Virus outbreak can be impetus for companies to improve, diversify
By WILLIE CHENG and Lau Yin Cheng
The Business Times, 26 February 2020
A CRISIS is an opportunity riding the dangerous wind. So goes one Chinese proverb.
Indeed, during previous epidemics, individuals, organisations and governments rode out dangerous winds and did well.
Given the current Covid-19 outbreak, what can corporations learn and from those earlier experiences?
The offerings of companies should be adjusted in line with changes in their supply and demand.
Some industries will benefit from the outbreak. Those providing healthcare equipment, cleaning and sanitation services, online entertainment, and goods delivery services have seen a spike in demand for their products and services. While they might be tempted to increase prices in the immediate term, they should also be sensitive to the optics of profiteering from the crisis.
Most companies, however, will likely see an overall decline in activity and business. The travel, hospitality and retail industries are among the hardest hit. They need to adapt their offerings to reach their customers. Restaurants, for example, have tweaked their menus to offer healthier options and promote online takeaways. Some education and health service providers now deliver part of their consultation and other services online.
One clear impact for many businesses is the disruption of their supply chains. Proactive companies are analysing the present and future implications of this, and reconfiguring their sourcing models and supply chains for agility and resiliency. Amazon.com, for example, is adjusting its traditional "lean inventory" approach to increase inventory levels, especially for goods from Chinese suppliers.
Even if companies cannot do much for their business today, they can prepare for a better tomorrow.
The slowdown is an opportunity for staff training and development, and for long-term planning. Now is a good time to think about and act on matters that the board and management have not previously had the time to focus on.
One item to consider is resilience. Besides business continuity planning, companies must work on diversification.
Diversified resource pools allow work to continue when part of the workforce is out of action. Diversified revenue sources enable the company to stay above water when crisis-impacted business dries up.
Another item is technology. When people cannot travel or meet in large gatherings, they rely more on communications technology to stay in touch and get work done. The CEO of videoconferencing company Zoom has said that the virus has resulted in record usage and demand for its remote work tools. When people stay at home, they engage in online gaming and e-commerce for their household goods. PC gaming companies have reported greater play time in the last two months in China, where there have been major lockdowns of cities.
Companies must also try to anticipate and plan for new developments. Sars was said to have given birth to Taobao and JD.com, now two major e-commerce companies in China. In Singapore, Sars prompted the development of the pioneering infra-red thermal imaging scanners for mass temperature screening by the Defence Science and Technology Agency.
Some companies have formed crisis control committees to plan, coordinate and implement measures to contain the Covid-19 outbreak. Perhaps they could also consider crisis opportunity committees that look for ways to protect revenue and realise benefits from the outbreak, while exploring its aftermath and impact on business models.
While no one is wishing for a prolonged outbreak, companies can still turn a difficult situation into an opportunity.
Willie Cheng and Lau Yin Cheng are members of the Singapore Institute of Directors.