One marker of this pandemic is the highly variable experience of families, businesses and communities experiencing COVID-19 right now. If you're not hearing very different stories, experiences and feedback, listen harder.
1. Market feedback
Intelligence about the impact of COVID-19 on specific financial services sectors, not published by media.
A. Highly variable: from almost BAU to BAUU (business as UNusual)
BlueChip works with businesses of all sizes from founder-led start-ups to large global fund managers, so you'd expect market feedback to remain highly variable. That said there are patterns across business type, sector and size - and extraordinary divergences in experience even where organisations look more similar.
Right now being headquartered in Queensland, versus Victoria, might lead to very different experiences for similar businesses for example.
One pattern regardless of organisational size, industry and COVID19 impact is that, as predicted, businesses with fewer resources, including cash reserves, are struggling more than others.
While this is true for businesses of all sizes, the difficulties are magnified at the start-up / younger business and SME end of the market, and those with smaller corporate infrastructure or shared services.
In these businesses there’s little or no “shared services” and thus fewer senior people to share the extra work – from their crisis response, to longer term situation management, logistics or OH&S - so the cognitive, psychological and time burden of their COVID19 response has often sat with a few key people.
By contrast? Larger organisations with access to deeper capital and talent reserves, who also often have geographically spread operations, seem - so far - to have better defensive moats against the pandemic. Many are better positioned to weather the storm. This highlights an emerging theme of incumbency benefits.
The other theme we’ve seen, from early on, is the major advantage of agility. This is in part defined by a combination of speed, innovation and entrepreneurial service or product evolution, versus being slow moving or ‘stuck’. Again, this theme and pattern cuts across organisational size.
We’ve seen the largest of super funds move fast to respond to COVID19 dislocations, including by bringing forward parts of their innovation and technology investment and moving to faster communication cadence. In some cases this meant implementation, in days, of technology and service platform changes planned for months or years ahead. On the flip side some relatively small organisations haven’t quickly adjusted their strategy, services or revenue sources.
The impact of those decisions, and action or lack of action, is starting to become apparent.
B. Price Dislocations
Some superannuation funds, and significant numbers of their partners in asset management, are set to continue to do well with steady income from member’s continued employment (at least for now), plus price dislocations in both public and private markets providing strategic opportunities to reposition portfolios for future.
We’re still seeing some significant opportunistic shifts in investment, and upticks in certain types of activity, from institutions to individuals. These include alternatives specialists who are set to do well in the new landscape, fund managers who were able to take advantage of arbitrage opportunities only possible in windows of asset price dislocation thanks to market volatility, and high levels of individual active trading by HNWIs and others with liquid portfolios keen to ride the waves of volatility via market hot spots such as travel, technology, BNPL (buy now pay later) and “staples” such as food and super markets shares.
2. Management responses
This section outlines how CEOs and their leadership teams are responding
Some mid-market firms are feeling that the viability of their business is threatened. Some are simply shaving costs, others are taking a ‘break it and remake it’ approach and one that involves more digital enablement. A very few with favourable COVID19 tailwinds are going “hell for leather”. Many businesses are deploying a combination of these approaches in their go-to-market and marketing approach.
The variations are geographic (state by state, ability to work from home or not), client-specific (e.g. size, industry, demographic), type of industry, and goods or services delivered. What’s become apparent now is that few, if any are insulated – even if our contact or client’s own business isn’t affected, their partners or stakeholders are.
Most businesses are being conservative around cost but are seeing the benefits of pivoting to virtual engagement and being invested in relationships beyond today’s revenue – or lack of it.
One constant is re-thinking office space and company culture. Businesses closer to lease expiry, fit out build or physical relocation are able to, and are forced to, act on their longer-term views about the future and location of work. Many who aren’t approaching these major commitments are still rethinking the ‘workplace’ and retooling to create a sense of co-location and physical closeness.
Those who’ve had to actually move, often involving fit out decisions and building, have made different choice to those they’d have done six months earlier. Their offices – at least form what we hear – preserve or increase hot desking, reduce overall floor space requirements where possible or allow more physical distance, and enshrine work from home and the office technology needed to support that. As one client said “Whether you’re at home, at a desk, in the boardroom or any meeting room we want people to be similarly equipped and able to collaborate”. This seems like a no-regrets move even in a post-COVID19 world.
3. CEO guidance regarding coronavirus responses
This section provides our guidance on management and communication responses
Plan for “forever” + keep the ability to move with agility.
There are two specific pieces of guidance here:
- Have a “COVID19 forever” plan or at least thought experiment
- Plan to move up AND down between escalation levels
A. Why a forever plan?
COVID19 may not be our “forever” but robust, long-term plans which can survive years, not weeks or months, now seem essential. That might include a range of ‘bunker’ or reinvention scenarios for a permanently COVID-affected future as well as agile response capability.
We’re not suggesting all bets go on this approach, or that leaders and their teams should only plan this. We are saying that way back when this started we said, repeatedly, “plan for this to last a lot longer than you think it will” because that advice is crisis and issues management best practice. Using duration as a variable, in particular assuming a given challenge lasts (inconceivably) longer than you expect, helps response teams develop more durable, resilient plans. Here’s an example.... if you’d planned for this to last years, not months, you’d probably have envisaged supply lines being threatened or cut, and possibly put in place contingency plans. You’d also have had a response team with a back up crew or a rostering or leave system to avoid burn out. You’d almost certainly have modelled financial scenarios with different revenue assumptions – say loss of up to 100% for a period of time, or even forever. If any of those things look smart now, but you didn’t do them way back when, it might be time now.
B. Up AND down instead of “escalation”
It’s pretty normal to have created – even if on the run - ‘escalation’ levels of crisis or COVID19 response.
Now it’s pretty normal to expect you, your business and your clients will all be moving between escalation levels, possibly in different directions, but at the same time.
A few tweaks to an existing ‘escalation’ plan to make it bidirectional is a relatively no-regrets move.
Depending on how long COVID-19 persists, management teams will be able to dial-down (or up) the organisational response while maintaining agility.
It’s harder conceptually and logistically to deal with a ‘different directions / levels at the same time’ scenario such as, currently, Victoria and Queensland. So plans, processes, procedures and ways of leading need to be both “strong in core capability” and “flexible at the edges and in implementation”.
In plain language? Do planning, and apply it based on what’s in front of you, where you are, and ask others to do or advise you on how to do the same based on where they are.
Robust plans should be open in communication and demonstrate awareness of the uncertainty of the situation.
Divergence of experience calls for divergent feedback
Managing these extreme divergences of experience means seeking – if you don’t already have it - diverse data points and divergent feedback.
If everything you’re hearing or seeing is pointing in one direction that might not be a good thing. Two simple examples are income or revenue and work from home. Some have record revenue or (more commonly) unchanged personal incomes. Others are having to do with a little less or are calamitously affected. Work from home is similar: some people love it, never want it to end and fear a return to the office while others can’t stomach the thought of permanent WFH and have steadfastly continued to work at their desks or returned to recently.
If you’re in one category and are not actively hearing or aware of the experiences of the other, it’s hard to lead and communicate well. So some of us may have to go looking for experiences through this process which are not the same as our own. Employee surveys, open ended feedback and questions, news and social media, customer insights and client calls are all good data sources.
All can help us get outside our own “bubble”. For management teams this helps maintain good peripheral vision – improving our planning, ensuring our “antenna” pick up important weak signals which may become stronger over time, and building our empathy.
4. Appendix: How to help us help you
This briefing is collective intelligence gathered, anonymised and shared with you by my firm for the greater good. We’ve taken the view, based on client feedback, that the collective benefit to you all takes precedence over normal competitive pressures at a time like this. If we’ve not yet spoken, please share your experience here.