Covid19 Business Impact What Firms Should Do To Minimize Disruptions

welcome back everyone joining us to discuss the economic and business consequences of Covid-19 and how social media is playing a key role in public sentiment like never before is Karen Harris she's the Managing Director of Bain & Company's macro trends group thanks for being here today Karen thanks for having me alright so when it comes to the business impact here making data-driven decisions is so important so with the data that you have right now what type of response is warranted in in reaction to this crisis that we're seeing for businesses so we look at the data really through through lens three lenses which is what we would think that business people and investors should look through the first is the science the the factual science the second is the government of reaction what is the public policy going to be around how to manage the crisis and the third is the public reaction to that and as you mentioned in your introduction it's really this third lens that is the the biggest difference in this crisis than what we've seen in in Prior crises when SARS happened in 2003 it was prior to the advent of really strong social media China's economy was yes much smaller but also the number of internet the percent of Internet penetration in China was much much lower today we're operating in an environment where while we we make fun of the Millennials a little bit at times for they're putting their every meal they eat on the internet but this could be the first crisis that people document live as they go through it and it will be far more public in that sense and so the reaction could be quite constrained if we continue to see doctors on TV and the messages this is just the flu and that will keep markets orderly it will keep reaction orderly that's not to say optimistic but orderly if a video that's real or fake goes viral about someone having a dramatically bad reaction or someone famous contracts the disease or we could see a very different swing in the epidemic so we are alert to and looking at those public sentiments as a very important reaction you had asked about how businesses should react and today Bane has created a what we call this sitrep a situation response index and we just raised that from a 4 to a five this week and what that means is we're really looking today at a reaction similar to what our clients would have for a mild recession so let's count on the fact that this is going to be a moderate one to two quarter recession like actions today on top of that of course every business is thinking about their people and how to manage and keep them safe in this environment that I think goes without saying but certainly we haven't heard a business executive anywhere who doesn't put their people front and center but on top of that the economic reaction is that more bounded button so when businesses are weighing what response they should take clearly it seems like at this point we know that there is going to be an impact on financials to some extent but how do companies best position themselves to come out of the other side of this crisis so when Bain looks at even a recession or a crisis and we think about how do you how do you thrive or win in a downturn there are activities that you take to think about cash management how you where you want to be after the crisis so it never pays to react sharply and shortly and in a panic in one's life in one's business really thinking about what are the resources we need to keep our business on a steady course through this but also how do we want where do we want to invest now to continue to grow and thrive beyond this crisis the place where probably the most concern now in terms of sentiment is the US economy has really been growing certainly consumers spend has been growing off the the affluent sector it's really been the spend of the the more affluent the 20 top 20 percent of the population that's kept the economy above water in some senses over the last few months we with de nada have a proprietary index that Bain & Company it's our consumer health index and what we've seen is first that sentiment is almost perfectly correlated with markets which we saw last week we're not performing at their best today seem to be recovering but with markets going down the optimism of that group goes down and therefore their intent to spend in their actions change and so we're monitoring that very closely over the next couple of weeks well we know this is a very fluid situation but sounds like it's definitely time for businesses to have a response that's appropriate to the severity of the crisis so it will definitely keep tabs on this thanks so much for sharing with us take care and thank you alright and when we return we're sitting down with creme chairs to talk about emerging trends in the China internet space as a result of the virus from e-commerce to education we'll be right back