The Chinese proverb said it all... ‘May you live in interesting times!’ For the Indian automotive industry, ‘interesting times’ means nothing short of an unmitigated disaster. Barely was the dust settling on BS VI norms issue and CASE expectations were beginning to play out, the Coronavirus with its attendant lockdown and stoppage of plants has clearly knocked the bottom out of the Indian automotive industry.
What is to be done? The world has seen big crises like the 2008 financial meltdown, SARS, EBOLA and other emergencies. But the unprecedented speed of spread across 200 countries, scale (700k infected while going to the press) and therefore the fear of Covid-19 is unique in terms of its impact. Plants are closed, inventories are piled up, suppliers are unpaid, and employees are tense.
What should leaders do? Eight things, in my opinion
- Cash is King: In our zest for top and bottom lines, the important barometer of cash is forgotten. Collect your money or get a schedule. Look at non-moving stocks, dilly-dallying debtors, obsolete spares and recoverable advances. Till the money is in your bank, everything is just efforts, not results. Conserve your cash: look at the capex not yet ordered. Make sure your banker is in sync with your requirements. Take control of cash in your hands, review it daily.
- Transparency and communication: Communication with all employees, dealers, customers and suppliers is the only way that you will survive and thrive. Make sure there is a regularity of communication using tools like Zoom. Letting employees go should be the last alternative after considering partial pay-deferment or cut based on reduced working or otherwise, utilisation of leave and allowing long unpaid leave.
- Learnings in the bad times: Doing more with less helps you to become lean, so take a second look at your overheads, size of offices, fleet of cars, do benchmark your lowest cost competitor and take actions to reach there. Reduce your fixed overheads by at least 30-40 percent over the next two years. Simultaneously, plan for the uptick and be ready when it happens.
- Crowd source ideas: Participation of employees can bring a community and team feeling, which gives you the strength to face the crisis together. A CEO need not fight the battle alone. Every employee’s destiny gets tied to that of the Company.
- Lead from the front: If you want a pay cut of 10 percent from the lower level employee, be ready to give up 20 percent yourself as a CEO. Practise what you preach.
- Your smile and calm radiate: The same issues can be handled smilingly or in an irritable way. Your demeanor is being watched by hundreds of eyes and they take their behavioural cues from that.
- Agility is crucial: The situation has been changing in the last few weeks and will continue to evolve. You need to move swiftly to jump into opportunities or exit businesses, as required.
- Focus on the important: We are doing the urgent all the time, forgetting the important, e.g. reviewing product lines and geographies, studying competitors and improving our website. The simple training programme on YouTube, the MOOC course offered free by Ivy League colleges, the oft-postponed product design which the dealers wanted, the idea you saw in an overseas exhibition-there are countless actions by each employee which can truly transform your company, step by step.
These times are a test of our resilience and should start with Optimism –and even with all the down days, let us not forget that the sun will rise again and automotive will be a sunshine industry.
Good Luck in your efforts to navigate to the shore in these unusually challenging times!!
You will make it.
The views of the author are personal
Raman Nanda is also a CEO Mentor and Coach. Till recently, he was Country Head and President, Gestamp India.
He can be reached on firstname.lastname@example.org
Leading a business during unprecedented challenging times