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Covid-19 / May-June edition: What are the right management tactics? What are other companies doing?

Frédéric Lasnier
Frédéric Lasnier
Chief Executive Officer

Logical and chronologically, today’s post is the continuation of my previous proposal for an Agile economic analysis of the period we’re living in, and the outline of a response for companies which are digital, digitalized, digitalizing, or intending to digitalize.

So what’s happened since my last post? Was I right? Where are we now? How fast are things going? Can we start thinking about exit dates from the crisis?

Let me start by saying that in this article, I won’t try to answer that last question about dates, even if I have some pretty specific ideas of how things are developing. The subject is and will remain highly speculative. Anyway, making predictions is not the right way to prepare. What we have to do is make some assumptions, then link those assumptions to tactics. And it is in that spirit that I’m writing this post.
 

 

So, where are we in the crisis?

First – almost good news! In my previous forecast, I distinguished five phases for this crisis. We are now passed the “Deer in the headlights” phase (phase 1) with its steep descent into economic hell. Depending on the country you look at, we took a shock of 20 to 35% of GDP.

We are also passed phase 2 – the “Flicker of Hope” stage – which held during the time the pandemic stabilized and started to retreat – roughly, the last few days before restrictions were lifted. This viral plateau formed the basis for the rebound, and as the curve continued to fall, the boldest among us began to act from the start of this phase.

No one saw it – certainly not the media, not even the financial reports – but the fall slowed down in April compared to the last two weeks of March. In the month of April, in my home country of France, we went from minus 32% to minus 27% . That may not seem like much, and in and of itself, it’s a terrible result. But if you read it dynamically, it represents an economic rebound of 18.5% in the space of a few weeks! And that is the basis for the much-touted rebound!
 

52% increase in American e-commerce!

Read that number again, but be careful if you’re subject to vertigo, because that 52% increase occurred at the same time that US GDP was falling by about 20%! Other players were simply shutout. Remind yourself that this number does not include numbers from the software giants or web platforms.

A few more numbers: GAFAM stocks (Google – Amazon – Facebook – Apple -Microsoft) rose by 17%, and the Nasdaq is up more than 2% since the start of the year (while the Dow Jones plunged by 17%).

For GAFAM, COVID-19_1 is not a crisis, it is an acceleration of their hegemonic destiny, and they understood that from the first moments of the crisis, at the same time the best e-businesses understood the same thing.

They have invested at any cost and in every form: free offers, discounts, campaigns, whatever you want. Social messages or explicit marketing – whatever! I think it’s been a long time since that much was invested in the communication of digital companies!

And when we recall that these companies are irreversible usage creators, we already know what will happen to those who remain paralyzed without moving.
 

Increase the digital budget of your digital products or services: marketing and development!

The first group to return in significant numbers to the outsourcing offers on the Pentalog platform is the Americans. That trend is also confirmed by Google queries – always useful in trend analysis. The Americans returned after less than a week of lockdown. Next, we saw the Europeans – and we’re getting twice as many leads from them as we did before the crisis started.

On the other hand, we’re surprised to see leads drop on SkillValue Freelance, because we see that as a real asset for overcoming the crisis.

Finally, whether you’re an e-commerce company or a classic retailer, a SaaS company or a tourism company, this is the time to go on the attack.

Some examples of actions:

  • Tourism needs to focus on relocating trade flows. Air travel is dead for the time being, but people are still going to go on vacation. Companies that were quick on the uptake noticed that vacation budgets were still not allocated when the roads and the campsites reopened. One result is a mini-boom in sales and rentals for camping cars and RVs: in what Bloomberg is calling “Covid Campers”. Dealers and manufacturers only needed to adapt their landing pages and buy some AdWords. Hats off to the fastest! American tour operators have invented the lovely word: staycation: you’re on vacation but you don’t leave your country! This means that all offerings need to be redone! We are currently working on a lead from a tourism company that wants to keep the Chinese in China! They have two months to succeed!
  • Increase your digital budgets, and make them more flexible. Imitate the American giants: capture growth while limiting risk through outsourcing and consulting. The risk of a second virus wave, especially in the fall or next winter, is high enough that you need to head it off by being able to rapidly reduce the budgets for your tech and marketing teams. For all that, if you’re not grabbing growth with both hands for the next few months, it could be fatal to your enterprise. Freelancing is another solution to get the same result.
  • Diversify your teams culturally. This is pretty much the Number 1 success factor worldwide. Remote work is a fantastic opportunity to successfully recruit talent from all over the world.

As a general rule, the current phase is going to last for several more months, probably at least until the end of October, when the probability of a viral return will increase, as it does with most coronaviruses, peaking in January-February. The fact that the disease is in Brazil and Singapore at this very moment does not prove that fresh air and higher humidity have no role to play in the spread. Australia did not see its contamination rate increase until autumn in the southern hemisphere, even though it is a highly mobile population with a lot of tourists.

This certainly does not mean that nothing will happen before then in the northern hemisphere. But if you know what to do for October, be prepared for July too! We don’t know if it will fall or when. But structure your tactics around these assumptions.

Meanwhile, my recommendation? Accelerate the delivery of technical products and services – intensely. Accelerate your digital processes – intensely.

During the next viral round, if one does occur, the collapse of non-digitals and those who failed to rebound in the current growth stream will not start from the levels they had in March 2020, but lower. At that time, companies must be able to count on a maximum of digital strategies, products, and services. If they don’t, someone else will take their place.

One more time for the numbers:

  • American e-commerce up 52%. In an economy that is down 20%.
  • Nasdaq + 2.2%, GAFAM + 17%, Dow Jones -17%, CAC40 -33%. The weaker the technological concentration in an index, the less resistant it is in the crisis.

Don’t give up – keep Agile. Stay loose, cause we could get hit again.

 

 
Further reading:

IT and Digital sector…. Who will survive? And how?

Pentalog: 20% growth in the first quarter… but what’s next?

Economic risk factors are already multiplying much too quickly in 2020


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