The SCRC held our first webinar panel today (video embedded below), which was attended by over 90 people, with another 200 who signed up for the recording. The webinar featured myself, commenting on some of the attributes of the global supply chain that will shift, based on some of my recent work with the US AirForce, GovBuy, the Helena Covid19 Network, and other groups on how to mobilize a response to the chronic shortage of supplies in hospitals. Next, Gene Klann from the Center for Creative Leadership (a non-profit executive education center), discussed a number of important lessons for leaders to consider during the COVID crisis. These lessons are based on his experiences in the military, and his book “Crisis Leadership: Using Military Lessons, Organizational Experiences, and the Power of Influence to Lessen the Impact of Chaos on the People You Lead.” Jason Schenker is the President of Prestige Economics and Chairman of The Futurist Institute. He discussed some of the key lessons for executives to consider once the post-COVID economy begins to unfold based on his new book, “The Future After COVID”.
I began by advancing some perspectives on how the supply chain will be forever altered after COVID19, which has caused the entire global economy to shut down, and will have lasting impacts. An implicit assumption in the press is that COVID-19 caught everyone by surprise and that executives foolishly ignored the risks of outsourcing to China, and are now paying the price. However, noted scholars and epidemiologists have been warning of the threats of pandemics since the SARS virus. The pundits would further posit that in their pursuit of low-cost production, global corporations made naive assumptions that nothing could disrupt them. The tariffs imposed by governments were simply a passing political inconvenience, while Brexit restrictions would somehow be negotiated away with Brussels in subsequent years. I offered an alternative viewpoint: the major disruption of the global economy, including COVID and the after-effects, are a function of events that are indeed part of the natural evolution of supply chains.
If this is the case, and you buy into this hypothesis, than organizations need to be much more aware of what the future will look like, and think about how to plan ahead not just for the next week, but what the world will look like in a post-Covid world.
Next, Gene Klann discussed how Crisis Leadership is designed to help leaders assess their strengths and weaknesses, learn new competencies and prepare for events that are as unpredictable as they are unavoidable. Klann contends that while the highly charged and often dramatic events surrounding a crisis can profoundly affect the people in an organization and even threaten its survival, there are actions a leader can take before, during and after to reduce the duration and impact of difficult situations. Crisis Leadership outlines those actions, concentrating on three important areas: communication, clarity of vision and values, and caring relationships. He gave specific examples of how leaders can be more effective by communicating often and through genuine concern and care for their employees. This can build loyalty, and eliminate the biggest problem: Making Stuff Up (MSU), which is the outcome of not enough communication and word of mouth. Especially during COVID and work at home, people need to know what the future will look like. Although there are no guarantees, frequent communication and giving people an idea of what lies ahead can reduce uncertainty and anxiety, and help people work through their concerns. There is a significant reduction of ear and anxiety whenever effective communication takes place, compared to little or no communication (which is the norm!)
Finally, Jason Schenker shared some of his insights on what lies ahead for the economy, which was definitely the bleaker part of the webinar. He estimated that there are about 35M people right now whose jobs “don’t exist”, which include many of the services we see like barbers, bartenders, massage therapists, sports and entertainment event planners, and other jobs that require in-person proximity. This segment is the hardest hit, which will also likely lead to impacts such as home foreclosures and ripple effects. Tourism and luxury industries will be hit, as will anything related to travel, gambling, etc. This could also last for awhile, as it will take some time for people to go back to work. Schenker also predicts that more and more people will work from home after the epidemic dies down, as organizations will realize their employees don’t need to come to the office, but are just as productive working from home. Their ecological footprint of firms will also be reduced, as fewer people will be driving to work, using space in a building, and consuming energy, which will be another added incentive.
From a supply chain standpoint, Schenker predicts that there will be a congressional inquiry for increased local production of medical devices, and a clampdown on long supply chains in countries that are not close friends to the United States. This will be a national security issue, and may result in changes around local production in the US for critical industries. Housing is one of his biggest worries – as he points out, a 750 credit score means nothing if you don’t have income coming in. Mortgage brokers will tighten up requirements to get a mortgage, and are seeking higher down payments in cash. And just as credit tightens renters will be spooked by higher rent costs, resulting in both a supply shock and a demand shock. The likelihood is that unemployment will likely be announced as close to 15% by the end of the month, and may come down to 7% by the end of the year. The IMF has predicted a return to Q1 2019 levels for Advanced Economies in Q4 2021. This means we may not see a return to 2019 growth levels for advanced economies until the end of 2022.
These insights and predictions will likely come to pass, but if you are interested in the details, watch or listen to the recorded webinar below. I want to thank Jason and Gene for their insightful comments!