It is the season of bad news. Every day since December 2019, I'm bombarded by news telling how many people have been infected and died because of Covid-19. The stock markets are crashing everywhere. There are swarms of locusts devastating countries to countries. In short, it's very hard to look for silver linings in all these storms.
However, I'm a strong believer that adversity builds characters and there are opportunities in the worst circumstances. To introduce more positivity in the daily news feed, I'm starting a new article series on the topic of "bouncing back from adversity". The articles are written based on interviews with senior executives within my network.
I had my first interview on Friday, March 7th with Mr Andrew Bissett (Head of Advisory Asia Pacific with SAI Global) via Microsoft Teams. He is a governance and risk management expert based in Sydney and he was the speaker for our CEO Seminar on December 4, 2019.
Here are the excerpts from our interview:
Surprise by pandemic
Ricky "R": Andrew, thanks for joining me in this interview. Please give us an overview of the recent Covid-19 pandemic situation and your perspective.
Andrew "A": Thanks, Ricky! Many organisations and governments have been surprised by this pandemic. There is a lot of negativity in the markets. It also presents a new opportunity in the market. The key is how to turn this situation into an opportunity.
Look at your services and your workforce. For services, a friend of mine in Malaysia just shared with me how AirAsia is offering an unlimited amount of travel for a limited amount of money*. That is very innovative!
For the workforce, organisations need to show they are focused on health and safety, but also that they are good corporate citizens.
If you can't turn this situation into an opportunity, it will have a big impact on your bottom line. Organisations need to be more innovative and do things differently to fill the gap created by this pandemic.
Business Continuity Plans (BCPs)
R: How about the Business Continuity Plans (BCPs)? How well prepared are organisations that you interact with?
A: Organisations are actively running their BCPs. The first level is a greater focus on hygiene, cleaning, and more vigilance in terms of health and safety. What I observe is that most people are slowing down decision making - that is one thing that you need to seriously consider and possibly avoid as an organisation. If everyone perpetuates this thinking it will drive a further downward trend in the level of economic activity. If organisations are not thinking of the medium and long term and pursuing their strategy, it might slow down their recovery when the situation improves. Many organisations are just focusing on minimising the impact, and not focusing on what they do with their strategy.
Organisations need to be innovative
R: Can you elaborate on the part of being innovative?
A: Sure! Look at AirAsia. They are pre-selling travel for use at a later date. An organisation needs to guarantee its sustainability and be innovative with their marketing campaigns: "buy and pay later". Give customers the ability to cancel.
If you are in the governance consulting space, this is a good time to promote crisis management and risk management. Depending on what you do, you need to find the opportunities. Look at the face masks and toilet paper at the moment.
Disruption to supply chain
R: Can you also comment on the disruption to the supply chain?
A: The main problem is that many organisations have a heavy supply chain concentration in specific countries. Give the global nature of business an organisation has to be prepared for disruption in their supply chain. There are constraints to significantly changing your approach in the short term, however, the lesson to be learnt is the need to anticipate and prepare for future events that may impact on your supply chain. How do you cost-effectively manage your risk?
Hopefully, when organisations are applying their lessons learnt from this event they will consider diversification and de-risking their supply chains more.
The balance between economies of scale vs. diversification
R: Diversification is certainly critical! I observe that organisations often have a short-term memory. I recalled that after the 2012 big flood in Bangkok, many companies develop additional supply chains in other SEA countries. It seems rather common sense! However, after a while, the concentration of supply chains in one country built up again very quickly. How can companies balance between efficiency/economies of scale vs. diversification?
A: Organisations will need to evaluate the cost-benefit. What is their attitude and capacity to deal with a high consequence, low probability risk event? E.g., Qantas is expected to lose A$100-150M from its annual profit due to Covid-19**. The impact can be quantified!
You've got to anticipate this and run scenarios. Can we bear the potential loss if this happens? What are the Top 5 things that could have a material impact on our business?
Most mature organisations would have identified pandemic as a business risk, but the reality is that most of them haven't worked out how to effectively respond -- and that's the problem we are seeing now! Scenario-based planning is key. There is no other way to do it. Leaders will need to work out which scenarios are more or less probable and develop a response plan to minimise the impact.
- If we have a natural disaster, what could that potentially look like and how do we respond?
- If we have a pandemic, how do we work through our supply chains?
Advice for leaders
R: What advice do you have for leaders?
A: You've got to be calm. This is a global phenomenon. How can we effectively support our staff, customers, and suppliers? What options are available for us? For a healthy and safe workplace, what additional steps can we do?
It's about change and resilience. One of the things that leaders can do is to practice and promote resilience. Stay calm, communicate effectively, be measured in your response. Provide appropriate support and be flexible. Demonstrate leadership and personal resilience at the same time.
R: In Singapore, the leadership (government and business) is cutting salaries. This is a measured response coming from the top***.
R: Any final thoughts?
A: People need to apply a positive lens. This is about focusing on the upside and not just the downside. It is not all doom and gloom.
Understand and manage the downside, but focus on the upside" - Andrew Bissett
The media is not helping, it's so negative! It's always reporting an outbreak here and an outbreak there.
The key takeaway from my interview with Andrew is that business leaders need to remain positive and focus on the upside. Despite the constant negative news coming from the media, leaders need to inspire their team to minimise the impact on this event and focus on the long-term strategy of the organisation.
My advice is to "switch off" to constant notifications coming from all the news channel (bye-bye Straits Times notifications!) and to keep looking at the bright side of things.
Here is one of my favorite quotes on resilience:
"When we learn how to become resilient, we learn how to embrace the beautifully broad spectrum of the human experience." - Jaeda Dewalt
If you want more quotes, click here. If you are interested in how to build a resilient leadership team in APAC, drop me a note at firstname.lastname@example.org.
For discussion on scenario-based planning and developing a strong governance and risk management approach within your organisation, Andrew is reachable at email@example.com.
Stay tuned for the next interview!
* Air Asia - news 2020.02.29
** The New Daily - Finance news 2020.02.20
*** South China Morning News - This week in Asia 2020.02.28