Frank Holmes, Chair. Founding Partner, Gambit Corporate Finance LLP
The Japanese proverb ‘fall seven times, rise eight’ is resonant with the concept of resilience, a popular outlook widely adopted recently by economists, government and business leaders, and a pillar of the Cardiff Capital Region’s Industrial Economic Plan.
Resilience is not just the ability to persevere.
It is also a perspective built on remaining focused on the important things in life rather than what seems most urgent, which is often coloured by lack of information and negative emotions.
The global Covid-19 crisis drives us to instinctively assess the risks and danger to ourselves of contamination, of the loss of lives and livelihood, as well as exposure to irreversible damage to our social fabric. Urgency compels us to take immediate action, when what is required is systematic analysis, thorough discussion, incremental actions and careful evaluation, not just of the worst case but of the probable and best-case scenarios too.
So, in anticipation of the return to normal conditions, we must explore techniques that go beyond resilience to cultivate re-imagination and anti-fragility, whilst accepting that the only things we can control are in the present. Anti-fragility goes beyond resilience and robustness. The concept of resilience implies resisting shocks and disorder but attempting to carry on as we were before; whilst the philosophy behind the anti-fragility model is to gain from exceptional circumstances and get better, because each setback is an opportunity for advancement.
This is particularly visible today in the influence of ever-expanding digital technology, cloud computing and artificial intelligence. The next few months will prove whether some of these accessible new technologies, notably teleconferencing, can allow efficient mass remote working for employees across many sectors; increasing productivity, and speeding up the reinvention of the office and reconfiguration of supply chains.
Business travel, large corporate and social events, bank branches, hospitality venues, shops, and even universities, are being undermined by digitalisation, online shopping, and e-learning, with cash being ostracised in favour of contactless payments. The adoption of lean manufacture and just in time delivery of components will lose its efficiency due to disruption through low levels of stock holdings.
Traditionally, businesses have been able to invoke risk planning and move production from afflicted areas or suppliers, whereas Covid-19 will affect these options simultaneously. Reverting to bigger inventories or localised ecosystem supply chains may become the new norm, thereby validating the cluster model currently being promoted by CCR in sectors of strength.
However, these shifts in the patterns of demand are further complicated by the fact that resources do not flow smoothly from contracting industries to expanding ones. Shop assistants or airport staff will not quickly become gig or construction workers on the growth of the digital economy or the Government’s new infrastructure projects.
Whilst we cannot predict with any precise certainty which businesses, government departments or institutions, faced with these technological disruptions, skills shortages or supply chain shifts, will disappear, there will be some significant casualties. This global crisis offers an opportunity to reflect on the suitability of the old mantra of “business as usual”, and re-imagine new ways of doing things.
If ever there was a time for cohesion on policy at all levels of government, forming new relationships between private and public sectors, invoking speed of delivery, ripping up normal outdated rules, avoiding reasons to say “no” and finding new ways to make things work, it is right here and right now.