Covid-19 - more dangerous to business than people?

Covid-19 - more dangerous to business than people?

Dom HawesGroup CEO, Selbey Anderson
Covid-19 - more dangerous to business than people?

Like the managers of most businesses that employ people in several offices (and countries) I’ve been thinking a lot about Coronavirus. This week, I started putting plans in place just in case it turns into the pandemic that everyone’s afraid of.

Like the managers of most businesses that employ people in several offices (and countries) I’ve been thinking a lot about Coronavirus. This week, I started putting plans in place just in case it turns into the pandemic that everyone’s afraid of.

My go-to read on the topic wasn’t a government website (informative though it is) but McKinsey and Co which has produced a very good report that lays out what’s actually occurring. It’s clear that whether the virus is man-made or not is being hotly debated by conspiracy theorists. I suspect the virus isn’t man-made. But the global hysteria surrounding it is. And that could prove to be as dangerous as the virus itself.

We've had it easy so far

It’s clear that in many countries, Coronavirus is far more prevalent in the media than it is in the population. Let’s get a sense of scale. South Korea has a ‘serious outbreak’. Out of a population of 51.6m, 6,284 people have been infected between the first case being reported on January 20th and March 7th. Of those, 42 have died.

The first two cases of Coronavirus were reported in the UK on January 31st. If the UK follows the same infection pattern as South Korea, we can expect just over 8,000 cases by March 17th with 54 deaths. (Ed 24 March 2020: on March 17th there had been 55 deaths attributed to Coronavirus, but unlike South Korea which had peaked its growth rate by March 7th, the UK's death rate continues to grow. By 23rd March there were 281 cumulative deaths in the UK. There were 113 in South Korea.)

Today is March 11th and there are 456 reported cases in the UK. There are around 49,000 conurbations in the UK which means that, today, for every town or village that has one case today, there are 107 that are virus free. Of course it doesn't work like that, but you see my point?

Put another way… if a random UK market town like Bedford was South Korea, it would have 21 cases and no deaths. Bedford’s most famous son, John Bunyan, is not turning in his grave. I’m not saying that we shouldn’t take precautions. But precautions should be proportionate.

But this is a very dangerous virus. Right?

It’s clear that unchecked, this is a highly infectious virus. It’s already on every news bulletin, it has spread across many pages of print media and now it has mutated and started infecting businesses.

The first businesses to catch a cold have been the events and travel and tourism businesses, but logistics, consumer goods and services aren’t far behind. In the words of one travel industry senior executive: “This is like watching a motorway pile up in slow motion”.

Just like with motorway pile ups, it’s not the crash itself that’s the major risk... it’s the rubberneckers. And that’s exactly what the media is turning all of us into. We’re business rubberneckers. The reality right now for pretty much everybody working in the United Kingdom is that the risk is very low. But you wouldn't believe that reading by reading the newspapers. So, we're all starting to change our behaviour based on what we're reading rather than what we're experiencing.

McKinsey presents three scenarios; quick recovery, global slowdown (base case) and global pandemic. The base case sees a small decline in Q1 – which is already nearly over, self-imposed lockdown causing sluggish trading in Q2 with at best modest chances of recovery in Q3.

It's not like this is coming off the back of a great and successful year. For the large number of businesses we've spoken to over the last six months, 2019 was fraught with delayed projects, uncertainty and disappointment. Nothing stalls businesses more than a general election. So, as the new year came around we were all hoping for a Boris and a Brexit bounce. Once again, we've been disappointed. But once again, the uncertainty is completely fabricated.

Unless we're careful we risk creating a recession that will be far more damaging to our country that Coronavirus is predicted to be. Businesses are catching a cold right now and there doesn't seem to be a cure.

So, where does that leave us?

Well, the world will keep turning. People will keep eating. There is a need for everything to keep going. So, before cancelling something because you're worried about what might be, ask what is. If you don't need to cancel, don't. If you genuinely perceive the risk to be too big, seek creative alternatives.

What has struck me over the past few days is how vulnerable the globalisation trend has made us all. I’ve rather glibly made a case that the coming slowdown has been fear mongered and rubbernecked into existence. There is another reality. China is the factory of the world and it is closed for business. At the end of every value chain, there’s a product that needs to be sold and right now, those products aren’t being made. In our race to make things cheaper and cheaper we’ve lost our manufacturing base. Perhaps it’s time to reconsider?

With any luck, coronavirus isn’t coming to a town near you any day soon. If it does… statistically, you’ve been unlucky. But, what I can tell you for sure is this: your business is already infected. You just don’t know it.

Comments added 24 MARCH 2020

I figured I'd leave the blog above unedited. Not because I'm keen to advertise my ignorance, but because it serves to illustrate how fast moving and devastating this pandemic is. The focus of the article was businesses and this is a business forum so there's nothing wrong with that in itself. But, as the death toll rises it's not businesses we should be thinking about, but the people that work in them and those that are supported by them. These are the people that are losing loved ones and these are the people that may yet suffer chronic illness or even succumb themselves. When we look back on these times, we'll note the economic hardship it caused, but it's the human loss we'll mourn.

The blog was written just two weeks ago, but a great deal has changed. The virus has indeed already killed far more businesses than even I thought possible and swathes of the population are sitting at home restless. Laid off, furloughed, forced from work. Last night, the country went into lockdown. Gatherings of more than two people are banned. All but essential shops must close adding to the bars, pubs, clubs and freelancers that have been made idle by law.

Even with this perspective, I got something seriously wrong in this blog.

I wrote: "I’m not saying that we shouldn’t take precautions. But precautions should be proportionate."

At the time, this was very much in line with the UK Government's thinking and driven by a love of freedom. But, the last two weeks have proved two things. Firstly, that freedom only comes with responsibility and large numbers of the UK population has not acted responsibly so our liberty has been taken away. Secondly, that it's not possible to know what's proportionate and what's not if the data set isn't large enough to model oneself because facts have to be weeded out from false-facts... and that's nigh-on impossible. Simply, these days it's hard to know who to trust.

Knowing what we all now know, a much earlier lock down would have made sense. But isn't hindsight a wonderful thing? The WHO advised the UK to lock down a lot earlier and it's probably a mistake that we didn't. But even a week ago, an order to stay at home, idle, may not have been received peacefully.

Dom Hawes
Dom Hawes
Group CEO, Selbey Anderson

Dom leads group development at Selbey Anderson and has been in the marketing business for over 25 years. He started his professional career after serving six years in the British Army and spent his early career in agency before moving in-house and into general management.

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