I’m lucky enough to be able to look out of my home office window at a nearby mountain. The mountain offers an abundance of recreational opportunities. People enjoy hiking, riding mountain bikes up and down, as well as even paragliding from the peak. From the summit, one is able to see great distances in all directions. Looking down at the town below one gets a completely different perspective of the valley. Everything from that distance and height seems much less significant and important. The smallness of everything is surreal. Golf courses just look like nice green patches. Cars look like ants. Boats are barely recognizable on the lake other than the white, foam contrails they are leaving behind. The hustle and bustle of the buzzing resort town seems almost comical from the quiet and removed peace up above. I never get tired of getting this perspective of our community. There’s something immediately calming about physically stepping away from our immediate surroundings. Being away from the fray is more than okay. Being able to view our world from a distance is not just pleasant, but provides perspective. When we are up close and personal with every interaction, we can lose the forest for the trees. Stepping back offers well needed context.
Former US Navy Seal, author, and leadership expert, Jocko Willink talks about detachment as the base trait of leadership. In his most recent book, Leadership Strategy and Tactics, Willink discusses an early experience he had while training with a Seals group. They were learning how to protect and manage missions on offshore oil rig platforms. Rig platforms are complicated and extensive structures, made mostly of metal grating which have holes which makes concealment difficult. Their practice assault was stymied when their team came to a section of the platform that offered no way forward without being fully exposed to a potential threat. The team froze in position with no one taking action. Each individual was focused on their immediate line of sight which offered a narrow perspective of the situation. No leader took charge. Jocko, the most junior member of the team, waited as did the others. He, finally, took action. He took a deep breath, stood up, stepped back, and looked up and side to side. His new vantage point and wider perspective offered a view none of the others were able to assess. The physical detachment helped him to mentally detach as well. He made a decision and led the team forward through the exercise. It was a pivotal experience that instilled in him the value of detachment which would serve him well as he led in much higher stake military engagements in future years.
Intuitively, we recognize that being able to pursue perspective in positions of panic is helpful. There’s little value when seeing smoke or hearing someone yell “fire”, to immediately stop, drop, and roll, or run in the first direction that comes to mind. We need to keep our heads attached, look around, and gain perspective prior to performing. The ability to detach and separate from the situation helps us make better decisions. This is ever more the case in today’s turbulent times.
We seem to be deluged with dreary information. Commerce is collapsing all around us. It can seem like no sector is being spared. So many businesses have had their revenues impacted. For many that have been forced to close, their revenues have gone from whatever they were to zero. Revenues have been reduced to rubble. Even if things turn around in the next month or two, many of these impacted businesses simply won’t be able to rebound let alone reopen. Faced with these facts we become full of fear. We are concerned with how our economic prospects will be impacted by the troubles around us. How deep will the dip be? How long will the struggles surround us? The avalanche of awful news abounds. As we move into May, we see stories that remind us that up to 70% of US GDP depends on consumers. Unfortunately, the consumer is stuck inside and hunkering down. Retail has retreated almost across the board. Projections for economic performance are being updated and downgraded almost weekly. Right now, many US prognosticators are suggesting a 10% reduction to GDP in Q1 (annualized) and up to 40% in Q2. Canada is likely to fare similarly. These are historically abysmal numbers. When reading these types of stories, it’s very difficult to fight pessimistic thinking. We feel that the bad news is pervasive and attacking all areas of the economy as well as perpetual, that there’s no end in sight. Pessimism is fueled by pervasive and perpetual negative thoughts. In the face of all of this negative noise, how can we try to step back and gain perspective?
If we consider not the business news, but try to take an objective look at our economy as a whole, what can we see? An approach we can take is to look at Canada’s economy (or our Province’s economy) by GDP. How does it break down across various sectors? Which sectors are more likely to be impacted than others? Of these impacted sectors, how deep may the cuts be? Of these impacted sectors, what percentage of GDP do they represent? We can look to expert economists who are already reworking their 2020 forecasts doing just this type of exercise. An alternate approach could be to consider the list of services that various governments have declared as “essential”. We can gain some comfort that not everything is going to zero. Those that are “essential” continue forward and may even having growing revenues. We can step back from the brink and recognize that from an overall perspective, as painful as things are and will be, the damage may be held to certain areas. Moreover, other industries may even have the ability to grow as demand for their services expand. Finally, a third approach could be to look at the stock market to see which companies or segments are holding up and which are getting trounced. For example, now five companies on the S&P 500 comprise over 50% of its capitalization. Facebook, Amazon, Apple, Google (Alphabet), and Microsoft. In Canada, the company Shopify has become the largest company by market capitalization. These can be contrasted with industries and companies that are dependent upon government support to continue. The economic landscape is changing.
Regardless of the approach we take, it’s likely we’ll come to a similar assessment. Sectors that are struggling include travel and tourism (including related areas like restaurants). Air travel internationally has, effectively, ceased. Domestic air travel is substantially reduced. Car rental companies, taxis, private bus companies as well as hotels and all tourism related recreational activities have had their revenue generating capabilities cut off at the knees. Additionally, personal services, some areas of healthcare, and many areas of retail are seeing significant revenue reductions as a result of not being able to serve customers face to face. Barbers and hairdressers, beauty salons and massage parlours, and numerous medical practitioners like chiropractors, physiotherapists, dentists, and more have all been negatively impacted by government imposed self-isolation measures. Retail has largely been shut down. Consumer confidence has disintegrated and customers even if allowed out and about won’t be excited about spending money on non-necessities in the near future. Pent up demand is unlikely to be in place the longer things last. People are scared into protecting and conserving their resources. If they can’t eat it or drink it, it’s less useful and less likely to be sought out. Real estate transactions are likely to dry up as well. These areas of our economy are being hit the hardest.
However, the doom and gloom need not be pervasive. Not every sector is being impacted and even impacted sectors aren’t fully failing. Grocery and pharmacy stores maintain robust activity. Liquor stores have seen substantial increases in sales. Truckers and delivery services are going well. Some retail businesses have been able to adapt to an online environment and are generating some revenues. Technology companies are seeing increased demand for many of their services. Demand for areas like utility companies, electricity, natural gas/propane, telephone, cable, and internet remains consistent. Many professional services, too, like legal and accounting remain fairly productive. With this approach to achieving a more balanced perspective, we can see the carnage isn’t pervasive. It is serious. It is bad, but it isn’t complete. Much commerce remains unscathed. Not only are many sectors of the economy largely unaffected, more than a few will see growth during these times. Furthermore, the challenges we face aren’t perpetual. We won’t be where we are forever. Certainly, we can’t confidently predict when things will “return to normal”. However, we can use a detached, objective perspective to revisit our strategies.
Once we’ve worked through our own analysis to develop proper perspective, we can determine better actions. Instead of being mired in misery we can identify where our efforts can be better allocated. We can’t control where we are or how we got here. It’s not helpful to wish that some sectors were spared. We should seek to use our perspective to concoct constructive choices for today, next month, and the balance of the year. Can we step back from the non-stop negative news, detach, objectively assess where things are, then begin asking: How can we try to detail our customer base by industry? Can we seek to segment our customer base by those that are in affected or vulnerable sectors and those that aren’t negatively impacted? Can we see what percent of our business is in troubled sectors? How can we proactively try to help these insureds with their insurance needs? Can we help them find ways to decrease coverage or insurance expense? What can we do to keep our eye on these customers and be sensitive to issues they may be facing? Can we help them manage things outside of direct insurance sales? How much business do we have that caters to clients that are in sectors that are going well? Can we proactively work with them to review their insurance needs to ensure proper coverage is in place for their anticipated growth needs? Are there decisions we should be making to draw back from business development efforts in certain areas? Are there decisions we should be making to ramp up our business development efforts in other areas? Could we use the time we have and the new operating environment in which we find ourselves to focus on developing some internal workflows and systems to improve our efficiencies? Is now a time to invest heavily in staff training? Should we be trying to help our staff increase their skill set such that they will be in better positions to provide expertise to customers going forward?
Before we can determine what steps to take to move forward we need to develop a sound sense of where we are. This is done only with proper perspective. Perspective achieved by detaching, stepping back, and taking in objective information.