In an effort to continue to try and provide our members with resources that are easy to consume, and relevant to their own businesses, we are taking some information that has been developed and trying to “pare it down” as much as possible so you can easily find the identified portions that are most beneficial.
One resource that has been created in the wake of the COVID-19 virus is a video series developed by Dirk Beveridge from UnleashWD. In this particular video, “Strategic Considerations During the Coronavirus Crises”, Dirk interviews Dr. William Putsis, PH.D., Professor of Marketing, Economics and Strategy at the University of North Carolina.
We have taken some time to pull some of the highlights and identify some important items that were covered, and then time stamp the video for easy access to everything that was covered in the video.
Dr. William Putsis begins the conversation by emphasizing that businesses shouldn’t think about whether they are putting their people or their business first. Instead, he states that businesses should put resources in the most productive place. Dr. Putsis states that making the best decisions for the company in the long run, employees will be taken care of in turn. It’s not “business or people.” You must do right by your employees by protecting them. They are giving their lives and taking a risk by choosing to work for you.
One lesson we should learn from the last year: as businesses expand, liquidity should be pro-cyclical. Businesses need to put themselves in a good position while the economy is good. Many private equity companies reaped the benefits of investing in an over-inflated economy. Now they are reaping the downside on what they did in the upside. Too many companies spent money trying to grow too quickly, when they should have been saving for a rainy day.
We are now in a recession. If you start losing business to someone undercutting you on price, in 3-5 years you’re likely not recovering. At all costs, companies need to maintain share and worry about profitability later. We are going through a fundamental shift. People in the next 3-5 years will be very risk averse. It’s a reasonable concern. What if something after the Coronavirus happens?
Dr. Putsis then highlights 4 types of businesses that will fail in an economic downturn, even a short one:
- Those that don’t have liquidity
- Those that are ill-prepared strategically
- Those in industries not ready for changes
- Those that do not adjust quickly to the downturn
We are now at zero percent net interest rates. This can do two things for companies:
- Companies worried about whether they will be financially viable in the next couple of months should tap into loan markets to take advantage of low interest rates.
- Those that have prepared, they should use these interest rates to become better positioned in the industry.
Dr. Putsis asks the following of business owners: can you transform your company to the new market opportunity? Companies poised financially to weather this are in a great position to take advantage of this opportunity. If you feel you will be fine with virtually no business between now and September, invest in transforming your business, invest in your people, and be ready to take advantage of that September boom. History has taught us that taking steps early prepares you to be successful.
To close the video, Dr. Putsis states that you should always position yourself to be successful in times of crisis. If you lose business to a lower-priced competitor right now, chances are that the customer is not coming back. Looking to the future, you should aim to stay ahead of the curve. Can you weather the storm between now and September? If you don’t know, start taking tough steps now, because you will have to take some really tough steps later if you don’t.
5:37 – What we do personally is more important than what we do as a business.
10:15 – Looking in the rearview mirror (connections between the past, present and future)
14:50 – How can we learn from the past? At all costs, maintain share and worry about profitability later.
16:15 – 4 lessons that literature teaches us about businesses that fail during economic downturns
17:20 – If we haven’t prepared for this, what should we do now?
19:07 – What’s unique in your market that someone owns that gives you an enduring strategic advantage in ways that you couldn’t do it before.
22:05 – How do you find a strategic opportunity?
24:45 – Snuggies vs. Slanket – advertising was cheap at the time, and they dominated airtime to prosper.
25:48 – Watch what’s going on in the marketplace and see where people are running. Is it rational? If we watch where they are running irrationally, maybe we find points of strategic control.
27:42: Preparing for the future.
About UnleasedWD's video series
At UnleashWD our purpose is to unleash the human spirit. And during this unprecedented time we felt compelled to support the UnleashWD tribe and our association partners with the right mix of inspiration and timely, relevant information. We reached out to our network of wickedly smart subject matter experts to provide the sessions below. In the words of one attendee - “This was amazing. You’ve changed our day tomorrow. We’ll be on the attack!”
We are a design, innovation, and strategy firm who transforms legacy distributors into nimble and innovative market leaders. What you are about to experience is designed to unleash your spirit so like the individual above decided, you too will be on the attack!
We are here to support you through these next few months and beyond. If we can do anything for you please reach out directly to either of us.