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COVID's Impact on North American Business

Posted by Jarrett on Jul 27, 2020 1:23:46 PM


by Mike Jarrett

Without a doubt, COVID-19 has had an impact on us all. In one way or another, our lives have changed on a personal level. Things have changed for businesses too. The choice of how to respond to challenges is crucial. In a time where change has happened, making new decisions and choices that are right for your business is pivotal.

 

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As hurdles arise and new challenges come to the surface, making proactive versus reactive decisions can set your business apart. In this time, we can all look at a vast amount of variables. First and foremost, look at what’s most important: the safety of your people. As the curve continues to flatten, it is important to keep safety a priority. Taking those extra precautions are still important.

 

As we began to flatten the curve, we also flattened the economy. It is still a frequent discussion amongst officials to try and balance the two. There will always be a tug of war between public health and business, it’s not just something we are currently trying to keep steady. A good example of this is reducing the speed limit to five miles per hour. Surely it would cause less accidents, but it would also impact the economy in a variety of ways. The key is balance.

 

Back to the Fundamentals

 

As business leaders, we are faced with a lot of decisions. My advice to business leaders everywhere when facing challenges in this current climate is to go back to the basics - the fundamentals. Fundamentals can be put into two categories: controllable and non-controllable. Non-controllable factors are what we saw in the height of the virus: shelter in place, stay at home, the virus itself, etc. As business leaders, you shouldn’t worry about the things you can’t control.

 

On the flip side, you should focus on the things you can control. Business leaders are naturally looking at effects in the financial area. When you go back to the fundamentals of finances, it’s all about financial discipline. Our economy has been on a roll for quite a few years, but it may not be that way again for quite some time. So, in response, business leaders can focus on controllables such as instituting cost control measures, making receivables tighter, and stepping up sales efforts.

 

At Jarrett, we’ve learned from past experience. Being in business for over 20 years, we’ve gone through 9/11 and the recession of 2008. In 2001, our largest customer at the time ran into a lot of financial difficulties because of 9/11 and, as a result, filed for bankruptcy. Unfortunately, when they did this, they owed us a significant amount of money - over $300,000! We received pennies on the dollar, but it taught us a hard lesson about financial discipline. Without it, you are not going to be able to survive tough times. We were thankful for that difficult lesson, even as a young company.

 

Adapting to Survive

 

One of my favorite books, written by Simon Sinek, is Start With Why. In this book, Sinek says, “You have to have the capacity for existential flexibility.” What he means is that the ability to sustain your existence is really about how you adapt. It’s about accepting the fact that some things will never be the same again. Some companies will understand that because they have the ability and flexibility to make changes. The things that have been handled the same way time and time again, may not be handled the same way anymore. It’s all about reinventing yourself and having the flexibility to change.

 

History in our country has shown that companies that adapt, survive. Those that didn’t learn how to adapt, no longer exist. A good example is Netflix versus Blockbuster. Blockbuster was the king of video rentals; Netflix was simply just a startup. Blockbuster refused to accept the fact that online streaming was going to be a method to watch video, and ignored the movement. Well, we all know how that turned out - Blockbuster struggled mightily and is now down to a single location in Bend, OR, while Netflix has a market value of $194 billion.

 

With COVID-19, we will see companies in a similar situation where only some understand the long-term changes ahead. This is not the first, nor will it be the last, pandemic. So, the ability to adapt and deal with these changes as a business leader will allow you to have an infinite vs. finite mindset.

 

First Principles Thinking

 

In order to weather this storm, business leaders need to look at moving away from the “we do it this way because we always have” mindset. Leaders should solve problems by looking at the root cause of the problem. Then, pull away the basic parts and identify how to put those components back together in a way that improves the process. This is called first principles thinking.

 

A good metaphor for this approach is football coaches. NFL football coaches are either play thieves or first principle coaches. Play thieves steal plays from other teams and coaches. They may adapt or tweak the play to fit players on the team, but they still stole the play. First principles thinking coaches dig into fundamentals and look at why plays are successful or not. They dig into the root cause of why a play works. Some legendary coaches, such as Vince Lombardi, Chuck Noll, and Larry Kehres, whom I played for at Mount Union, have shown this methodology. They are able to make halftime adjustments because of this way of thinking. These coaches understand the fundamentals of the plays and know what's working and what's not, allowing plays to work more successfully. A coach that steals plays can’t do that. They don’t understand fundamentals, so when plays don’t work, they don’t know why.

 

As business leaders, we want to dig into the fundamentals of what is and what is not working in our business, instead of accepting things as they are because that's how they’ve always been done. During difficult times, we must make the appropriate adjustments, just like a football coach makes adjustments during halftime.

Topics: blog

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