The Resilience Mindset

This is a guest post by Jared Smith, entrepreneur and advisor.

Most of us will have the opportunity to look back on this unprecedented time – I hope we can be proud of how we showed up. This is truly remarkable – and the scope of consequences (personally, professionally and economically) are unpredictable and… unimaginable. Needless to say, if you aren’t feeling anxious (like I am), then I’m concerned about you… and envious.

Setting aside a societal response characterized by uncertainty, fear and emotions, it’s been fascinating (not to mention scary and overwhelming) to observe and attempt to understand this from a variety of perspectives. My purpose here is to share some reflections inspired by conversations with some smart people* in an effort to help me take a pragmatic approach to my response: one firmly rooted in the real world, and one that takes into account facts, historical lessons and science… with a massive dose of humanity and a touch of emotion. Lets guide our decisions using practical considerations vs. what the theorists, denialists and fatalists are perpetuating.

COVID-19…

I am a volunteer isolator. At the time of writing I had been working in my home office for 50 days… well not really. In reality, it was only 3. But my extroverted self seemed to quantify that as 50. Combine that with my addiction to Italian coffee (my homebrew tastes like horse-piss compared to the delicious concoction that my beloved friends at my local coffee shop – Al Centro – have prepared for me daily for the past 10 years)… and well.. this is tough. Light-hearted comments aside, by most estimates, we’re in this for the long haul, and this will surely be a test of our resilience.

According to leading scientists*, statisticians, and epidemiological experts, there are three ways to stop the spread of COVID-19 (assuming it continues to behave the way it has over the past weeks – spreading to over 100 countries). One involves extraordinary measures to manage human-to-human contact, restrict free movement, minimize assembly and perform aggressive testing to interrupt the transmission. Well, we’re attempting to do that, (at the time of this writing our Canadian Gov’t has closed all public venues including schools, restricted all gatherings of over 50, and has just declared a ban on all international travel). But experts claim that this will simply “flatten the curve” to soften the potential onslaught of demand for healthcare services (hotels in UK are being converted to hospitals*).

The second option is a vaccine* that has yet to be developed but even with rapid production and deployment, assuming the vaccine is finalized this week, we’re looking at months or longer before mass-production and distribution on a global scale is possible.

The third is, well… flatten the curve and let it run its course, and hope that over time humans build a natural immunity to the virus. A proposition that would have, by some estimates, at least a third of the global population affected within 12 months*.

Unprecedented financial times

Since the collapse of Bear Stearns (March 2008) and Lehman Bros. (September 2008) the global financial markets have continually re-leveraged themselves to prevent significant downward shock. According to economists including Brad Ferguson, former CEO of Edmonton Economic Development Corporation, global measures to curb the spread of COVID-19 are being compounded by a perfect financial storm: “threshold debt levels, the Saudi production announcements, the fragility of our capital markets to the price of oil, and a run on the stock markets.”

Government interventions due to the pandemic have compounded these negative pressures on the global economy (people can’t go to work, massive layoffs are imminent, consumer spending is halted and entire industries are at a stand-still). As Ferguson indicated, “The LIBOR inter-bank lending rate is now at 0% and governments will need to start printing money as they cannot issue more debt. To issue debt, you need a buyer of debt, of which there are precious few. This either de-values currencies or there needs to be a planned global response between central banks, resulting in a plan to inflate our way out of this mess. To coordinate a planned response from the G7 will take 3-6 months and monetary policy typically takes over a year to work its way into the system.” However, we do have precedents for steep declines, circa 1987, 2008 etc. and according to some smart folks at RBC Capital, the markets are typically responsive to the insatiable US consumer. There will likely be a bounce back (it’s human nature to assume that it might never bounce, and that “this is the one that will be different”) but markets are resilient. Regardless, we should likely assume that a) recovery will be U shaped (as opposed to V shaped), b) we’re in for a wild ride and c) it’s unlikely that the markets will stop being erratic in the near term.

What does this mean for us? And what can we do about it?

No doubt, this is overwhelming. One of the things that feels hardest, I think, is how fast and how drastic things have changed. However, leadership expert Ian Chisholm’s advice is to pause in the aftermath of a shock. “We should let the after-shock shake-out and allow ourselves some time to reflect before we start planning and acting…”

On a personal level, I believe we need to stay pragmatic, calm, thoughtful, connected… and we need to continue to prepare. There is a chance that things will return to normal and we will be relatively unscathed. There is also a very good chance that we are all affected: financially, emotionally, physically and intellectually. We need to focus on what we can control. We need to fortify and design strategies to be resilient. We need to breathe. We need to stay connected (to our loved ones, our friends, and our colleagues).

I like the word resilience. From fortifying my personal immunity to putting my house in order to finding unique ways to bring my community together. I’m sure you’ve seen the video of the Italians singing from their balconies – the one that sent shivers of inspiration and slivers of hope around the globe. (But my neighbours shouldn’t worry, I’m not about to start singing). The Chinese recently sent testing supplies to the US with a note on the packaging: “We are waves of the same sea.” … examples of resilience and inspiration are everywhere. I’m inspired by clients and friends and family who are reaching out to help – their charities, their front-line workers, their hospitals, their favourite local businesses, their communities. There’s opportunity in that.

From a business perspective, first and foremost, great organizations will pay attention to their culture and their people (i.e. building plans to support employees and their families who might be affected by the disease, the stress of change, working from home etc.). We will look to our leaders for clarity of direction, preparedness and a mindset of resilience. Business continuity plans need to be modified to take into account the specific nature of this disease and the physical and mental repercussions of dealing with isolation, working remotely…

While some companies are posting record profits (Amazon just announced that it will be hiring 100,000 new employees in the US alone, and remote-tool-based offerings like Mentorly, Microsoft, Google, Slack, Zoom are on fire), most of our traditional businesses should a) batten down the hatches and prepare for the worst and b) get extremely creative in an effort to pivot and address potential market needs.

One way to batten the hatches: build out scenario plans (i.e. -20%, -40% and -60%+ decline in revenues – depending on business and industry – beginning this month and potentially carried out for 12 months). These plans could take into account scenarios where receivables and collections worsen (even customers who can pay may be intentionally slow). We should be working with our credit facilities to ensure they are in place and that our bankers (lenders) understand our preparedness plans. We should make cuts in order to preserve capital, but we should pay attention to how cuts affect our culture. We should plan to over-communicate, and over-collaborate, with our teams and external stakeholders. We should take advantage of everything that the government offers to us (but expect subsidies and tax-cuts to take months to be realized). And, depending on our resilience, access to capital and reserves… we might be in an excellent position to eventually acquire businesses that are less fortunate when this thing starts to turn around. As Joseph Kennedy said, “when the going gets tough, the tough get going” (or was it Billy Ocean?).

Creatively… your business, your employer (and the world) needs your ingenuity now more than ever. In the short term, how can we pivot to meet the needs of this new normal? What core competencies could be leveraged to help address global demands through the crisis? How can we use this as an opportunity to tackle projects that have been waiting on the sidelines? What technologies could we adopt to support our ability to offer value to our customers?

Examples of human ingenuity are inspiring. Hotels are becoming hospitals. Dangerous goods businesses are creating best practices for transport and containment. Demolition companies are offering solutions to deal with contamination… an entrepreneur in China recently invented a holographic elevator button.

I am confident that we will adapt, we will show up for ourselves and for each other, and we will tap into the best within us. We will remember this as a time when we stood for something bigger than ourselves. And for those of us who suffer more dire consequences, I hope we can lean on others – and let others lean on us.

Please connect with me so we can continue the conversation. (Remember, I’m an extrovert, I need all the virtual coffees I can get).

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