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Aziz Sajdi (MSc Innovation, Entrepreneurship & Management 2016) Aziz Sajdi (MSc IEM 2016)

Written by Aziz Sajdi (MSc Innovation, Entrepreneurship & Management 2016) Innovation and Strategy Officer at SAJDI, Consulting Engineering Centre. He has been in lock-down now for over a month in Jordan - one of the few countries to take drastic lock-down measures to minimise the spread of COVID-19. In this blog post he reflects on impact of the global pandemic and the shift to a digital age.

Companies are continuously forced to disrupt their thinking. Some have done it well over the years, while others have been slow in implementation. However, this pandemic has forced disruption in an entirely new way; for some deliberate and for others emergent. Should businesses think of new operation methods? Perhaps lower liabilities? Lower debt? New diversified products and services? Very interesting times we live in.

It’s been more than two weeks now of our quarantine against this so-called ‘pandemic of our century.’ While time is not directed to the usual work, it made me think of what to expect and how businesses should react to the situation. Working in the consulting industry and having most of my time dedicated to innovation research and financial strategy, I need to say that what is yet to come is way worse than what has passed.

Let’s look at the three major shifts to be expected; people, companies and government/banks.

People

People are the most impacted in this situation. As people shift to working from home, they are finding new ways to organise time. But would their mentality be the same when we are all out of this quarantine? What should businesses do to overcome this sudden shift? In my opinion, companies should act swiftly on how they should treat employees during lock-downs (remote working) if they want to create brand succession and future stability. Spending behaviour has also majorly shifted - with fear of the unknown, people went into survival mode, purchasing essential goods as they prepare for the worst, majorly cutting down on non-essential goods. However, will their spending behaviour shift after this pandemic is over? More contingency plans? Cuts towards non-essential purchases? Each household should radically alter their spending habits for the future. We can expect more demand on technology platforms; financial, education and medical. 

At times of recession (current times) people will definitely think in a completely new way. It’s crucial to think of insurance for yourself and your loved ones. In these uncertain times, it’s vital to take note of how you can benefit from health and home insurance. Cut overhead expenses, this will make the unwanted in the past, think of contingency plans or funds, think of new ways to invest. It doesn’t mean we are going to live through a pandemic our whole lives, but it would seem that the impact of a recession will take some time to recover. With higher unemployment rates, this can only mean we would need to possibly think of supplementing our income? If you are jobless, would that mean freelancing for the new digital era?

Until this is over, you need to boost your credit score so that banks are willing to lend you when support is needed. Maybe buying the house or the car can wait, but meanwhile, work on raising your investment balances and cash savings. Interest rates are lower than what they were, but does it always make sense to buy the house instead of renting it? Study your in’s and out’s.

Always think of the best financial foundation scenario possible. Consult a financial banker or an adviser, they can be of great help at times like this.

We need to be more conscious of our consumption and invest more locally towards services, businesses and products. As a society, we need to work together to become our own country’s right hand. This in return will positively catalyse the growth of our economies and reduce harsh economic impacts caused by the pandemic.

Companies

Companies with the highest free cash flow balances would easily ride the pandemic without the aid of banks and other lending institutions. But what about small businesses? Legacy holders, knowledge holders and other day-to-day retail shops who are responsible for employees and their families? Would this mean they are out of business? Potentially yes. But what lessons could be learned and how will the mind-sets of business owners and entrepreneurs change? This shift could mean destroying entire companies and could also mean raising new startups from ground up. But don’t we need the knowledge of the older generation to help guide the economies? Or are the youth capable of pushing the new economy? I am a 3rd generation in a family business and I speak out of experience, we still need businesses and the older generation to help us with what I call the age of digitisation. 

We need to be more conscious of our consumption and invest more locally towards services, businesses and products.

We think of industries and questions like, what should we focus on? What will be terminated? What sectors will boom? Sectors like internet providers (Verizon), online education (Chegg), cloud platforms (Microsoft, Amazon, Zoom) and human resource services (Ceridian) could ride the big wave. 

But at times like this, companies should really be revisiting their operational models and questions their ability of what can we do to ride this pandemic with little damage? Or, what are the changes so that in the future we can sustain ourselves. Revisit debt, liabilities, cash and even assets. How can they be more lean in the future?

This could be the age of startups - the youth should be taking this advantage and build the next 50 years of businesses, they need to be able to explore all areas and be granted the complete freedom of not being taxed for example. We are seeing great examples of education websites, medical and other very inspiring stories. This is the time for entrepreneurial drive to flourish.

Governments and Banks

In my opinion when all this settles down, we will look around and see; higher unemployment rates, over-leveraged businesses, monopolies, partnerships and less social interactions due to implied digital age. Governments will need to tackle unemployment but how? Will banks and governments sustain such aid or do we need to think radically about our businesses and our lives?

With zero interest lending, businesses who are over-leveraged before the pandemic could face bankruptcy. Banks and governments want people and businesses to increase their loan balances after all this is over; they want us to increase debt to stay committed to the financial system. Debt is not always bad, it is very healthy when done correctly.

What will happen to banks, are banks like Monzo and N26 successors? Should banks think of re-modelling their operations? Will this create or destroy jobs? Banks have a higher advantage now than ever to remodel and grab the opportunity that is being given to them.

In countries like Jordan, it’s burdened with its zero natural resources, lack of water and increasing demand by influx of refugees. Although its non-stop work through this pandemic is extremely professional and disciplined, I fear the aftermath. They have placed the people before the economy and that is the true meaning of being a human.

Everyone wants to be optimistic about the future, but we need to be realistic, governments need to understand that if the economy wants to sustain and grow it will need to take sacrifices and ensure that the legacy of what was built through the past 50 years is not lost. 

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