Unless you are hiding under a rock, or living in a cave or on a desolate mountain top with no internet access, you cannot escape the current fear and calamity of the Wuhan Corona Virus (#CoVid19) outbreak impacting China first, and now the rest of world. Truly CoVid19 is a historical "Black Swan" event that is both a world health and economic problem of great magnitude. Today much of in-country China is quarantined, travel restricted, commerce limited, and flow of trade retarded. This will have great economic impact inside China and the delays in shipping and trade route flows will eventually ripple throughout the world supply chain.
How did we get here?
On December 30, 1999 the Chinese government issued a health advisory on an unknown pneumonia. From public reports (released since that date) the first case of the Coronavirus likely occurred in late November 2019 (and originated not at the popular market in Wuhan). Several cases were identified in mid December 2019 noting a novel respiratory illness of unknown origin and attributes. From these early cases it appears the Coronavirus disease started to spread exponentially at year-end, with still no public awareness of this issue. This would all change in January 2020.
On Jan 3, 2020 in Wuhan, China 44 people were admitted to the hospital with an unknown severe respiratory illness. Since that date, the virus has spread exponentially.
By Jan 25, there were 2,019 cases worldwide, and 56 deaths.
By Jan 31, there were 11,374 cases worldwide, and 292 deaths.
By Feb 7, there were 34,842 cases worldwide, and 723 deaths.
By Feb 14, there were 67,021 cases worldwide, and 1,525 deaths.
By Feb 27, there were 82,549 cases reported worldwide, and 2,810 deaths.
The image below shows the current state of CoVid19 detection as of 2/27/20, and it is widely believed that due to the difficulty of early detection (before severe respiratory signs develop), and the limited testing for the virus, that many more cases are likely in China and rest of world.
Don't be fooled by what appears to be a drop in reported new cases in China. The decrease in reported incidents is highly likely to be the result of government officials worldwide non-reporting of incidents, non-testing of pneumonia like cases with no Wuhan travel history, and deaths reported for respiratory illnesses not tested for CoVid19. In the US alone, only limited testing for CoVid19 has been conducted, with few testing kits distributed, so the likely contagion is much greater than reported, and now we are told by the US CDC that a Covid19 outbreak is expected to become a worldwide pandemic.[a]
This week in the USA, the public posture changed from if, to when the CoVid19 contagion arrives. So individually, as families, as communities, corporations, and other aggregations of populations we need to prepare for the disease, detection, disruption, and recovery of both health and the economy. It is likely that this CoVid19 will be with us for a few years, and may come and go with weather, seasons, and population movement.
So it appears there are several things to do now, if you have not done so already.
On an individual basis,
- Follow the advice that has been repeatedly given by the authorities.
- Wash your hands frequently.
- If you must cough or sneeze, do so into your shirt and cover your mouth; and clean your hands afterwards.
- If you are sick, stay home and practice social distancing from others.
- If you are severely sick with a respiratory impacting illness, call your doctor.
- In terms of avoiding sickness, use common sense to avoid public areas where you may come in contact to those who are sick.
- Prepare your home with household items that if you should need to be quarantined or stay in place that you could do so for a period of time without leaving. And add cleaning supplies, hand sanitizer, and other items to your shopping cart. Purchase foods that store well that you enjoy eating, to minimize your need to leave your home in a crisis.
- Talk to your banker and wealth advisor about preparations for short-term potential income disruptions, and consider ways of paying your bills during a downturn, if you are not already covered.
- Lastly, if you take special medicines, get your prescriptions refilled again as you may experience some delays in availability of some pharmacy items, as 40% of the current components in our drug supply originate in Wuhan, China, and not much is moving today.
- These are some of my top of mind suggestions, and you can follow the advice of many others on this topic.
On a company-wide basis, and as a CEO coach....
1) Prepare your company now to operate with up to 40% of your employees not being able to show up to work at the factory or workplace; reasons for not coming to work might include individual sickness, mandatory confinement, or travel restrictions in or out of impacted communities.
2) Prepare your company today to operate virtually with potentially limited travel availability between locations requiring interstate commerce. Consider virtual enabling software like Zoom video conferencing, and other online tools. Consider your online payments methods, ready your collections department to accept payments delivered electronically if you are still accepting mail provided check payments.
3) Prepare your company to allow and encourage stay-at-home, or stay-in-place operations. Research shows that employees that are sick can frequently work from home, lessening the economic cost of complete absence from economic contribution, particularly when illness symptoms are mild. You will want to create a policy and procedure to get the most of your employees at this time.
4) Examine your supplies and inventories of key items for production and operations, and consider increasing your cache of key items that may be in short supply later, or prone to hyper inflation with supply shortages.
5) Reexamine the business health of your own customers; consider who of your customers may be most impacted by the CoVid19 situation, and consider what your proactive plan and response will be to support them, and mitigate your operating risks at this time.
6) Review and ensure cash and capital lines to ensure that you have funds to operate for an extended time of 3 weeks to several months at restrained operations follow. Credit is near all-time lows and this is a good time to secure dry powder to sustain operations for a few months of downturn, that may be cheaper than restarting and rehiring talent later on.
7) Revisit your employee health policies, and encourage employees who are feeling sick or unhealthy to stay at home. Increase your own health measures within your space; if you are hoteling space for workers, have the space wiped down clean several times per day, and at a minimum between sessions. Distribute hand sanitizer throughout the organization. And consider whether it might be wise to limit hand shakes, preferring to fist pump, or better, to tap elbows together and not spread germs.
8) Revisit your own emergency operation contingency plans for management that may also become sick or unavailable during an outbreak. The best plans are role played, so test your plan, and cross train your team to do each others work, to keep operations afloat during the temporary downturn. Revisit your essential travel plans and seek to mitigate risk to the health of your employees.
9) Communicate, communicate, communicate. Keep the lines open. Practice radical candor. Do not lie. Create and build trust. And remember, what the ear does not hear, the mind frequently morphs into something worse, so be mindful to tell and share what is known, what your plans are, and how you are proactively moving forward to do. Further, "be kind", and seek to diminish hostilities that may arise between different factions and populations groups (Asians, Chinese, etc) wherein some may be unfairly targeted with societal hostilities and xenophobic ill will at this time.
10) Remember, this is the best of times, and the worst of times. It may look bad but it will blow over eventually. In the meantime, never let a crisis go to waste. Do what you can do today with the cover of crises that you might not have been able to do at other times of plenty. And I'm not just talking about considering belt-tightening or headcount reductions. I am also talking about parking current costly initiatives experiencing headwinds in this environment, and switching into new markets that are in driven with strong tailwinds in this market. From this era, there will be new leaders, new businesses, and new services that will be created in this crisis. Lean into these and create hope, strategy, and sales to drive your company forward.
In the short term, the Covid19 virus has the potential of being a major negative economic global event that might at first look like the economic shock of the 2008 great recession that took several years to recover, and I believe that is why people are panicking today. Do not fall for the hype or hysteria that the world is ending; far from it. No doubt this will be an economic storm, however in the coming weeks, months, seasons, and years we will see that the likely lethality of the virus is found to be much less than at first assumed, and that a virus vaccine will be found, and the sun will come out tomorrow (though it might be next year's tomorrow). And in hindsight, we will all be blessed to have lived through these times and learned something valuable about our own mortality, valuing our human relationships with one another, and for businesses, the risk of just-in-time supply, the value of agility and diversity in our supply chain, the value of remote working and video conferencing in new ways, and many more lessons.
It will be difficult for some to operate businesses in the near future, especially if your services are dependent on supplies that must be transported, or on employees who must congregate in gatherings like a factory, office, or convention center. However, for several important reasons that I share below this CoVid19 economic shock is likely to be more like the 1987 Black Monday, where the week prior the stock market dropped for several days, then on the following Monday the DJIA fell 22% in one day, and the market crashed, and within two years, things were back to normal and the market recovered.
Supporting my conjecture is the belief that the CoVid19 virus while more contagious, is less lethal. As the disease is difficult to detect, and half of those with the disease do not recognize or show symptoms of great enough degree to recognize the illness, there are likely many more people with the virus than are confirmed, and this means the actual mortality rate is likely less than 1%. This means, many will get sick, most cases will be minor, and most all people will recover.
Further, the first Country in this contagion may be the first country out of this calamity so don't rule out China. China will continue to be an important international actor in trade and their manufacturing and supply routes will be of great help to other countries as we move down the road in this health crisis.
It is imperative that you read reliable sources and do not pile into the falsehoods, fear, and unintelligent conversation online.
In my research on the CoVid19 issues, I seek to identify sources that are reputable, frequently cited, first-hand sources, studies, and analysis that are peer reviewed. I also look to mentions in the news that are not widely known, but are closer to the epicenter of key issues. For the reader, with interest in following these same sources, I follow the following:
COVID19. "Everything we do before a pandemic will seem alarmist. Everything we do after will seem inadequate" -M. Leavitt, DHHS News and updates #COVID19 #coronavirus
@AEI, Partner, @NEA, and Contributor @CNBC
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