Would you rather be behind the curve or ahead of it?
Views with Acuity: Insights to Build Resilience (May 17)
As economies around the world re-open in the shadow of a second COVID-19 wave, we are finding that the virus is upending typical planning toolkits. Charging ahead as if it's business as usual will not work in a pandemic setting.
Simply put, this crisis has demonstrated that scenario planning is crucial.
Leaders who scenario plan can brainstorm a range of possibilities, from operating under various phases of extended lockdowns to war-gaming the risk of a second wave. By having dynamic action plans at the ready, organizations can then act early and with conviction when trigger conditions are met, in stark contrast to competitors who “duck and cover.”
The trick, though, is to do the hard work now. It's either that or play the wait-and-see game. The question is: would you rather be behind the curve or ahead of it?
Stay safe, stay positive –
Joy
Country Acuity Advisors - Insights
The need for a global, coordinated response. People yearn for a return to normalcy – to meet in person, go back to school and work, and travel freely. If not carefully managed, however, we risk wasting the sacrifices we have so painstakingly made over the past several weeks in containing the pandemic. In prior global health crises, the United States has readily assumed a leadership role, putting forward its resources, power, and influence behind a common set of standards; but not this time. The World Health Organization then, could and perhaps should step in, to back a science-based approach. But it, too, has been contaminated by geopolitics. Right now, the absence of leadership is a grave risk. Lack of coordination and communication across countries and international organizations has the potential to exacerbate the COVID-19 crisis as badly as anything.
The COVID-19 political alliances. Nations may start assessing their allies on a new dimension, at least in the near term: similarities in competent responses to COVID-19. The next several months may witness a gravitation towards small clusters of countries that possess certain core ideals and the fundamentals of good crisis management systems. The Australia-New Zealand travel bubble and the prospects of a similar mechanism between the Austria and Germany and others exemplify this approach of countries collectively or bi-laterally banding together to ensure the movement of food, medical supplies, and even people. Others, especially emerging and frontier economies in Asia, may find themselves at risk of being cut off from critical markets, which can deepen economic downturns.
The growing divide between markets and the real economy. We’re seeing record unemployment numbers, fear of a depression, and a seemingly unstoppable rally in financial markets. It’s hard to reconcile, until you dig a bit deeper. Shift your focus back to March, when COVID-19 started its full-frontal assault on the world and financial markets careened. Having learned their lessons from the 2008 Great Recession, central banks around the world, led by the U.S. Federal Reserve, opted for a ‘whatever its takes’ strategy with the sole purpose of ensuring that credit markets and the financial system didn't collapse. While providing a lifeline for larger businesses in the near-term, these interventions have been a boon for financial markets. What was not learned was that these measures will further inflame ideological wars related to inequality, populism and the nature of capitalism.
Supply chain diversification? Do your homework. The pandemic has exposed supply chain vulnerabilities, but that still doesn't mean a total overhaul is needed. Rather, operations management may simply require some tweaking. Though many countries talk about manufacturing everything locally, in reality few can do so. But even if one could, it's not the best idea. COVID-19 supply choke points are accelerating recent trends in supply chain realignment that were triggered by natural disasters, geopolitics and labor costs. As you re-examine your supply chain, don’t be misled into thinking that all will be smooth sailing as governments lay down the relocation red carpet. Investments in the time, money and effort it takes to understand local circumstances and political risks will need to be made. For governments and investment promotion agencies across Asia, this is a golden opportunity to be exploited. But for companies, pragmatism must rule.
Three Things To Read this Week to Build Resilience
The Pandemic Has Revealed the Weakness of Strongmen. Strongmen prosper as leaders because they promise certainty in uncertain times. They offer a simple enemy and present themselves as the only champion against it. The more control they have—by delegitimizing opposition leaders and the press—the better this strategy works. But this virus can’t be delegitimized. (The Atlantic, May 6, Free to read).
Now is the time to emerge as a corporate ‘saint’ not ‘sinner’. The global pandemic has forced an abrupt rethink of a responsible capitalism agenda that had started the year on a high, when the teenage climate change activist Greta Thunberg starred at a Davos conference whose idealistic slogan was “stakeholders for a cohesive and sustainable world”. (Financial Times, May 11, Free to read).
Who Pays for This? World War II debt was never repaid, at least at the aggregate level. Old bonds were repaid with new bonds. But debt kept rising. As long as nominal GDP growth is higher than the annual budget deficit, debt to GDP goes down, and spending more than you take in leaves you with a lower debt burden. (Collaborative Fund, Apr 17, Free to read).
Resources
5 challenges SMEs face and strategies to manage - Aask Advisory (Strategic Partner)
Hubspot COVID-19 Marketing & Deal Flow Data Tracker - Hubspot
Global Protests Tracker (including COVID-19 Protests) - Carnegie Endowment for Peace
Country-by-Country Policy Responses to COVID-19 - Compiled by the IMF
Coronavirus: The Latest - Financial Times Tracker (Free to read)
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