Best Laid Plans

contingencies can be a killer

Will COVID-19 change how companies plan for contingencies?

It’s tough to find good news these days, but living through a pandemic will do that to you. There’s the onslaught of case count and its death toll, along with stories about how badly governments from China to Europe and the USA all botched their responses to the coronavirus. There are some bright spots, in which former civil servants talk about the pandemic response plans they wrote up decades ago, but those always end in the sad realization that all those playbooks have been tossed out the window.

If there’s any true bright spot, it may come from the story of a regional grocery chain in San Antonio that took the coronavirus threat from China very, very seriously, and began planning for its imminent arrival in the states. A few things stick out in how H-E-B got it right. First, they had a functional head responsible for emergency management employed year round. Not a bad idea in a hurricane prone locale. Second, they had experience with natural disasters placing stress on portions of their network. Third, they worked with their overseas suppliers to better understand how the disease was developing around the globe. But perhaps most strikingly, they communicated with customers every step of the way. Business students are going to be reading about this for years, and not just because of the antidote about the wedding flowers. Brava!

We haven’t reached the point in this situation in which folks start talking about its lasting impact, but one question on our minds is whether COVID-19 will force companies to pursue more robust kinds of contingency planning. While those in the consumer industries have some form of “contagious diseases” boilerplate in the risk section of their 10-K filings, others, like tech firms and industrials, still seem to view absenteeism as the biggest risk of a pandemic. Here’s hoping that social distancing works to flatten the curve, not only to protect our loved ones and the health works fighting on the front lines, but also so that we can begin having these critical conversations. Post-epidemic world, we’re waiting for ya!


Heard on the Street


$BEACH - Bookings, Entertainment, Airlines, Cruises, and Hotels

Every crisis deserves an acronym, and the folks at Visual Capitalist have christened a dubious new group of companies known as BEACH stocks: Bookings, Entertainment, Airlines, Cruises, and Hotels. It’s a great acronym and a quick way to refer to the collected leisure industries that have been so badly burned during the coronavirus. This one might have staying power, too, and we wouldn’t be surprised if folks continued using the shorthand even after this moment passes.


Earworm

Who doesn’t love a good ESPN “30 for 30” documentary? The franchise’s podcast took a deep dive into the Donald Sterling affair in its fifth season. The five episodes offer a fascinating look at how the reputational damage of an owner’s racist comments led to the loss of a surging sports team. Reputational risk is one of the top strategic business risks, and the saga of the disgraced Los Angeles Clippers owner is prime example of what not to do.


She Said It Best

"The biggest lesson I learned, and I take it to everything I tackle now, large or small, inside of work and outside: If you have a problem, you've got to solve it. Because that problem is going to get bigger in six months. It could get bigger in two years. But it's not going to get smaller with time."

— Mary Barra, CEO of General Motors, during a 2012 interview.


That’s all for now. Are we all running out to buy a Peloton this week?