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McKinsey and Bain tell their clients how to prepare for coronavirus

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  • Major companies and businesses can prepare for the economic impact caused by the coronavirus outbreak. 
  • McKinsey and Bain & Company brought their problem-solving approaches to all the available data on the virus. Both firms broke down the industries most likely to be impacted. 
  • The leading consultancies shared their advice on how businesses can prepare for the coronavirus outbreak and change market approaches accordingly. 
  • Click here for more BI Prime stories. 

As the coronavirus has spread to every province and region in China and at least 88 other countries, many companies are uncertain about what this means for their business. 

Leading consultancies McKinsey and Bain & Company recently shared reports advising clients to set up company contingency plans to help combat the virus outbreak. 

At their best, management consultants are essentially business doctors that leaders rely on to help fix complex problems. And in the midst of the coronavirus outbreak, these experts shared you can make smarter business decisions to soften the financial blow. 

Here’s exactly how businesses should prepare for the coronavirus outbreak, according to McKinsey and Bain consultants.

Industries most impacted 

According to McKinsey’s breakdown, the industries likely to be impacted for the longest amount of time include hospitality, aviation, automotive, and tourism. As Chinese tourism accounted for $277 billion, or 16% of international tourism in 2019, McKinsey predicted a 40% reduction to demand in the tourism and hospitality industries until the disease is under control. 

Karen Harris, managing director at Bain, generated her insights based on a coronavirus Situational Threat Report Index (SITREP) that combined data with her firm’s problem-solving approach. She recommended that all businesses focus on mitigating the threats of disease transmission to their staff and halting unnecessary investments for now. Moreover, Bain predicted that the coronavirus would cost China more than $72 billion.

About 51,000 companies worldwide have direct suppliers in the affected regions to date, and the entire global economy has been put at risk due to the spread of the coronavirus, according to the Federal Reserve. The coronavirus, which causes a disease known as COVID-19, has killed more than 3,400 people and infected more than 100,000 worldwide. The vast majority of cases — just over 80% — are in China. 

Protect your workforce 

Your employees come first. 

Both McKinsey and Bain consultants advised clients to prioritize the safety and well-being of their workforces, and many major companies are trying to do just that. 

For example, Google and Apple restricted international travel and encouraged employees to work remotely, Business Insider previously reported. Consulting firm Accenture also cancelled “any non-essential international travel and do not plan any additional until further notice,” according to an internal memo sent to employees seen by Business Insider. That memo stated that an Accenture employee had been diagnosed with coronavirus and that more than 100 Accenture workers were quarantined in China and Italy. A company spokesperson confirmed the memo’s authenticity. 

Bain consultants also advised companies to start preparing for future talent needs, as “uncertain market conditions often make critical talent available,” according to the report. In other words, recruiters should start hiring people they’re going to need in the long term. On top of focusing on softening the economic slowdown, think about how you’re going to grow and profit after the virus blows over, the report said. Neither report commented on fears of the virus becoming a permanent part of life, like flu season, as the virus remains unpredictable and is rapidly changing.

How to grapple with a break in the supply chain — take stock

The coronavirus has disrupted many companies’ supply chains, and McKinsey made several recommendations about how companies can cope. 

First, McKinsey said to monitor your company’s supply shortage, and then to draft predictions on how this will impact your business in a year’s time. Look for other opportunities to build partnerships with vendors, and design a new approach for the future to prevent another major interruption of the partnership.

“Create a sufficient supply buffer that factors in traffic suspensions and supplier shutdowns, and monitor the end-to-end supply chain, including raw materials, inventory and delivery challenges,” Harris and consultants wrote.

Create a response team to deal with rapid change 

Adaptability is the key to overcoming change. 

Bain advised clients to be ready to move quickly if opportunities present themselves. If you have a company plan for 2020, make sure to adjust your budget and rework investment deals. You want it to make sense considering the current market conditions.

McKinsey recommended that you set up a cross-functional response team specifically for any issues related to COVID-19. 

“Companies should nominate a direct report of the CEO to lead the effort and should appoint members from every function and discipline to assist,” the report noted. “Team members will need to step out of their day-to-day roles and dedicate most of their to virus response.”

Nevertheless, both consultancies stressed that company crisis responses are a group effort, in which employees and managers should prepare for on switching gears and taking on unfamiliar responsibilities to deal with an unpredictable outbreak.



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LeBron James shares powerful video of protestors chanting ‘I can’t breathe’

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  • Los Angeles Lakers star player LeBron James shared a powerful video of protesters in Colorado lying on their backs and chanting “I can’t breathe” for nine minutes on Sunday. 
  • “Media showing this???? I bet you they’re not!” James tweeted on Sunday night, sharing the video to his 46.2 million followers. “You know why, cause this is unity, peaceful, beautiful and love!”
  • James, one of the most prominent basketball players and athletes in the United States, has used his platform in recent days to raise awareness about Floyd’s death.
  • Visit Business Insider’s homepage for more stories.

Los Angeles Lakers star player LeBron James shared a powerful video of protesters in Colorado lying on their backs and chanting “I can’t breathe” for nine minutes on Sunday. 

“Media showing this???? I bet you they’re not!” James tweeted on Sunday night, sharing the video to his 46.2 million followers. “You know why, cause this is unity, peaceful, beautiful and love!”

The video was taken and posted by the Colorado Times Recorder, a local news outlet in Colorado.

Over the weekend, protesters in dozens of cities across America have taken to the streets to protest the death of Minneapolis man George Floyd, with some demonstrations becoming violent.

Floyd died on Monday shortly after being violently arrested by four police officers in the city. On Friday afternoon, prosecutors announced that one of the four former officers involved in the arrest, Derek Chauvin, who was caught on video pinning his knee on Floyd’s neck, had been taken into custody and charged with third-degree murder. All four officers were fired on Tuesday.

James, one of the most prominent basketball players and athletes in the United States, has used his platform in recent days to raise awareness about Floyd’s death, the issue of police violence, and Americans peacefully demonstrating in protest of police brutality. 

Earlier on Sunday, James also highlighted a video of a peaceful protest in Washington, DC, where demonstrators chanted “stop killing black people,” adding, “Is the media showing this??? I bet you they aren’t. This is beautiful.” 





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Amazon tweeted a statement in support of George Floyd protestors

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  • As protests over George Floyd’s death turned to riots across the country, Amazon offered an extraordinary show of support for the protesters and the Black community.
  • The Seattle retail and cloud giant tweeted out a statement that point-black said that “inequitable and brutal treatment of Black people in our country must stop.”
  • Should Amazon decide to put its weight behind such a message, it could be a game-changer, given that Amazon has itself faced criticism of its treatment of its warehouse and Whole Foods workers, and the sale of facial recognition technology to law enforcement agencies.
  • Amazon is not the only tech company issuing statements in support of the Black community. The tech giant joins Twitter, Microsoft and others in making similar calls. 
  • Visit Business Insider’s homepage for more stories.

As protests across the nation rage for days after the death of George Floyd, a black man who was killed after a white police officer knelt on his neck, support for the protestors are coming from some of the most extraordinary corners of the tech world.

Amazon has followed Twitter’s lead and tweeted out a strongly worded message of support for those people who are protesting. It says:

“The inequitable and brutal treatment of Black people in our country must stop. Together we stand in solidarity with the Black community — our employees, customers, and partners — in the fight against systematic racism and injustice.”

This tweet is extradinary for a host of reasons. For one, Amazon has had its own struggles with allegations of unjust treatment of employees, particularly its warehouse employees. The company has even fired a number of people who were protesting how the company was treating employees during the COVID-19 pandemic, but is now posting a blog where it updates daily the steps it is taking to protect employees at Amazon warehouses and its Whole Foods stores.

Amazon Web Services has also been accused of selling facial recognition technology to law enforcement agencies even though facial recognition tech does a far poorer job recognizing non-white faces, according to various studies. The concern is facial recognition could jeopardize the civil liberties of people who are misidentified. Amazon has criticized those studies, alleging that the technology was misconfigured.

So, Amazon’s unequivocal statement of support for the Black community is particularly meaningful, particularly if Amazon begins with its own house and then throws its massive resources behind efforts to help police department solve the problem.

Certainly, Amazon is not the only tech company tweeting out support of the Black community in the past couple of days. Twitter changed its logo, added a link to #BlackLivesMatter to its accounts and tweeted out a string of “take action” advice that began with this statement:  “The recent killings of Ahmaud Arbery, Breonna Taylor, Tony McDade, and George Floyd, and the victimization of Christian Cooper has left many of us angry, and with a deep sense of grief, but it doesn’t compare to what Black and Brown people face every day. #SayTheirNames

 

Microsoft also tweeted out the link to a speech by CEO Satya Nadella last week in which he addressed the situation and pointed out that Microsoft is working with “the Criminal Justice Reform Initiative, investing in partnerships and programs, working to drive reforms, focusing on policing,” he said.

 

Meanwhile, on Friday, Box CEO Aaron Levie also tweeted his disgust “Enough is enough.” He and Joelle Emerson, founder CEO of Paradigm, have committed $500,000 to support organizations trying to solve the problem. Nike has also tweeted its support, just to name a few more examples.

Amazon could not be immediately reached for comment.





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Sara Blakely is guiding Spanx through the pandemic from an RV

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  • Spanx founder and CEO Sara Blakely needed a change of scenery, so she and her family bought a 35-foot RV to explore the quieter corners of Florida.
  • In a conversation with LinkedIn’s This is Working podcast, Blakely shared four things Spanx is doing to get through the coronavirus crisis.
  • In moments of challenge, she says, “the ones who make it are the people who take obstacles and turn them into opportunities.”
  • Visit Business Insider’s homepage for more stories.

The disruption caused by the coronavirus pandemic has many people working remotely, but Spanx founder and CEO Sara Blakely is taking it a good distance further.

“We decided that quarantining with four children under the age of 10 in a home just wasn’t enough,” she told LinkedIn’s Dan Roth. “We had to take it up a notch.”

Blakely and her husband Jesse Itzler — himself an entrepreneur as well — needed a change of scenery, so they bought a 35-foot RV to escape their home city of Atlanta and explore the quieter corners of Florida.

“We don’t even have super set plans. We kind of just got in,” she said.

A post shared by Sara Blakely (@sarablakely)

Even on the road however, Blakely remains involved in her company during this unprecedented time.

“Spanx is deeply affected, like so many other businesses. We are in the retail space, which obviously has had an enormous impact,” she said.

Blakely shared four things Spanx does, which are helping the business get through the crisis.

When setting your budget for the upcoming year, it may seem natural to simply look at what you spent last year. But that’s not how Blakely runs Spanx.

“Every year the budget starts at zero,” she said. “Each leader in the organization has to make a case for the money being spent.”

This approach has helped the company weather disruptions in the past, and Blakely turned to it once more when this crisis hit.

“We regrouped as a leadership team and each leader redid the budget with the new normal,” she said.

The new financial targets are more fluid than in normal periods, and the team revisits them every few weeks to make sure they’re still appropriate.

Prioritizing culture and communication

Blakely said her first thought when the health crisis started was how to keep her team safe and connected, which involved a major push toward remote work.

“We’re doing a virtual all-company meeting every week,” she said. Also, “we’re having fun virtually and connecting, because emotional wellbeing is a really important thing right now.”

People may not be physically close to their coworkers, but Blakely says that shouldn’t stop leaders from investing the time and resources into strengthening their teams.

“This is a fantastic time to build culture and to show your people that you care,” she said. “People are going to remember in times like this who showed up who did something for them.”

And what goes for your team applies to your customers as well.

“People are hurting and scared,” Blakely said. “People don’t want to feel like they’re just being sold to. They want to feel like you’re there for them.”

‘Take obstacles and turn them into opportunities’

In moments of challenge, Blakely says, “the ones who make it are the people who take obstacles and turn them into opportunities.”

For Spanx, one such opportunity is the chance to focus on rethinking some of the company’s processes.

“Spanx has been growing pretty rapidly over the last several years and it’s harder to stop and go, ‘there’s a more efficient way to do this.'”

Even though Spanx is a global brand and a household name, Blakely says she still runs the company like a small business and that she’s no stranger to getting good results with lean financing.

“Cash for a while is not going to be as accessible as it has been and I think for a lot of people that may end up being a hidden blessing,” she said.

Blakely launched Spanx 20 years ago with $5,000 that she saved from selling fax machines, and has since weathered two major economic recessions.

“I moved forward with everything that I could and I just didn’t let the the macro environment overwhelm me,” she said.

Entrepreneurs may take a degree of comfort in knowing that creative business ideas and an adaptable mindset can get them through some extraordinary circumstances.

“If you are making a product or a service better than anything else out there, it is always a good time to start a business,” Blakely said.



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