to have flattened the curve. Numbers from the european centre for disease Prevention and control show that confirmed cases seem to be stabilising.
On YPo’s business distruption cycle scale for april, asian companies seem to be ahead, and on their way to coming out of a continuity phase to transition into business revival. Australia, new Zealand, and america follows closely behind.
Sharon Wong, founder and ceo of motherswork, a singapore-based mother and baby retailer with a significant presence in china shares: “Q1 business in china dropped by 70 per cent. Only Beijing has shown some signs of recovery, which means we are in for a tough ride. We survived china’s lockdown because the landlords were supportive. The government ordered all state-owned malls to waive rental for february and march.”
Industries impacted. With most social activities disrupted, the largest number of ceos negatively affected by the virus come from the hospitality and travel industries; next are retail and wholesale. Despite this, 10 per cent of sector-specific retail and wholesale leaders, as well as those in the business of agriculture, factories, mines and utilities, reported a positive effect on revenue in march.
Meanwhile, according to a report by the World economic forum, large-scale events have taken major hits, with events being cancelled all over the world. Tech conferences alone, like SXSW and the electronics entertainment expo, have sustained losses of over us$1 billion (s$1.45 billion).
WHAT SOME YPO MEMBERS ARE SUGGESTING
The following are key, actionable steps from YPO members that have been compiled anonymously from a survey. An overwhelming majority of leaders have already taken action by implementing steps like increasing channels of communication, having new health and safety measures and cancelling events.
ACTING NOW. “This black swan has compromised all our risk management matrices. What plans do we make to ensure our businesses survive it and emerge stronger? Our businesses need to adapt to minimise the impact and we need to be nimble in our responses. We will likely all take a hit from the economic impact of it but this too shall pass and preparing for what’s next is all we can do as leaders to maximise the odds for survival and success.”
COMMUNICATING WITH STAKEHOLDERS. “Watch very closely but don’t overreact. Help employees quantify risks and relentlessly communicate the company plans to address the illness if detected in your company. Address the fears but project confidence in your ability to manage through the pandemic. Bring in outside experts, if necessary, to help employees differentiate between media hype and facts. Take the same measures with clients.”
PROTECTING THE COMMUNITY. “Join in what your community is doing. In Silicon Valley, we are working to stop the spread by having everybody stop travelling and going to the office. It’s a mini self-quarantine in our backyard. If we can stop it, we’ll save our community and the world a lot of pain and deaths. Protect your employees and they will thank you for it.”
ENSURING FINANCIAL RESILIENCY. “It’s time to aggressively free up operating expenses and de-risk as much as possible. This is a crucial step to creating some level of flexibility – a commodity most organisations will be looking for very soon. The speed and ferocity in which news comes must be addressed immediately with meaningful crisis communications. There will be some short- and long-term adjustments that conflict with the agile, lean, just-in-time world we’ve grown to love. Despite a healthy amount of progress in the last decade, the newest innovation craze will be diversification.”
“WE’RE GOING TO START ENGAGING AGAIN – IT’S INNATELY HUMAN. EVERYBODY WILL RECONSTRUCT OPPORTUNITIES AND VALUES BASED ON THE NEW HABITS THAT SOCIETY WILL CREATE AS A
RESULT OF THE PANDEMIC.”