Speed & Discipline

Speed and Discipline in Business

Speed and Discipline. These are the keywords for resilient companies to survive in an After COVID-19(AC) economy.

After the 2008 great recession, resilient companies increased revenues by 30%, reduced operating cost by three times and moved 12 to 24 months earlier than non-resilient companies. Furthermore, resilient companies divested poor performing divisions and product lines in the downturn. In the recovery these resilient companies developed or acquired more market share all the while deleveraging more quickly.

It’s the Economy Stupid

The AC economy should open up on a risk based data driven basis. I take that to mean we will try to restore as much of the pre-COVID-19 economic activity with the least amount of risk to the population.

High health-risk businesses such as bars, gyms, restaurants, and personal grooming salons represent a tiny fraction of the overall economy. Therefore, these may trail other businesses that represent a larger share of the economy, yet can be sustained from an isolated home office. Examples are finance, legal work and other professional services.

Our beloved national pastimes, with large gatherings of raving fans, may be last in line. While we love watching elite athletes, spectator sports represent a tiny fraction (much less than 1%) of GDP.

Also, gone is the “Lives versus Livelihood” debate. It is a “Lives versus Lives” problem to be solved. Aside from the increase in obesity, depression, suicide, and domestic violence (all of which can lead to death) we have to resume life-saving but elective medical procedures such as colonoscopies, pap smears, skin cancer screenings and the like.

Displaced workers will be called upon to fill new roles in deglobalization. The trend has started to shorten the supply chains from overseas manufacturing (the low cost at any cost approach) to building smart factories here at home.

Workers will also be needed in rebuilding our electric grid to be dominated by “Micro Grids” that will be evidenced by solar panels on every roof charging the battery in every basement. These micro grids will still be interconnected but the meter will be designed to run both ways so that a home with excess power can be sold back to a neighbor at market rates. All the while increasing the sustainability of the grid overall.

How Likely is this to Really Happen?

That question largely depends on whether the US sees this as a “Pearl Harbor” moment. Will we come together as a nation to forever change the world? Or will we slip back into our indulgences of choosing a weird and often useless college degree while eschewing a STEM (Science Technology Engineering Math)-based education? Our graduate technology schools have majority populations of foreign students who are likely to return to their home countries taking our technology with them.

When will we recognize that IT DOES MATTER if we buy products and services from companies that are neither ethical nor sustainable, so long as they provide the lowest cost?

Opportunities Abound

The AC world will be much different…

New trends will be established (fewer large business conferences, more home cooking, the rise of deglobalization, less public transportation and ridesharing, new standards for hygiene and sanitation).

Emerging trends will be strengthened (cloud computing, cyber security, online e-commerce & education, demise of brick and mortar stores, telemedicine, work from home, continued rise of “Big Tech”).

Are you and your company well-positioned to take advantage of the AC world?

Contact me for a free evaluation. You can reach me at dp@purcellcpa.com or (800) 344-1272 Ext. 2.  

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