As the Coronavirus outbreak brings the world's economy to a halt, many businesses in the region are beginning to feel the effects. Fadi Ghandour, executive chairman of Wamda and founder of Aramex outlines the lessons to bear in mind during the uncertain and difficult times.
For people around the world trying to keep up with the latest news on the Covid-19 pandemic, the word “triage” is one that has become familiar and often cited by politicians, doctors and analysts. It is a medical term that first emerged in the battlefields of the Napoleonic Wars, where surgeon Dominique-Jean Larrey developed a system of treating the wounded according to the gravity and urgency of their injuries.
Military rank or status played no part, attention was paid firstly to those who were likely to survive if they received medical care. Today, the concept of triage has advanced from the battlefields and into hospitals and (virtual) company board rooms around the world.
In a recent talk to some entrepreneurs and founders of startups, I told them they had better get used to the word triage, because every single company, government and non-government organisation as well as every venture fund and investor, is engaging in triage while they manage this unprecedented crisis.
Everyone is trying to decide where to focus their resources and which areas require more or less of these resources to keep them relevant, or in many cases, keep them alive as organisations.
This is no different for startups and small businesses and they must do the same today and decide where to focus their resources. This has become a battle of life and death and the oxygen supply is diminishing daily while governments attempt to curb the spread of the virus. You need to do all you can to keep your company alive until this battle ends.
This pandemic is unlike any other crisis I have experienced before. In my 38-year career and during my time at Aramex, I witnessed the civil war in Lebanon, the Intifada in Palestine, the Iran-Iraq War, the First and Second Gulf Wars, the financial meltdown of 2008 and the economic disruptions of the “Arab Spring”. Each of these had a severe impact on the economy and our business, but we always found a way to work around the disruptions and continue our operations. If there was war in one area, there was peace in another, if one region was going through a slump, another region was more resilient, there was always a way to allow one resource to cover for another.
But the Covid-19 pandemic has brought the entire world to a standstill, we have limited resources to find that alternative solution to keep operations going. So, what should you do to stay alive?
- Stretch your dollar to the maximum and learn how to manage frugally. Maintain the frugal mentality with you at all times, because crisis will be part of your life as a CEO and a leader. This means cash is king, you will know how valuable your cash is only in times of crisis. You need to think of what matters most to you to keep your company relevant and capable to survive this crisis. Very difficult decisions have to be made – which employees to keep and which to let go, how much can you cut salaries, which activities you need to stop investing in and which to suspend, which suppliers can you delay payment to, is your product relevant now or do you need to pivot fast to survive this tsunami of extremely rapid changes? You need to work with your senior team and ask many questions about every single activity you are doing and question every single expense and exercise triage accordingly.
- Lots of investors will not answer your calls in times of crisis. They are busy firefighting, worrying about other, more important commitments. They are in also in triage mode to support the strong and abandon weak or more difficult startups, they want to preserve their cash. Even when they have signed your terms sheets, even when they have signed all the agreements you want, they will be in cash preservation mode. They need to weather the storm and you are most probably lower down their list of priority if you are a cash guzzler. New investors will also lack interest in investing until further notice. So, if you have cash, conserve it. If you are burning, you are in trouble unless you can manage the burn very quickly.
- Take care of your people. Don’t let them be the first victims of a crisis by letting them go straight away. Find a way to accommodate them if you can, ask them to sacrifice with you, maybe accept lower pay in crisis, and find a way to reward them back when the crisis is over. They will be your most productive and most loyal people. Your brand will also shine as a company that takes care of its people. A corporate culture of empathy and care will attract talent and admiration in the community. When Aramex needed employee support in a time of a cash crunch, I went to every Aramex office around the region, and asked the top leadership that if they could accept salary freezes for a certain period, in return for stock options and a future return to normal pay after the crisis. I had complete support from more than 150 senior leaders with the highest salaries and they all accepted my proposal. They received the options, which later compensated them for their sacrifice, and they became more loyal to the company. The company and its people gave back to each other in times of need to develop a complete and true symbiotic relationship.
This will be the most painful time of your life as a founder and it will be the time you will talk about most. It will stay in your memory and in those of everyone around you for life. As a leader, and a manager, how you act and how you conduct yourself will determine how your company will look like post-crisis, and how you are viewed as a leader and a responsible person. Work transparently, share the information with all your employees, be the first to sacrifice and sacrifice most, be on the frontlines and lead by example, now is the time to show who you are and what defines you!