Episode #351: Two Waves Theory And Covid-19 Leadership

As an Aussie, I enjoy going surfing in Australia. Blue skies, golden beaches, clean oceans and good surf make the whole experience very enjoyable. What is less enjoyable is when you catch a wave, get severely dumped, find yourself pressed to the bottom under the weight of the wave and have to struggle to claw your way to air. You break the surface to grab some air and at that moment, you are smashed by an even bigger wave. That is where we are as leaders right now. The First Wave is the virus disruption to business, particularly hammering small and medium sized enterprises (SMEs). The Second Wave is a global recession that takes everyone down.

Naturally in Japan, we initially thought the virus was a Chinese problem, like SARS. Then we discovered that big influx of Chinese tourist money brought with it carriers of the virus. We also had political leadership who after Cabinet debate, concluded that the 1000 people who had been locked in their cabins on the Diamond Princess were okay to go home. Every other country who evacuated their nationals off the cruise liner, placed their evacuees into a further two weeks of quarantine isolation. Not Japan. The virus started popping up in unexplained locales and PM Abe closed the schools down, sparking a panic rush to buy toilet paper, long life food products, hand cleaning gels, etc.

The business consequences of the fear of the virus kicked in with cancelations of events, people avoiding going out and many working from home. Restaurants saw major declines of clientele, tourists both domestic and foreign stopped traveling, Hotels faced horrendous vacancy rates, etc., etc. Suddenly cash flow concerns seized everyone’s attention, more than the health aspects of the virus and SMEs began to entertain probable bankruptcy.

As company owners and leaders we have moved all the cash to the centre of the office and set it on fire. We now play a waiting game of which will extinguish first, the virus or the cash? We have all put plans in place to wait it out. We stopped all unnecessary spending. This has been a “pass the parcel” exercise, where our lack of spending hits those down the food chain, who in turn stop spending, affecting those further down their food chain, who stop spending and so on, ad nauseam. This is Wave One.

Once we start locking down whole countries, as we have seen with Italy, Spain, France and New Zealand (at the time of this writing), we can anticipate nearly all commerce comes to a dead stop. Trade is hindered and each country lurches into recession, as their domestic economies cower in the fetal position, hoping somehow things will get better soon. Now the big corporations have moved all their cash into the centre of the CFO’s office and have the lighter at the ready. This global recession is the Second Wave.

As leaders, have we bridged this full blooded global recession likelihood with our teams? They may be sitting in isolation at home, already feeling uncertainty and even loneliness. Have we set up regular Town Halls, with everyone accessing it on-line, to talk about where we are with the cash burning situation? Are we focusing only on the virus induced business disruption in Japan or are we now talking about a potential global recession. Or are we afraid to talk about either of these highly flammable subjects ?

It is difficult because we have to strike a delicate balance between causing panic and being transparent. Looking at our global political leaders, not too many countries have found that balance as yet. My view is that we need to be transparent. If the team knows they may face salary cuts, as the corporate cash burns low, they are mentally ready for it. If they are alerted to a macro economic problem, associated with a probable global recession which will elongate the required survival struggle period, then they are ready for it. They also know that this isn’t a one company, one industry, one country issue. Even if they wanted to retreat to another company, it is the equivalent of choosing a different deck chair on the Titanic.

We must be transparent, but also must have a plan which is shared with everyone, on how we are going to make it out of this morass. The plan may be as simple as preserving cash until things pick up or switching focus to a part of the business where there is still some ability to get revenues.

The leader also has to radiate hope, confidence, certainty, calm, bravery, commitment, fighting spirit, consistency and guts. Winston Churchill sent language to battle to keep the spirit of the British people alive in the most dark days of the last world war. We don't have to be as good as Churchill, but we should be trying as hard as possible. He communicated with his tribe and we have to make sure we have committed ourselves to doing the same. Regular on-line Town Halls for isolated staff working at home has to be a given. If you think you are doing okay in terms of communication, then double that, because you will undoubtedly need to do better.

Free LIVE On Line Stress Management Sessions

On a separate note, we are running public LIVE On Line Stress Management classes, which will be free to all attendees on March 19 (English) and 24th (Japanese) and April 16th (Japanese) and 17th (English). We are also offering the same thing as an in-house programme, delivered LIVE On Line for our existing clients and for prospective clients. This allows us to help our clients and our community.

The registration process for these free stress management sessions is being offered on our website, so please go to this specific page: http://bit.ly/dale_stress_e