How your company can confront the uncertainty

06/04/2020

How your company can confront the uncertainty

Where will we be in six months, a year, ten years from now? We wonder what will happen to our jobs or companies after the coronavirus lockdown.

Is not a secret that Coronavirus has hit the worldwide economy badly. How your company can confront the uncertainty during post-corona? 

There are a number of possible futures, all dependent on how governments and society respond to coronavirus and its economic aftermath. Hopefully we will use this crisis to rebuild, produce something better and more humane.

Embracing uncertainty

Acting in the face of uncertainty has been a defining theme of modern business, even within a context of macroeconomic stability and continuity. But it’s becoming harder to shock today’s executives. Potential responses to what were considered black swan events even a generation ago are today built into most strategic scenarios. By any standard, however, the COVID-19 pandemic qualifies as a true outlier.

Embracing this fundamental reframing, widely described as the “next normal”, means confronting uncertainty head-on and building it into your decision-making.

Our perspectives on how to do so entail the following:

  • Consider uncertainty under different time horizons
  • Identify the most salient uncertainties for your industry and business
  • Use the uncertainties to envision multiple different futures
  • Seek diverse perspectives
  • Incorporate scenarios into decision-making
  • Distinguish implications of different decisions
  • Make choices and monitor

So, what’s the future of your company?

V-shaped recovery

What’s your company’s future? Will it recover? A McKinsey article on safeguarding lives and livelihood discusses different recovery cycles based on containment of virus and economic measures taken by a country. If a country limits the growth of the disease within 2-3 months and averts fundamental damage to the economy, a full recovery is possible in the short term. This means a V-shaped recovery for your firm in say 6 months and your job, increment and promotion is mostly safe.

W-shaped delay

If the disease spreads faster than desired while the economic measures taken are not optimal, but still manages to protect some parts and ensures a functional banking system, then the overall economic recovery will be slower. Your employer, industry and the business environment will limp back to normal over a period of about 2-3 years in such a W-shaped recovery. If your firm can survive this period it will emerge stronger. If you make yourself invaluable and retain your job, you will thrive too.

L-shaped disaster

If health and economic interventions fail then the virus may spread unabated for 12-18 months. Conservative consumer behavior may drag a country towards a recession. Supply chains may collapse as small businesses and companies’ default on payments or go bankrupt. This will push banking systems towards a crisis resulting in an L-shaped curve where the downturn extends with no immediate relief in sight. Your company may shut down most parts. Don’t bet on retaining your job. Work on reducing costs and figuring out other sources of income.

 

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/safeguarding-our-lives-and-our-livelihoods-the-imperative-of-our-time