These are some unprecedented times. Many are also calling it the most significant catastrophe since World War 2.
There is a pandemic, economic crisis, supply chain worldwide has disrupted, oil prices have slumped, and countries are witnessing increased disputes. In short, one may go far as saying that we are at a cusp of a major crisis.
How do we effectively manage our business at such times? For most businesses, unless you are in medical supplies and other necessary industries, they can suffer a massive collapse in market demand if there is a global catastrophe. Well, who would think of taking a holiday, visiting a cafe, or purchasing a new car or home at a time of an emergency?
So, how would you operate your business in such a scenario?
Don’t worry though, we at TimesNext love talking about startups and several likely and unlikely scenarios that can happen. In this story, we will uncover plenty of effective ways you can adapt to run your business effectively at a time of a crisis.
First, Wait, Are We Saying That a World War 3 May Happen Soon?
People have talked about a possible WW3 over the past several decades (1, 2, 3). It almost started in the 1960s, during the cold war between the US and Russia. Fortunately, so far, we have managed to avoid it.
So, are we saying that World War 3 may happen soon? Well, it is not easy to claim something like this.
Because in reality, anything can ignite worldwide, it can include the world’s prominent political leaders getting killed, fighting over sacred resources, and even intelligence threats.
When we talk about a world war this way, it makes the chances of war happening sound highly likely. However, the actual chances are lower than what you may imagine.
Since 1945, our planet has witnessed various battles, be it Pakistan, China, the ongoing crisis in Afghanistan, and a few more civil wars. Yet, we should not forget that the entire world needs to be involved for a world war to happen.
And thankfully, the world’s structure has changed a lot since 1945. No nations are aligned the way they used to be. Our militaries are skilled and stronger than they were ever before (4).
If a world war is likely to happen, people in billions will suffer, and it would take at least decades, if not hundreds of years, for humanity to recover from the crisis.
And even though several scenarios about WW3 sound like some sci-fi movie, we can’t forget that weapons, be they physical, biological, virtual, or in any other form, are pretty scary.
Long story short, if WW3 happens, no one would win it. A full-on war would have a huge impact on the entire world, so much so that the world won’t be the same again. We mean, look at the way our industries have transformed because of a single virus. Imagine the kind of havoc a world war can place on us.
While any scenario or crisis that can lead us to a third world war involving dozens of nations is unlikely to happen tomorrow, there is a chance that we may not be as lucky as we have always been to avoid it next time.
And that’s why we have prepared this blog post, so in an unlikely situation, if such a catastrophic event happens, you will know what to do.
Tips to Effectively Run Your Business in a World War 3 or Any Global Crisis
Stay Calm and Adjust Your Mindset
The coronavirus outbreak has been an eye-opener to many business leaders. It made them realize the importance of being proactive to any potential challenges and crises.
And when the path ahead becomes uncertain, leaders need to offer their people clarity and ground hope for a better future. At that time, as a leader, you need to have a positive vision and confidence that you are courageous enough to tackle any challenges in front of you.
At the same time, you need to confront any unsettling truths and accept that you don’t know or can’t predict everything.
It would be best to practice what industry leaders call integrative awareness to remain calm and optimistic even under immense pressure. It means being aware of the changing reality in the world and how to best respond to it physically and emotionally. It is an intentional practice that would allow you to shift from looking at challenges as roadblocks and seeing them as problems to be solved or taking lessons instead (5).
According to McKinsey, here are six steps you can practice to develop your integrative awareness.
While these practices may appear commonsensical and straightforward, most leaders often fail to follow them. They end up believing that they will worry about certain things once the crisis is over. However, it doesn’t work that way.
- Adapt to your daily operating model
- Set your intention
- Observe your emotions and keep checking your reactions
- Practice listening to your inner world every day
- Shift your perspective from threats and negative messages to positive messages and opportunities
Remember, being a leader during a crisis is an enormous responsibility. However, it is also a great privilege. Keep yourself centered in a storm with Integrative awareness.
Accept the Reality
Accepting reality is arguably one of the most used yet most misunderstood skills for any leader (6).
“We can’t change a thing until we accept it. There is no liberation via condemnation, only oppression.” – Carl Jung, a Swiss psychiatrist and psychoanalyst (7).
We can often trace the room of unnecessarily harsh behavior, aggressiveness, tantrums, shutting people out, avoidance, etc., in leaders who do a lousy job at handling reality at the moment.
There are multiple examples of leaders being unhappy about a situation, result, or individual and insisting on being different. The time, money, effort, and energy such leaders spent arguing and fighting against reality is astonishing.
In short, it takes courage to accept reality. However, you can’t expect to make any changes until you accept it as it is.
As a leader, there are three immediate acceptance that you should focus on during a global crisis:
- Accepting Results
- Accepting Situations
- Accepting Failure
Now, you may feel that “acceptance’ is very passive. However, in reality, acceptance is about acknowledging the facts and letting go of our perceived version of any circumstance.
Your reality can include a pandemic hurting your business; there is no market for your product any longer, or how your revenue numbers are falling at a significant pace. Whatever you may face, you won’t be able to employ your most prominent skills until you accept the reality and get ready to change things for the better.
Approach Your Business As Per the New Reality
Once you are calm and accept the reality, now it is time to approach your business differently.
If your business is no longer relevant as per the new reality, try to find new ways to monetize your business. Think of different ways you can sell, strategies, and implement accordingly.
Of course, you will need some time before you understand the full impact of WW3 or another pandemic like COVID-19. However, recent history tells us two major things:
- Even in severe recessions and economic downturns, some businesses can gain an advantage.
- Crises lead to not only a plethora of short-term changes but also long-term ones. For instance, the recent coronavirus pandemic led to a temporary decline in travel and a lasting shift in societal attitudes about digitization and ecommerce.
The key is to figure out your growth opportunities in the new normal. You will also have to reconfigure your entire business model if needed to realize those opportunities.
So, how would you find new growth opportunities amid a global crisis?
- Start by scrutinizing big behavioral changes and narrow down to specific products or businesses that are likely to grow or contract due to the crisis.
- Next, categorize those behavioral shifts as they are likely to be temporary or lasting and whether they existed before the crisis or are new.
Remember, any analysis of growth opportunities need to go well beyond simple categorization. You must challenge your ideas and take a fresh and careful look at the data you find. Moreover, it is recommended to take multiple perspectives.
And once you realize where your opportunities lie, you can take a step further and reshape your business accordingly (8, 9).
Collaborate or Build Strategic Partnership with Others
Another lesson we can learn from the past is the importance of effective collaboration for either long-term and short-term business success.
Particularly at a time of crisis, as a leader, you need to be open to collaboration. After all, it will allow you to gather experts with cross-functional and unique perspectives that can help you solve rapidly evolving challenging issues with long-term implications.
In addition, such experience diversity will also allow you to see risks and opportunities from different angles, ultimately helping you build new solutions and adapt dynamically to emerging circumstances (10).
Here is how you can promote collaborations:
- Encourage constructive challenge
- Make direct contact with people at the front lines
- Reinforce your business’s purpose and goals as frequently as possible
- Get your staff to reflect on their preferred ways of operating
- Focus on using your strengths to improve collaborations
Remember, when you promote collaborations, your business is more likely to survive the present hard times and even thrive once the crisis is over.
Effectively Manage Your Cash Flow, Assets, Investments, and Costs
Be it WW3 or any other global crisis; we can’t overstate the importance of healthy finance. In case of any potential challenge, you will need to immediately develop a treasury plan to effectively manage your cash flow, assets, and investments as part of your overall business risk and continuity plans (11).
And to do it, you will need to take your entire ecosystem and end-to-end supply chain into perspective. Remember, how you will manage your cash will implicate your business and your customers.
There are several lessons you can take. We have learned so far from the 2003’s SARS outbreak (12), the great recession of 2008 (13, 14), and other black swan events like the Japanese earthquake disaster in 2011 (15, 16). Below is the summary of different lessons we have found across the web:
- Ensure you have a strong framework to manage any risks in your supply chain
- Ensure your finances remains viable
- At a time of crisis, it is necessary to focus on the cash-to-cash conversion cycle
- Encourage everyone across your company to think like a CFO
- Keep an eye on your variable costs and try to reduce liabilities as much as possible
- Revisit your capital investment plans and consider what is needed for the near term
- Increase scrutiny when it comes to inventory management
- Intelligently extend your payables while also expediting your receivables
- Consider other supply chain financing options
- Frequently audit payables and receivable transactions
- Focus on your business interruption insurance policies and coverages
- Consider new and alternative revenue streams
- Whenever and wherever possible, convert fixed to variable costs
- Get creative when it is about maximizing your working capital
At a time of crisis, cash flow management must be an integral element of your overall risk assessment and action plan. Even if you are in a business that the crisis has not adversely impacted, we recommend you actively evaluate any risks, cash flow needs and take appropriate actions per the situation’s demand.
In times of crisis like another pandemic or world war 3, it is easy for businesses to default to their old approaches. But, it is often necessary to develop new habits during those times.
As organizations position themselves for the new normal; they can’t be constrained by conventional data sources, capital allocations, and business models. It won’t even help a bit if you can’t even accept reality in the first place.
Instead, stay calm and strategize how to effectively revamp your business and manage your capital to survive WW3 and thrive in the post-crisis era.