Is your business 'corona proof'​ ?

The title for this article is deliberately provocative as I wanted to address an extremely critical area for any business- 'how future ready is your organisation and what steps are you, as a leader, taking to anticipate totally unanticipated crises, those 'black swan events'?

Allow me to explain: in his eponymous book 'The Black Swan', author Nassim Nicholas Taleb develops the Black Swan theory. Simply put, 'Black Swan' events are those events which are totally unexpected, difficult to predict, rare, of very large magnitude and with immense consequences. Given the above circumstances, such extremely rare events are also referred to as 'outliers'-that is such occurrences are not factored in normal business projections (think 'exemptions are always exempted'), or, to use legalese, they are buried in the 'Force Majeure' conditions which lawyers and insurance companies love so much.

Also to be noted: such events can occur in any realm- society, technology, disease, finance..... and, since these are rare, it is very difficult to compute the probability of such an event's occurrence.

Add to this cauldron, our psychological biases which blinds us, both at the individual and collective level, to these events' massive role throughout history. Fact is, such events, collectively play vastly larger roles than regular occurrences and leave long lasting consequences. A few examples of 'Black Swan' events will illustrate this better: the Fukushima nuclear plant in Japan seemed impregnable with its high sea wall, backup generators and extensive emergency planning but it wasn’t. On March 11, 2011 a massive tsunami struck, resulting in the disastrous meltdown of the reactors or, take the case of the World Trade Centre bombing in NY-could anyone possibly imagine that multiple commercial airplanes could be hijacked and effectively turned into missiles- but in 2001 they were, with catastrophic effect or, who would have imagined that an almost bungled assassination in Sarajevo of the Austro-Hungarian heir, Franz Ferdinand and his wife, would trigger one of the biggest blood-baths in history costing millions of lives-what we today call the World War I, or, going back far, far in time, the comet, asteroid or meteor impact event which is likely to have caused the extinction of the dinosaurs some sixty-five million years ago.

Having made the point of the huge impact and consequences of 'Black Swan' events despite their rarity and unpredictability let us know turn our attention to the Black Swan event confronting us even as it is unfolding, the outbreak of the Corona Virus Disease (COVID- 19). Who would have imagined just a month ago that a country of 1.3 billion people spread over a huge land mass would be effectively under a 'lock down'?! We are indeed living in interesting times...

Now let us turn back to the question I posed in the beginning of this article-can we be prepared for such events. The short answer is, we can never be prepared- by it's very nature a 'black swan' event is an extremely rare occurrence which by it's very rarity is unpredictable....so instead, let me turn this question around and pose some deliberately provocative questions to organisations with a view to spurn debate, introspection, rethinking and, reprioritisation, where required:

1. Is your business overly dependant on a single country for supply of raw material, components, parts or sub-assemblies?
2. Is your business overly dependent on a single supplier?
3. If the answer to either of the above two is a 'yes', then are there alternative sources of supply?
4. If the answer to the above is a 'no', then are you in the right business?
5. Is your business overly dependant on a single market or market segment?
6. If yes, can you introduce new products/services to reduce dependence on a single market/geography/segment?
7. How effectively is your business leveraging technology to cope with such emergencies- can the operations be run with 50% or more, of the employees working from home? Are they trained and equipped for contingencies?
8. How agile is your organisation to quickly pivot to turn a crisis into an opportunity. With the recent outbreak negatively impacting sales, automakers in India and USA are planning to use excess capacity to manufacture Ventilators, a critical piece of equipment in the fight against the carona virus. Can your organisation quickly adapt to changed circumstances-indeed, can it thrive? Does it have a culture which fosters team work, encourages failure, promotes transparency with minimum bureaucracy, fosters merit...as only then can you spot an opportunity in a crisis. In short, if you have been handed a lemon, can you make it into lemonade?

These are just few 'top of mind' hard questions which organisations must ask themselves and the answers to which have to come from within.