AFTER THE STORM... PART II
About Crisis Management
If there is a rule that governs the world is that continuity does not exist, the concept of normality is entirely a human abstraction through which we try to give a sense, a direction, to the flow of our existences.
Therefore, the very idea of being able to plan in the long term is in itself a forcing that goes against natural laws. However, at the basis of each business project there are necessarily business plans that span a time horizon of at least 5 years and consider the recovery of the cost of investments through depreciation, as well as the return of borrowed capital, both from shareholders or stakeholders in general, both found on the financial markets.
In addition, the entire corporate adventure focuses on the entrepreneur’s vision, that vivid dream in which his expectations and hopes are condensed, in which his set of skills and experiences, personality and character are mixed. The entrepreneur aims to leave a mark of his passage, to change reality, to make his own contribution, even if minimal, to impact on the status quo and therefore, by his nature, he looks to the future, or more correctly, he lives in the future.
However, awareness of natural determinism and need of planning are not antithetical, on the contrary. One integrates the other, in a directional and creative process that is based on the assumption that everything that happens in the human being and around him, in nature, is in itself fluid, constantly changing and, therefore, difficult to predict. In this way of thinking, crises are understood as physiological and, therefore, cyclical. It is not a question of theorising about “if” a new crisis will occur, but rather of speculating on “when” and “how” will affect our lives, our projects, our companies.
When facing crises, there are generally always two possible attitudes of Crisis Management to be put in place:
- the attitude of reaction
- the attitude of action.
A) The attitude of REACTION
The attitude of reaction is based on the prevalence of a pessimistic view about the current crisis situation and the devastating effects they will have on the economic and social context. Given the alleged impossibility of returning to pre-crisis performance levels, the target will be to prolong the company’s survival as much as possible, favoring a short-term perspective, implementing actions that could also affect the company’s operations and the brand positioning, thus leading to the aggravation of the crisis for the company itself and therefore going against the primary objective of survival. Examples of these actions may be the cutting of research and development costs, staff cuts that demotivate the team and deprive the organization of skills and experience, the drastic conversion to new products / services which if implemented instinctively and not adequately planned can lead to the rapid loss of value of the investments made and the degradation of the company offer.
In the case of a hostel, the choice to reduce the staff by deciding to increase the use of volunteers and exchange travelers could lead to a drastic reduction in quality, which could impact on guest reviews and market positioning, as well as depriving the team of specialist skills and determine the need to train resources that will generally be part of the organization for a short time. Then believing that you are forced to completely change your business, transforming for example into a Bed and Breakfast, addressing your offer to different targets (e.g. families), could entail important set-up costs, debase the brand and reputation acquired so far and plausibly find serious difficulties in readjusting the expertise and offering to serve a completely different target. In the long run, the project may lose competitiveness and have problems returning to its original repositioning once the crisis conditions overcome.
B) The attitude of ACTION
The attitude of action or proactive attitude is based on accepting the cyclical nature of crises and on an evolutionary and fluid vision of the economic and social system in which we live and in which the company operates. The manager or the proactive entrepreneur knows that after the storm the calm always returns and that fighting against the fury of the elements is rather useless, while the attention must be focused on containing the effects of the cataclysms without ever losing sight of the “after “. In this case, the entrepreneur and the manager are courageous captains who lead the vessel-company across seas, sometimes calm, sometimes stormy, facing one wave at a time, straight to the port where they are headed.
The proactive attitude, therefore, aims at the long-term perspective, looking to the post-crisis world as full of opportunities, which must be sought and built with creativity and planning. Even when the crisis makes its sharp teeth feel, whoever is in charge of the company (and perhaps anyone who is part of the organization) must continue to study, read, understand the reality that surrounds us and face it day after day with a positive spirit. The identification of opportunities leads to the development of new projects that can already be implemented or to be launched at later times, which determine immediate or future results.
This tendency to renew itself with changing environmental conditions must not be understood in the sense of completely revolutionizing the organizational structure or repositioning in the market with new products/services offered, rather on the basis of the opportunities that the market offers or will offer, new approaches will be imagined, new organizational formulas, new products / services that will harmoniously fit into the existing corporate structure, without distorting it.
In this sense, a hostel could for example decide to turn to the long stay market or to consider some dormitories as private rooms, it could decide to implement other services and turn to other markets such as developing study or coworking areas (COMING SOON: some tips about actions for hostels to take in facing the actual crisis), it could think on weaknesses or areas for improvement of its organization and devote itself to strengthening these areas, such as pondering the environmental impact and alternative management methods in a green perspective (COMING SOON: which are the hostels with a strong green awareness?).
THE OPTIMAL STRATEGY? Well, it's a mix ...
Each business strategy must necessarily balance different needs and each business need has its reference time horizon, in which the relative causes and effects will occur.
A correct Crisis Management strategy must therefore be based on two fundamental pillars, such as short-term survival and medium-long term development, and define tactics and actions in a harmonious way, so that short-term goals do not collide with the medium to long term targets and that the soul of the company itself is not destroyed by the rapid and “pulse” decisions to be taken to overcome the disruptive impact of the crisis.
Thans for reading,
See you on next articles!