Triage, Cash is god, Ventilaid, Human trials, Safe deliveries & Grief
29th March 2020 Evolution Partners Newsletter
“Culture is who you are on your worst days. When your culture is that of a caring family, everyone pulls together in a crisis. True leadership is demonstrated in tough times, not good times.” Bob Chapman
Hope you’re surviving!
(And can still dream of Thriving!)
The word ‘triage’ comes from 1792 when Baron Dominique Jean Larrey, Surgeon in Chief to Napoleon’s Imperial Guard devised an effective process of sorting wounded people in an emergency situation on the battlefield. The first group was those who would live, the second group was those who would die, and the third group was those who would be saved.
Now, in The Great Pandemic, it feels like the enormous amount of debt that Governments are incurring and throwing around should perhaps be subject to some sort of triage, or system of processing. Some businesses are going to live. Some are going to die. Some can be saved with assistance. Don’t get me wrong, I want all businesses to survive, I believe that entrepreneurs are the engine driving the economy, but, there are some very brutal facts to be confronted when one is asking every Australian taxpayer to accept debt of $13,700 each, or a US taxpayer $14,184 each, and that’s only the stimulus that’s been announced to date. I don’t think it’s possible to maintain the national weight of GDP with debt that’s only allowing businesses to last a little longer after which they only go out of business once the stimulus stops.
If you can survive, and you can support jobs with a business model moving past the next month or two, then you have a great case for assistance. But if one hasn’t been profitable in the past quarters and years, and can’t demonstrate why one’s business is worthy of saving (or worthy of investment from taxpayers) perhaps one should go into the second triage section. Perhaps.
For business, right now around the world, the big issue is collecting cash. The circular economy built upon generations of trust and legal validity has frozen over in the course of approximately two weeks. People aren’t paying bills knowing that they might need it in the coming months. Cash used to be king, but now cash is God.Fixed costs have turned into variable costs as long-established contracts such as rent have been brazenly dismissed such as this example creating a standoff between large retailers and large commercial landlords. Meanwhile, small to medium business is being bled dry. If the Global Financial Crisis was a locking up of the credit markets, then The Great Pandemic is freezing of all markets.
Here are three cash tips for right now
– Call debtors and discuss their intent to pay
– Decide on a daily basis who you need to pay to maintain business continuity (your primary goal)
– Delay all other payments if appropriate
– Map your customers and consider who is likely to pay and when. Are they likely to go out of business? If necessary ask for payment upfront before you provide the product or service. This is happening in some retail supply chains now, before any product is provided retailers are being asked to pay all debts and pay for the product upfront, creating even more of a cash crunch.
– If your business model is not working and you are bleeding cash, build a plan, cut early and cut hard. Understand what you must do to have a viable business model
– Identify any Government support you may be eligible for. Arowana has built an awesome list of all support available to businesses in Australia and the Asia Pac region you can access here. Also as Ron Lovett explains in this video allocate one person in your organisation to focus on what the facts are and how they apply to you for these support opportunities.
I’m sure by now you are familiar with the term flatten the curve which refers to the effect that measures Governments take will have upon the impact of the virus. For Perth readers, the University of WA has released modelling outlining what different measures will do to impact the number of new cases per day as you can see in the image below. For context before the virus, there were around 5,876 hospital beds and 124 ICU beds in Western Australia, and on average 20% of patients require hospitalisation, and 5% require ICU. That means without intervention we would require 6,000 new hospital beds each day, and 1,500 ICU beds. Importantly many actions have already been taken, the curve is flattening, and we’re noticing a very early trend in the reduction of daily new cases from 25% growth per day to 22% growth, which is a result of actions taken about 12 days ago (There’s a 12-day lag — for more info see my blog post here).
The other really important thing to notice is that flattening the curve also delays the peak. Whilst many people would like this to be over by Easter, with a partial lockdown instead of a complete lockdown, as you can see the peak will be 6 to 8 months after the 8th March. And with 2,500 to 5,000 new cases per day, it will still overwhelm the healthcare system in no time.
The Government will be forced into a complete lockdown and you need to plan now to have a business model that will either be frozen or profitable in that environment. Many business owners are gambling right now that if a further lockdown comes that they might be deemed essential or able to navigate their way throughout to continued operations. That might be nice, but gambling everything on what actions Governments take doesn’t make good business sense. You should consider what to do in case you are not able to operate. You may think it is unlikely, but the most important thing right now is business planning. Finding a way to be profitable through this period. And if you can’t be profitable, perhaps how to freeze the business with the absolute minimal ongoing costs so you can restart it again.
It’s brutal, but any plan is better than no plan.
I’ve come across two interesting developments this week around ventilators, the machines that support breathing for patients in ICU with the Coronavirus. The first is called the Ventilaid project, an open-source 3D printed ventilator that can be made anywhere for around $45 in readily available parts. See the YouTube video explaining it here and the Gitlab here.
The second is Dyson, the vacuum cleaner manufacturer who has built a super simple ventilator in 10 days and received 10,000 orders. This is on top of efforts by other manufacturers around the world such as Ford, GM and Tesla.
In other positive news, the first human trial for a vaccine started this week, and while that is positive, public health officials don’t expect a vaccine to be ready for widespread use for at least 18 months.
A good friend of mine and expert on strategy Kaihan Krippendorf has put together an online conference to raise money to fight the virus and those affected by it. With an outstanding list of speakers including Scott Galloway, Alexander Osterwalder, Paul Krugman and Salim Ismail, the plan is to have 20 speakers for 20 hours straight, meaning that it can suit all timezones.
Check out the conference here.
Finally, if you’re in isolation like me and need to deal with deliveries like shopping or groceries, what do you need to do in order to sanitise that shopping coming into your home to avoid contamination? This video from Dr Jeffrey VanWingen details how to safely manage home deliveries. The big takeaway for me was that types of Coronavirus can live in a freezer for up to 2 years!
Check out the video here.
Who is affected
New data from the Australian Bureau of Statistics shows exactly how the pandemic is adversely affecting businesses of each size. In blue, we can see that around 55% of businesses are currently adversely affected, with the expectation that around 90% are going to be adversely affected.
Next, we can see how different industries are being adversely affected. The larger the difference between the blue and green lines, the more impact is yet to come. Notably, retail trade has almost seen the major effects, while mining, manufacturing and construction are yet to come.
The most common reported impact is reduced local demand. Critically, businesses are expecting severe staff shortages in the coming weeks and months. This suggests the response from Governments in the education and (re)training space will be vital.
Article I found valuable
This HBR article is a fantastic reminder to stop and recognise that we are all experiencing a few similar emotions right now. Perhaps that emotion is a form of grief, or what David Kessler calls anticipatory grief. Kessler is the world’s foremost expert on grief. He co-wrote with Elisabeth Kübler-Ross On Grief and Grieving: Finding the Meaning of Grief through the Five Stages of Loss. His new book adds another stage to the process, Finding Meaning: The Sixth Stage of Grief.
From the article, here are 4 key items for you and employees to consider right now.
“Unhealthy anticipatory grief is really anxiety, and that’s the feeling you’re talking about. Our mind begins to show us images. My parents getting sick. We see the worst scenarios. That’s our minds being protective. Our goal is not to ignore those images or to try to make them go away — your mind won’t let you do that and it can be painful to try and force it. The goal is to find balance in the things you’re thinking. If you feel the worst image taking shape, make yourself think of the best image. We all get a little sick and the world continues. Not everyone I love dies. Maybe no one does because we’re all taking the right steps. Neither scenario should be ignored but neither should dominate either.
Anticipatory grief is the mind going to the future and imagining the worst. To calm yourself, you want to come into the present. This will be familiar advice to anyone who has meditated or practiced mindfulness but people are always surprised at how prosaic this can be. You can name five things in the room. There’s a computer, a chair, a picture of the dog, an old rug, and a coffee mug. It’s that simple. Breathe. Realize that in the present moment, nothing you’ve anticipated has happened. At this moment, you’re okay. You have food. You are not sick. Use your senses and think about what they feel. The desk is hard. The blanket is soft. I can feel the breath coming into my nose. This really will work to dampen some of that pain.
You can also think about how to let go of what you can’t control. What your neighbour is doing is out of your control. What is in your control is staying six feet away from them and washing your hands. Focus on that.Finally, it’s a good time to stock up on compassion. Everyone will have different levels of fear and grief and it manifests in different ways. A coworker got very snippy with me the other day and I thought, That’s not like this person; that’s how they’re dealing with this. I’m seeing their fear and anxiety. So be patient. Think about who someone usually is and not who they seem to be in this moment.”
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