Who knew? It’s not the technology economy or the service economy that drives our nation’s Gross Domestic Product. It’s the connection economy, a sector that the COVID-19 virus has sadly brought into a swift and costly downfall, and likely business-altering event.
The connection economy consists of activities where people convene proactively for fun, commerce, or learning activities. Sports. Education. Restaurants and bars. Movies. Sightseeing activities. Office, plant, and location work. In-store retail. Canceling an event has significant multiplier effects on industries that are part of the process. Consider the cancelation of the Final Four NCAA tournament. Plane fares, gasoline, restaurants, hotels, Lyft/Uber drivers, t-shirt companies, arena fees, and contract work all disappear. The cancelation of South by Southwest will cost Austin $355 million, and that does not include all the ad agencies and performance artists whose work disappeared.
And these examples are merely the loss of canceling “fun” events. The real impact of all the closures and cancellations is mind-boggling. Restaurants are like the first wave on the beaches of Normandy. The travel industry has been dealt a severe blow (and perhaps a death knell for some providers) as business and pleasure travel stop. Non-essential retail, as well. Productivity will plummet as work becomes remote, and parents scramble to attend to children no longer in school.
How, as a business leader, should you adjust your strategies?
To preserve long term success, your people must come first. In Seattle, Microsoft went from 40,000 in-office workers to less than 5,000 by enabling many people to work from home, thanks to its leaders’ concern about associates. Facebook just promised every employee a top rating in their work reviews, insuring bonuses for all. By way of contrast, a for-profit hospice care organization refuses to grant additional paid time off. The CEO makes over $400,000 a year. The resentment will affect this organization far after the crisis is over. Remember, how you treat your employees affects brand reputation and talent retention.
Second, demonstrate customer care. Safeway limits its grocery stores to seniors from 7am-9am, daily. My health club won’t even answer questions about a short-term suspension of my monthly membership. They should have proactively offered to split the fee, and not just offer us free at-home workout videos. My loyalty is lower.
Third, pivot into opportunity areas where you can. L’Etoile, a gourmet restaurant in Madison, Wisconsin (an early catalyst to the farm-to-table movement), is packaging affordable family meals for curbside pick-up. The pivot keeps the restaurant’s workers employed and helps the community avoid going to grocery stores.
Can medical equipment manufacturers start to make ventilators with leading ventilator manufacturers licensing their FDA-approved designs? Can commercial sewing companies start making face masks? Can restaurant supply companies pivot to providing healthcare institutions with food and supplies?
How can credit unions and local bankers keep money flowing in the local community so that homeowners and renters are not evicted, and employers can meet payroll? With the Federal Reserve dropping their borrowing rate to 0%, loans could be offered at very low-to-zero –percent interest rates.
Fourth, help your community. I admire Amazon for offering local service industries reliant on Amazon workers with grants to help their businesses. If you need to cancel an event, donate the food you would have purchased to a homeless shelter. Free up employees’ time to tutor kids online using collaboration tools. Don’t ask for refunds for your canceled cultural event tickets. Move your December donations up and, if you are an ad agency with canceled events, pivot to help non-profits improve their marketing efforts.
Finally, consider how this pandemic and fear of future ones will reshape the economy and its implications for your business. Take careful stock of how your business depends on people being together and what might happen after this period of social-distancing ends. Study the impact of at-home work on your teams’ effectiveness. Should at-home work become more prominent? How can you make it more productive? Are digital channels now more critical than in-store retail? Should your supply chains have greater redundancy? This virus will transform conventions, cultural events, travel, education, healthcare, leisure, and many other industries. Will it redefine yours?
The Chinese symbol for crisis combines those for danger and for opportunity. Consider both in the months ahead. My prayers are with you,