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Covid-19: A Black Swan

Covid-19: A Black Swan

Response to Covid-19 involves resources, both human and financial, and therefore pose an even bigger challenge for small companies who are strapped for both.

 

The Coronavirus (Covid-19) is a serious threat to global health. The Economist recently estimated that the moment it enters a country, it may infect anywhere between 25% to 70% of the population. For India, this translates into truly terrifying numbers that range from 30 to 90 crores. It is expected that 80% of these cases will be mild, like routine viral fevers that can be treated at home, and 15% may require hospital treatment. The remaining 5% may require intensive care. This last number itself is potentially greater than 1.5 crores. In other words, the country’s medical infrastructure will be severely tested.

 

Governments all across the world are doing their bit. They are screening incoming visitors and ensuring testing of people reporting symptoms suggestive of Covid-19 infection. They are spreading awareness, suggesting dos and don’ts, training medical personnel, establishing treatment and contact tracing protocols, building quarantine facilities, and ensuring medical supplies. The Indian government is doing all this and more. For instance, the political leadership is staying away from large social gatherings and setting an example for others to follow.

 

Everyone is looking towards China - the first country to be affected - and drawing lessons from there. Many of these may have long term implications - good and bad. The positive learnings are those that are related to speed and decisiveness.

 

The Chinese government set up large dedicated hospitals in record time and acted quickly to isolate vast multitudes, entire cities and provinces. They also developed and deployed testing facilities on a vast scale and rapidly sequenced and shared the virus genome so that researchers around the world could start developing vaccines and antidotes.

 

The negative consequences are those that of personal liberty. An app developed by Ant Financials, and mandatorily deployed over large parts of China, uses self-declared data coupled with information in terms of location and movement pulled out from a social media platform (WeChat) to generate a colour code. This has to be flashed on demand by showing one’s phone and determines access to public places. If red, one can be asked to stay at home for 14 days. In some locations, motorists have to scan roadside QR code signs to determine if their personal colour code allows access. Baidu and SenseTime are helping the government identify people who are not wearing masks in public places. Technology companies sharing individual data with government agencies serve a benign purpose at this moment, but once these gates open they are likely to remain open. Countries that have been squeamish about following China’s example in technology-based surveillance may be compelled to do so to combat Covid-19, and thereafter, may become comfortable in this practice .

 

Business organisations are doing their bit to protect employee well-being and ensure business continuity. This has consisted of education, better sanitation, provision of supplies, cancellation of travel and group events, and in some cases, shutting of offices for fixed periods. Here again, many are looking to see what China has done. While Chinese companies have done all of the above, they have gone beyond in some areas. In some companies, employees are required to keep alternate seats empty and not talk when they eat at the company cafeteria. Apparently, talking while eating facilitates viral transfer. They are also required to use masks and submit to temperature measurements several times a day.

 

What is more interesting is their rapid response by way of pivoting their service delivery model. Two examples are illustrative. One, while schools were shut in Wuhan, not one day of schooling was lost as lessons were delivered through the internet on mobile phones. Some parents have welcomed the easy access to teachers for query resolution which has melted down the traditional hierarchical relations in Chinese schoolrooms. Two, Sun Art Retail, which is one of the largest supermarket store chains in the country, has seen no decline in revenue even though 80% of their stores are shut. This is because they turned to online sales and home delivery in a big way. The 18-month spell of Spanish flu in the US (1918) is a rough guide to the duration companies will have to seriously examine their business model to retain revenues and margins since Covid-19 may be around for a while. To continue with the US analogy, the virulence declined with the onset of summer, leading to relief and complacence, but come winter, the virus spread ferociously claiming over 6 lakh lives in 18 months.

 

Some of the changes that will come about as a result of Covid-19 may stay forever.

 

◆ Companies will have to not only review and strengthen their work from home policies, but will have to provide the appropriate infrastructure, and establish protocols to prevent inappropriate use of that infrastructure.

 

◆ Reorganisation of the workforce to reduce geographical concentration and thus minimise the impact of shutting any one facility will also have to be considered.

 

◆ Careful shadowing of key personnel, which was always a good thing to do to minimise attrition impact, will now have to be done to minimise the impact of those people falling sick. Processes may have to be reviewed to minimise group meetings and get people used to interacting over phone or video-conferences to achieve the same purpose.

 

At a macro level, supplier diversification will have to be introduced to minimise the impact of any one supplier being quarantined. This has huge implications for global supply chains where enduser companies do not even have full visibility of the locations and number of the secondary suppliers who supply their primary suppliers. The pharma companies are seeing this need right away because they depend on China for Active Pharmaceutical Ingredients (APIs). To see the challenge involved consider this: the last US-based penicillin fermenter was shut down in 2004.

 

 

Since the virus does not distinguish between staff on rolls and those on contract, companies will have to invest in both education and infrastructure for the vendor staff who currently fend for themselves.

 

 

Since this is often a varying number, the difficulties are obvious. In short, many things were good to do, but were either put on the back-burner or were done as a matter of form and not in spirit, will actually get done leaving organisations transformed for the better.

 

Response to Covid-19 involves resources, both human and financial, and therefore pose an even bigger challenge for small companies who are strapped for both. Many small establishments are under equipped with even washrooms, soap and driers, leave alone sanitisers and masks. They also have very lean staffing and cannot afford to carry extra staff for contingencies. It will be an uphill task for them, but the good thing is that if they last through the spell they would have become better places to work.

 

Our knowledge of Covid-19 is evolving almost by the day. For instance, when this piece is being written, it has become clear that there are at least two strains, one more infectious than the other, and that women suffer fewer fatalities than men. In many respects, the key information is so vague that it can be seen as almost useless for planning. For instance, the fatality rates estimated by different researchers vary by an order of magnitude. One thing is certain though. This is a true Black Swan event that will forever change the way we work.

 

References

1. The Economist: Feb 29, 2020

2. “China’s High-tech battle against Covid-19"; Ananth Krishnan; The Hindu; 06032020

3. “Coronavirus: Are there two strains and is one more deadly”; Jessica Hamzelou; New Scientist; 05 March 2020

4. CoronaVirus News: Newsletter; The Scientist; 20 Feb 2020

 

 

 

 

Gautam Brahma is a management consultant who advises start-ups and SMEs on strategy & operations including sales, HR and IT. He carries an experience of over four decades in the public, private and non-profit sectors in telecommunications and IT industries. He has been an invited speaker on multiple industry forums and a monthly columnist on HR issues for nearly two decades. Gautam is based out of Gurgaon and can be reached at [email protected]

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