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How Aristotle Can Help You Lead Your Business Through Tough Times

Aristotle
Archives, Global Trade Daily, Special Reports

How Aristotle Can Help You Lead Your Business Through Tough Times

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Business leaders face plenty of questions as they try to get a handle on the new economic reality brought about by the COVID-19 shutdown and the resulting recession.

But the answers to those questions may not appear in their corporate handbooks. Instead, they could lie in ancient philosophies with lessons that apply just as much today as they did centuries ago, says Cristina DiGiacomo (www.cristinadigiacomo.com), author of Wise Up! At Work and founder of MorAlchemy, a philosophical consulting firm that helps CEOs and executives tackle their biggest challenges by teaching them how to think differently so they see new solutions and their companies thrive.

“We could all use a little wisdom these days because COVID-19 has caused a shift in the way people think, the way people work, the way they live and how they think of themselves,” DiGiacomo says. “Technology may change, culture may change, but acting wisely is no different in the 21st century than the 5th century.”

Too often, when people hear words like philosophy and wisdom, they conjure images of a bearded man on a mountain, with enlightenment seekers trekking to see him, DiGiacomo says.

“In reality, the philosophers whose teachings changed the world were the kind of people who rolled up their sleeves, got to work, dug deep, and spoke up despite hardship, resistance and even threat of death,” she says. “Their views aren’t some abstract idea but have practical applications in today’s world.”

So, if Aristotle, Socrates, Voltaire and Immanuel Kant opened a corporate consulting business, here are a few things they would tell you about moving your business forward as the world tries to recover from COVID-19:

Don’t be rushed into rash decisions. Voltaire said “doubt is an unpleasant condition, but certainty is absurd.” Sometimes CEOs feel the need to make quick decisions, perhaps to avoid seeming indecisive. That’s not always the best approach, DiGiacomo says. “Are you making critical decisions, with long-term consequences, on the fly without actually having developed your ability to deliberate?” she asks. “Our reactionary mind wants us to set it and forget it, so it can move onto the next thing.” Resist that temptation.

Avoid letting your “darkest moments” color reality. Immanuel Kant, among others, believed your mind shapes and structures your experience. “Your mind influences to a very large degree how you see the world and how you feel about it,” DiGiacomo says. “Those things you say to yourself, in those darkest moments, are shaping your reality. But it’s entirely possible that those thoughts you have about what you think reality is might not always be true.” She says it helps to “hit the pause button” and make sure the situation is what you think it is.

Say “I don’t know” even if you think you know. The country faces uncertain times over the next several months, but that’s not unusual, DiGiacomo says. The future is always uncertain – coronavirus or no coronavirus. One of her favorite quotes from Socrates is: “I know that I know not, and that makes me a wise man.” DiGiacomo says being in “I don’t know” mode releases your mind to discover new solutions and ideas. “If you constantly believe you know everything,” she says, “then there’s no impetus for your mind to be creative or continue to look for new information.”

And finally, DiGiacomo says, Aristotle offers encouragement for business leaders who are afraid they aren’t up to the task of making wise decisions. “Aristotle’s foundational idea of being human is that we are all wise, inherently,” she says. “It’s just a matter of tapping into that innate wisdom and building the skills that will help you to not only be wise, but to act wisely.”

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Cristina DiGiacomo (www.cristinadigiacomo.com), author of Wise Up! At Work, is the founder of MorAlchemy, a philosophical consulting firm. She also is the inventor of industrial philosophy and is the driving force behind the idea of applying philosophy in the workplace for the benefit of the leadership of organizations. DiGiacomo has 20 years of corporate executive experience at companies such as The New York Times, Citigroup, AMC Networks, and R/GA. She holds a master’s degree in Organizational Change Management from The New School. She also dedicated nine years to the study and practice of philosophy.

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Moving Past COVID-19: Risk Mitigation Strategies to Drive Supply Chain Resilience

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As the world begins to ease movement restrictions imposed during the COVID-19 pandemic, companies are wondering where they go from here and how they can reduce risks moving forward.

These questions are especially relevant to supply chains, as the pandemic disrupted trade flows across borders, from raw materials to finished products. The initial decline in production in China rippled across the world, as the country sits at the heart of many global manufacturing networks. As the virus spread west, more nations instituted lockdowns to protect public health, leading to an increase in factory closures and a sudden drop in consumer demand.

The shock to the global economy was breathtaking in both scope and speed. The search for efficiencies within disrupted supply chains is now driving organizations to look at the lessons that can be learned, in order to better manage and mitigate risk of disruption from future events.

Before you develop risk mitigation strategies, you have to first understand how your suppliers were affected by the pandemic. Are they considered essential? Did they have trouble sourcing raw materials or run low on critical inventory? Did they suffer a shortage of labor due to workers falling sick? Did they face transportation issues?

Once these questions have been answered, then you can start developing and implementing risk mitigation strategies: from immediate actions to enhance supply chain resilience and reduce future supply bottlenecks, to longer-term strategies that require a greater investment of time and resources.

Short- to Medium-Term Strategies

1. Develop a supply chain risk monitoring program

If not already in place, companies should integrate risk management into their supply chain, sourcing strategies and ongoing category management processes. A comprehensive risk monitoring framework should capture the following key elements:

-Understanding the critical risk-prone categories and level of risk across the supply chain

-Regular monitoring of different risk types across suppliers – going beyond just financial indicators, to cover operational, compliance, strategic and geographic risks

-Scenario and contingency planning for unforeseen situations

2. Identity alternative logistics partners for future contingencies

Companies trying to recover from economic lockdowns will face hurdles in shipping markets roiled by deep capacity cuts and weeks of disruption. Airfreight could be constrained for months as airlines continue to operate reduced schedules. Identify and qualify alternative logistics providers to mitigate service failures by an existing partner.

3. Shift supplier base to other low-cost countries

The drop in exports from China in the first quarter led to a significant increase in sourcing from other countries for many product categories. American and European manufacturers started sourcing raw materials and goods from low-cost countries such as India, Vietnam, Bangladesh and Turkey. A diversified geographical sourcing strategy is an effective way to ensure supply chain continuity. Larger companies are leading the charge in this respect: Apple, for example, recently pledged to invest more in Vietnam.

4. Adequate focus on ensuring compliance with new regulatory norms

Companies need to assess new regulations put in place by regulatory bodies across the globe, and identify those that impact their supply chains, manufacturing processes or end products. Dedicating time and resources to reviewing and adapting existing procedures will be critical to ensure compliance with the latest requirements.

Long-Term Strategies

1. Implement a Direct-to-Consumer (DTC) model for uninterrupted supply

COVID-19 has affected many e-commerce businesses as well as how consumers shop. Brands need to be agile and able to move at speed to find and meet demand. Many B2C businesses (and their partners) are pivoting to a direct-to-consumer model because it helps strengthen brand loyalty and increase consumer confidence in terms of certainty and guaranteed supply of goods and products.

2. Develop alternative supply chains

Developing new supply chains in collaboration with respective governments can ensure faster delivery of key raw materials. Further, to avoid supply chain disruptions arising from factory shutdowns in the future, companies can develop a manufacturing network strategy that leverages government economic development programs that encourage domestic production.

3. Consider supply chain digitalization supported by automation

The coronavirus crisis may be a tipping point in the transition to digital platforms and applications that help establish an interconnected network of supply chain components. In a digital supply chain, every activity is able to interact with one another, allowing for greater connectivity between areas that previously did not exist.

Investment in technologies such as artificial intelligence, machine learning and Internet of Things can help companies gain real-time visibility, better manage inventories, improve logistics tracking and make better-informed decisions. These alternatives to often error-prone ERP systems and manual spreadsheets can help businesses predict disruptions and design actionable mitigation strategies.

4. Adopt robust demand planning practices

Traditional planning tries to match demand with supply for the next 30 days. The problem with this process is that a lot of things can change in a month, or even a week. Today’s fast-moving markets require more forward-looking planning to correctly determine demand for future production and identify potential material and manufacturing capacity shortages. Companies should also invest in strengthening their online presence, and focus on quality assurance and delivery timelines, as more and more customers become reliant on e-commerce channels.

Outlook for the future

The COVID-19 pandemic has had significant effects on international supply chains. Going forward, the crisis is likely to give further impetus to trends already underway. More companies are seeking to leverage their production plants outside China or are planning to build production in new locations. The shift to online shopping will accelerate, putting more pressure on companies to meet expectations in an on-demand economy.

When planning ahead, timely, relevant market intelligence is fundamental to making complex decisions and embedding long-term strategies.

Access to timely, relevant market intelligence, conducting the right analysis and asking the right questions now, will provide the opportunity to build a robust, agile procurement strategy that minimizes risk and safeguards business continuity, without sacrificing profitability.

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Tavleen Kaur and P Vijay are Research Managers at The Smart Cube

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Archives, Global Trade Daily, Special Reports

As Consumer Habits Change, How Can Businesses Keep Up?

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American consumers don’t act and buy the way they did just a few short months ago – at least most of them don’t.

The pandemic and the need for social distancing led to an upsurge in online buying. Takeout and delivery replaced, at least temporarily, dining out. Many consumers, worried about the health risks of spending time in grocery stores, turned to services that would do their shopping for them.

Now, as the country tries to reopen and seek the next normal, businesses across the nation must figure out which of those consumer behaviors will become permanent, which were temporary, and whether any new ones yet unthought of might emerge.

“We live in a time when information can become outdated pretty quickly, and that’s become even more true because of COVID-19,” says Janét Aizenstros (www.janetaizenstros.com), a serial entrepreneur and the chairwoman and CEO of Ahava Digital, a company that ethically sources data on American consumers.

“The businesses that are going to succeed moving forward are those that grasp what consumers want and understand their changing habits.”

In contrast, those businesses that fail to understand what the latest consumer data is telling them, and are slow to adapt to the changes in consumer behavior, are going to be at risk, Aizenstros says.

She says going forward, businesses need to:

-Be prepared to pivot. Business leaders must be flexible. Many restaurants figured that out when the pandemic began, Aizenstros points out. Patrons could no longer dine-in, so the restaurants put an emphasis on takeout and delivery services. In the same way, each business will need to figure out how it can adapt and adjust its services or products to meet what customers want and need, she says.

-Gather reliable consumer data. With the internet, social media and numerous other sources, there is plenty of information available today about consumers, but not all of it is reliable. Make sure data comes from a quality source and that it reflects as much as possible the current thinking and behavior among consumers, Aizenstros says. “Businesses that fail to use reliable data and stay on top of the consumer trends,” she says, “will have a difficult time thriving as we go forward.”

-Take steps to make consumers feel comfortable. Even as people venture out more to dine in restaurants or shop in person, a Gallup survey shows they still plan to exercise caution. Businesses can help themselves by letting consumers know what steps they are taking to keep their stores, restaurants, and offices as safe as possible. “This is just another example of understanding and keeping up with what consumers want,” Aizenstros says.

Businesses have always had their plans and operations disrupted by both technological advancements and changing consumer habits. But rarely does consumer behavior evolve as quickly as it did in the early months of 2020 – and the changes didn’t always happen in easily predictable ways.

“Some areas such as home decor and fashion have done well recently,” Aizenstros says. “At the same time, we are seeing trends with businesses like J.C. Penney, Hertz and others struggling and filing for bankruptcy. It’s hard to keep up with consumer thinking unless your data is consistent, relevant and accurate. But if you understand what your customers want and work to give it to them, your business will have the opportunity to prosper.”

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Janét Aizenstros (www.janetaizenstros.com) is a serial entrepreneur and the chairwoman and CEO of Ahava Digital, which provides businesses and investors with ethically-sourced verified data about American consumers. Her background includes roles in finance at TD Canada Trust, Canon, and Brookfield LePage Johnson Controls, along with management consulting in a broad range of functions, such as supply chain operations, data analysis, and strategic thinking. She has a doctorate in metaphysical sciences with a specialization in conscious business ethics.

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Lessons to Learn from East Asia’s Response to COVID-19

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The proximity of the likes of Hong Kong, Taiwan, and Vietnam to China, the epicenter of the COVID-19 outbreak, meant initial forecasts of the virus’s impact were grim. Both public and economic health looked certain to be under serious threat. Yet in stark contrast to much of the Western world, these East Asian nations appear to have the situation under control.

Few to no new cases are being reported here from week to week, while figures continue to spike daily in Brazil, Russia, and elsewhere. But how have they done it, and what can the West learn from East Asia’s handling of the outbreak?

A fast and decisive response

The crucial element in East Asia’s early response – and one perhaps missing elsewhere – was speed. Taiwan, Vietnam, Singapore, Hong Kong, and South Korea all acted swiftly to ban or quarantine incoming visitors. Smart test and trace programs and widespread public mobilization have further contributed to success in limiting the advance of the disease. Taiwan in fact began monitoring the health of travelers on the very day China announced the discovery of the virus to the world.

Lessons learned from previous health crises

Hong Kong suffered the most deaths outside of mainland China During the SARS epidemic of 2002-2004, while Taiwan had the world’s highest mortality rate. Both nations in particular were driven by a desire to do better if and when another virus struck.

Despite a fumbled state response, Hong Kong’s residents began wearing masks almost universally and distributing sanitization supplies to areas in need. The Taiwanese government meanwhile was far better prepared than it had been almost two decades earlier, with public movement quickly curbed and hospital capacity under constant review.

Resilient economies

Investors monitoring global markets with online brokers such as Tickmill may find encouragement in East Asia’s economic response. Taiwan, for example, resisted a full lockdown, meaning that economic activity, while still stunted, has not suffered to the degree it has elsewhere. Residents have stayed at home more than they otherwise would but are buying online while continuing to work. In Hong Kong meanwhile, life is returning to normal, with many public and private spaces back welcoming visitors. Success in containing the disease should provide a more stable foundation for economic recovery.

Takeaways for the West

There are important lessons for the West to take away should another disease spread in the future.

Countries will need to strengthen the medical supply capacity closer to home while working with producers to find ways to plan ahead, respond quickly, and save lives. East Asia’s response has also demonstrated the potential of digital strategy and how, in the context of a pandemic, it can monitor and protect society en masse.

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How Will Your Company Emerge from COVID?

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We all learned growing up (hopefully) that our deeds define who we are. Times of crises especially reveal what kind of character people, and companies, have. The coronavirus pandemic is no exception. It’s forcing companies to evolve rapidly regardless of size, industry, or location. As we fear job loss and lament the dislocation from our work, we have to stay focused on improving our workplace cultures, processes, and environments, all of which define our organizations.

The Coronavirus Pause

Over time, leadership that’s bogged down by deadlines and daily quotas can forget the evergreen management principles needed to drive long-term success. The coronavirus offers companies a chance to reset their workflow, reexamine their offerings, let go of dead-end initiatives, and embrace emerging opportunities. The pandemic gives each of us an opportunity to remake ourselves—to disrupt the disruption.

Evaluate Yourself and Your Ideal

First, you must find ways to take stock of your brand impact. If you don’t appear to others as you intend, odds are you’re not the company you want to be. Evaluate who you are and why, then decide who you want to be and assess the action needed to get there.

-Find out who you are in the marketplace. Solicit opinions on your organization and its impact from trusted colleagues, friends, prospects, clients, and even honest competitors.

-Go through your workflow, your processes, your team, your client list, your vendors, your strategic partners—everything that you are currently doing that defines your company. Share and review it with members of all departments. Look at your current mission, revisit your original purpose, and find the direction to match that goal. Define what you need to change.

Next, assess, reassess, and harness all of your information and resources. This may help you find new business lines, action items, or process improvements.

-Amass all your institutional knowledge. Bring your leadership and staff together to codify everything you do. Capturing all the tacit and implicit knowledge of your people will reveal new paths to take and lessen the chance of missed opportunities.

-Have your leadership team focus on the near misses of the past and build a “recent lessons learned” catalog to facilitate self-examination. This will also show you how and where you need to mentor your team, build new working relationships, and improve collaboration.

Third, examine your leadership team through a new lens and rebuild—leaving your dysfunction behind.

I have heard countless times from colleagues (and experienced myself) how destructive it can be to be wholly removed from decision-making, and to have one’s hands tied when trying new things, or even just seeking counsel from outside your department due to trivial power dynamics.

-Share ideas and solicit them. Let people from all levels of your organization contribute freely and synergistically. You will be amazed at how much more engaged all your people are when they know they can contribute in a meaningful way.

-Treat your people well. Mental and emotional health are the wellspring of longevity, loyalty, and creativity. You simply get much better performance out of happy people.

-Break the taboos. Have people from different teams explain their roles to each other. Encourage them to talk to each other about the different functions in your business.

Becoming Who You Want To Be

An example of such a reboot is a small rideshare startup for kids and families. The company—RideAlong—was started by parents in New Jersey who were initially just seeking a safe way to get their kids to and from school.

RideAlong’s CEO Norbert Sygdziak was stunned by how much pent-up demand he discovered: “We started in September 2019 and had double-digit growth and double-digit profits. What started out as a local community need quickly snowballed into real demand across the country. It was incredibly fulfilling. But then came COVID.”

Schools shut down. The business went away entirely. RideAlong’s leadership was at a loss like everyone else. But then it clicked. Sygdziak and members of his Board and leadership team all galvanized around one question: “There are so many people in tougher situations. What can we do to help those people in this time?”

Sygdziak started by taking care of his people and asking his team to pull together. He made sure to take care of his drivers first as they were completely out of work. He paid them to keep the team intact and demonstrate his appreciation of what they were going through. The executives waived and postponed taking paychecks. He gathered volunteer teams of drivers and staff to partner with hospitals, food pantries, restaurants and non-profits to deliver food and supplies to seniors and families in need, provide meals to overtaxed healthcare workers, help children get to hospitals for much-needed regular medical treatments, and coordinate school deliveries for students.

It is not an uncommon pivot at this time, but it is a great example of the power of reexamination. These non-profit relationships and good deeds are leading to for-pay partnerships in ways they never dreamed. Pulling together the entire team, asking “why do we exist?” and “what should we do?” allowed them to reimagine everything.

Importantly, it crystallized what Sygdziak and his team wanted the company to be. They were not just a kids’ transportation company, but rather a mechanism for building community. Sygdziak is moved when he thinks about it: “We were forced to think more deeply about our purpose. By spending our resources on helping those less fortunate, by providing connection, and hopefully alleviating some difficulty, we found inspiration and grew tighter as a team. Now we understand exactly who we want to be.”

Who Will You Become?

Whatever you do with this time, if you have it, embrace it.

Despite the damage done, the coronavirus has inspired companies to pivot to philanthropy. Maybe you have the opportunity to prepare for change and pursue what the ferocious day-to-day never quite allowed. Reach out and expand relationships and geographies. Refine and redirect your team. Fully explore the ideas and solve the problems that always seemed too big to take on.

Rewrite your story and be better.

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Jennifer S. Bankston is the President of Bankston Marketing Solutions and has over twenty years of experience spearheading strategic initiatives for law firms and other industries including technology, financial services, life sciences, and healthcare. Jennifer is also rooted in technology, having developed various applications and products within the organizations she has worked. She can be reached at bankstonmarketingsolutions.com

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How To Make Your Business More Financially Sustainable after COVID-19

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The coronavirus outbreak in December 2019 came at a time when the global economy was trying to get its act together after being slowed down for a while by trade tensions, especially between China and the US. The much-needed transition towards sustainable manufacturing and clean energy has also played a part in slowing down the global economy, but for a good reason.

When the virus checked into town, all the gains we have experienced over the last decade were turned upside down. Businesses now have to address the health, social, and economic impacts of the coronavirus on top of the already existing geopolitical (e.g. Brexit) issues that impact the business.

Supply chains all over the world have been disrupted by the pandemic, millions of working citizens infected, hundreds of thousands dead, and billions of potential customers rendered jobless. To compound these miseries, most markets are under lockdown, and no one knows for sure when life will get back to normal. The big question now remains: How will business people make their businesses more financially sustainable after COVID-19? Here are 5 measures you can take as a business leader to counter the financial impact of the coronavirus:

1. Leverage employment organizations when expanding internationally

If your intentions were to expand to international markets, or if you had already opened shop overseas, you can collaborate with professional employment organizations to source for and compensate employees. You can, for example, count on a Japan employer of record to help you to establish presence and support personnel in Japan cost-effectively and efficiently. They will help you hire new talents, manage existing staff, and navigate the legal requirements and obligations that come with business ownership in Japan. When you don’t have to worry about managing employee payrolls and compliance issues, or to hire an HR department for that matter, you are able to save on overhead costs until your business recovers fully from the coronavirus shock.

2. Re-evaluate your supply chains

The coronavirus has grossly exposed the vulnerabilities of global supply chains. Companies that depended entirely on Chinese manufacturers or raw materials have been forced to close down temporarily with some closing shop completely. Businesses that will survive this pandemic have to look beyond first- and second-tier suppliers, especially for their key products’ raw materials, and expand their supply lines to bring in more players. Businesses also have to expand their markets. Having a contingency “plan B” will not be enough. You will need to diversify in all aspects of your business so that if one line closes or is unable to recover fast from the pandemic, you will always have alternatives.

3. Reach out to customers

Do everything that you can to retain your main customers. If they owe you, don’t be quick to pressurize them to pay because they are also struggling to get back on their feet. You can loosen repayment terms a bit to accommodate the new normal- this is one of the small prices you may have to pay in order to keep your business afloat. Your lenders are probably doing the same for you. The most important thing here is to maintain open communication lines with your debtors, creditors, and other clients and being honest with one another in case of any payment difficulties. In the long run, when you are all back on your feet, you will still have your customers, and cash will start flowing in as it used to.

Reaching out to customers also means reaching out to new markets, or offering more products to your existing market. If your existing market isn’t recovering as fast as other markets, it is okay to move your business elsewhere. If one of your competitors has closed shop, this is your chance to move in for their customers. Be courageous to fill in every gap that the virus could have created within your market, and to explore other options that could bring in additional cash provided they won’t compromise your brand identity.

4. Update your terms and conditions

There are some terms and conditions that you have held on for too long, some of which have left your business vulnerable during the ongoing pandemic. This is the time to scrap them all and create better terms that protect you from future crises. In fact, you would rather pull out of a contract now and pay the cancellation fee, rather than push on with it and incur losses in the end.

Going forward, you need to take a proactive approach in revenue, employee, clients, and commercial risks management. Crisis management is a process; not just an event. You will need all the teamwork and support that you can get if you are to pull this off. Flex your network and get rid of any dead weight.

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How Modern Services Enable Agility, Elasticity and Mobility in an Enterprise

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Organizations across the globe have been tirelessly working on improving their agility and scalability. Due to a sudden change in the business landscape caused by COVID-19, business leaders suddenly found themselves having to rise to the call to action. The results are staggering – the unanticipated impact and pace of the global spread of COVID-19 caught businesses off guard. Many failed to quickly adapt to the changing circumstances as they were not well-equipped in their ability to scale down impacted resources and operations in response to a halt in customer demand. Some were just not ready to operate their businesses 100% remotely.

Conversely, in sectors such as healthcare and other essential services, several organizations could not keep up with the unexpected rise in demand as they lacked means to quickly ramp up their operations. Most of these companies that could not adapt to the changing circumstances had one or all the three critical traits of the modern enterprise ecosystem missing – agility, elasticity, or mobility.

In this article, we’ll discuss how organizations can make their ecosystem agile and elastic and support mobility – and how these qualities are going to help organizations scale their businesses in the long run.

The role of elastic services in business agility

In today’s world, businesses are faced with a variety of challenges that require they quickly adapt resources to address a dynamically changing environment. After the pandemic declaration, organizations found themselves having to provision new remote working solutions in a matter of hours. Monolithic application architectures are designed for a certain level of capacity. Sudden changes in demand add stress to existing resources, such as a rise in network utilization due to the entire workforce requiring VPN connectivity to on-premise applications. These networks may have never seen these levels of utilization before, and therefore, become bottlenecked, resulting in poor user experience or worse, slow mobilization of resources toward an urgent demand.

Adapting elastic services to actual demand

In other situations, agility is needed to pivot and re-invest resources away from impacted operations or loss in demand. An organization can consume elastic services and managed services to deploy the minimum resources needed to service actual demand. Managed services providers can help business units in distress with predictable, recurring services at fixed annual terms, which allows leaders to re-prioritize full-time staff members to newer product lines or more strategic initiatives. A well-positioned product organization with a properly designed Cloud-Native Architecture can auto scale with the minimum resources needed to run an application and scale out to meet the demands of a growth spurt.

Source: AWS

Flexible, collaborative, and secure digital spaces enable enterprise mobility

In addition to agility and elasticity, the third critical requirement that came to the spotlight during the recent crisis is enterprise mobility. Previously, IT leaders have elected to utilize digital workspaces as a flexible benefit to augment in-person activities with remote capabilities, such as the occasional work from home. However, it was not until the current crisis that several organizations looked at full-scale enterprise mobility as highly differentiating, if not mission-critical to success.

However, full-scale enterprise mobility is not a switch that one can just flip. It needs technological, cultural, and behavioral changes. The workforce, particularly newer generation workers prefer to work from home and operate more on results, rather than “working a shift.” Managed services providers can help businesses design a flexible remote setup that can be further leveraged to drive a culture of collaboration.

How to implement elastic services: The three-step approach

Given the requirements of each business are different, there is no one-size-fits-all strategy to ensure the successful implementation of elastic services and guarantee agility, elasticity and mobility in an enterprise ecosystem. However, following the three-step process described below helps organizations design a custom implementation plan suited to their needs.

Step 1 – Discover: Identify the business goals the organization is trying to achieve by implementing these services and the potential risks that can jeopardize the effort.

Step 2 – Analyze: Analyze the business goals and map them to the desired outcomes. Perform capabilities assessment against the current architecture – mapping out demand versus usage patterns and identifying the opportunities for modernization.

Step 3 – Plan: Define the implementation roadmap. Enterprises can choose the buy, build or partner route to implement and operationalize a modern enterprise ecosystem.

Elastic services make businesses risk-tolerant and sustainable

Setting up modern infrastructure and developing it to an enterprise-level, especially during this time of crisis, is a demanding task. However, enterprises must not look at this exercise to combat only the current crisis. An agile, elastic and mobile enterprise ecosystem helps companies tackle new initiatives with less worry. Consumption friendly elastic services can allow organizations to pay-as-you-go with minimal up-front investment costs. This ability allows organizations that can mobilize with high agility a competitive advantage in the experimentation of new initiatives or expansion to new markets while having a risk-managed auto-scaling architecture to turn down resources to what’s minimally needed to keep a foot in the game. Most importantly, the decision to fail fast and stop investing becomes more attainable and less regrettable.

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Joey Lei is the director of service management at Synoptek, a global systems integrator and managed services provider. Prior to joining Synoptek, he was a lead product manager for Dell EMC’s Data Protection Division. Lei managed product lines contributing half a billion in annual product revenues and was a founding product manager for Dell EMC PowerProtect Data Manager, Dell EMC’s newest generation data protection and data management solution. 

Email address: jlei@synoptek.com

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Archives, Global Trade Daily, In The News

White House Issues Executive Order Providing Agencies with Regulatory Enforcement Discretion to Promote Economic Recovery

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The Trump Administration issued its Executive Order on Regulatory Relief to Support Economic Recovery (the “EO”) on May 19, 2020 (Executive Order). The EO seeks to remedy the economic impact of the ongoing COVID-19 pandemic by removing certain administrative barriers and providing flexibility in the implementation and enforcement of other administrative provisions and requirements.

Although certain provisions of the EO are vague, Section 1 states the EO’s policy that “Agencies should address this economic emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility.”

Section 4 of the EO asks the heads of all federal government agencies to “temporarily or permanently rescind, modify, waive, or exempt persons or entities” from regulatory standards “that may inhibit economic recovery.”  Significantly, Section 5(b) of the EO gives agency heads the discretion to “decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards, including those persons and entities acting in conformity with a pre-enforcement ruling.”  (Emphasis added.)

Of course, agencies must act within their statutory and regulatory frameworks and must also comply with the Administrative Procedure Act, but the EO potentially has broad implications across sectors and agencies, including for international trade.  As an example of how this EO might affect certain trade issues, consider the following:

-Importers should not expect to be exempted from exercising reasonable care, paying duties, participating in antidumping or countervailing duty investigations,  or complying with any other CBP, Commerce or ITC statutory or regulatory requirements.  Per Section 5(b) of the EO, Agency heads have enforcement discretion “as permitted by law,” meaning agency heads cannot override a statute, even if they believe that doing so would aid economic recovery. However, for matters that have already been placed within the “enforcement discretion” of an agency, the government has the ability to be more lenient in accordance with the EO. For instance, an agency could seek to enforce minimum penalties within a range of statutory options, although the agency could not ignore statutory requirements altogether.

-Similarly, if CBP discovered that certain imported apparel violated CPSC lead content standards, CBP and the CPSC could extend a more lenient resolution by permitting the shipment to be reconditioned or reexported rather than destroyed.

Another potential question is how evenly any leniency in trade and customs matters will be applied since the Trump administration has made tariffs and restrictions on Chinese imports and exports a pillar of its political platform. Because of the broad nature of the EO and because any action will be at the agency head’s discretion, we reiterate that it is difficult to determine the EO’s exact effects at this time. However, we can expect that affected companies and individuals will seek to use the flexibility and leniency provisions of the EO, effective immediately.

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Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

Jeffrey Neeley is a Washington-based partner with the law firm Husch Blackwell LLP. He leads the firm’s International Trade Remedies team.

Julia Banegas is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

 Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

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SBA Extends Safe Harbor Deadline to May 14, 2020 and Confirms that Foreign Affiliate Employees Must be Counted for Size Purposes

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Late on May 5, 2020 the Small Business Administration (SBA) issued another round of Frequently Asked Questions (FAQs) that extended the Safe Harbor Deadline to return Paycheck Protection Program (PPP) loan funds from May 7, 2020 to May 14, 2020. Significantly, the SBA also confirmed that its rules regarding foreign affiliates are applied to PPP applicants in the same manner as its other programs. Loan applicants should closely review the most updated version of the SBA’s FAQs and talk to their counsel about the best way to proceed.

Safe Harbor Extended from May 7, 2020 to May 14, 2020

As discussed in a previously, on April 23, 2020 (20 days after applications could first be submitted for PPP loans), the SBA issued FAQ 31 that significantly increased the requirements surrounding an applicant’s certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” In the strongly worded FAQ 31, the SBA stated that “[b]orrowers must make this certification in good
faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” Unfortunately, as of the date of this alert, neither the Department of Treasury (Treasury) nor the SBA have issued any further guidance beyond the above sentence to confirm how applicants actually make this determination. On April 28, 2020, the SBA also confirmed that FAQ 31 equally applies to both public and private companies.

In addition to issuing FAQ 31, the SBA also issued an initial Safe Harbor Deadline of May 7, 2020 to return PPP loans. This May 7, 2020 Safe Harbor Deadline has now been extended to May 14, 2020. Under FAQ 43 that was issued on May 5, the SBA and Treasury are allowing borrowers to return PPP loan funds by May 14, 2020. For those borrowers that return funds by May 14, the SBA and Treasury have confirmed that they will deem the certification regarding “need” to have been made in good faith. The SBA also has confirmed that it intends to issue additional guidance on how it will review the “need” certification before May 14, 2020.

While the SBA’s recent guidance does not specifically reference any eligibility certifications outside of the “necessity” for the loan, a borrower knowing that it has a separate eligibility issue should seek counsel about addressing that issue before the extended deadline of May 14, 2020.

Frustration and confusion abound since the issuance of FAQ 31 and FAQ 37. There are several questions that Treasury has not adequately answered. Until further guidance is issued, applicants are faced with a difficult choice of keeping funds with the risk that the government may later hold the unclear guidance against them, or refuse the funds and accept the impacts that go along with that, including a possible reduction of employees.

Applicants across the country have been raising these complaints, and Treasury has at least initially responded by extending the deadline to May 14, 2020. We hope that Treasury will also soon issue additional FAQs or rules to confirm the parameters for which businesses can in good faith certify the need for a PPP loan.

Borrowers Must Count Employees of Foreign Affiliates When Determining Eligibility for a PPP Loan

The SBA also issued FAQ 44 on May 5, which confirms that borrowers must count both foreign and domestic affiliates when determining eligibility for PPP loans. FAQ 44 has significant impacts on businesses which applied for PPP loans without counting the employees of foreign affiliates.

As a reminder, SBA’s regulations confirm that “[c]oncerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both.” 13 C.F.R. § 121.301(f) (February 5, 2020). The PPP Loan Affiliation Rules describe how the SBA determines affiliation for PPP loans.

SBA’s rules for determining size have long required participants in SBA’s programs to count both foreign and domestic affiliates. See 13 CFR §§ 121.103(a)(6), 104(a), 106(b)(1), and 301(f)(6) (confirming that both foreign and domestic affiliates should be considered for size purposes).

However, when the SBA issued the PPP Loan Affiliation Rules, it did not include the pre-March 11, 2020 version of 13 C.F.R. § 121.301(f)(6)1, which confirms that foreign affiliates should be counted. The PPP Loan Affiliation Rules do not reference Section (f)(6). The Interim Final Rule first issued on April 2, 2020 and SBA’s FAQ 3 also states that borrowers are eligible for a PPP loan “if the business has 500 or fewer employees whose principal place of residence is in the United States,” or meets other criteria.

The use of the term “principal place of residence in the United States” in the Interim Final Rule and SBA’s FAQs created confusion about whether employees of foreign affiliates actually needed to be counted for PPP loan eligibility. For those who have long worked with SBA’s rules, it seemed that not counting foreign affiliates would be a significant change from SBA’s past implementation of its regulations, but the clear language in the above sources made it reasonable to openly consider that question to determine if the SBA was handling the PPP loan program differently.

On May 5, the SBA confirmed that PPP loans are consistent with its other programs and borrowers must count foreign affiliates when considering size:

For purposes of the PPP’s 500 or fewer employee size standard, an applicant must count all of its employees and the employees of its U.S. and foreign affiliates, absent a waiver of or an exception to the
affiliation rules. 13 C.F.R. 121.301(f)(6). Business concerns seeking to qualify as a “small business concern” under section 3 of the Small Business Act (15 U.S.C. 632) on the basis of the employee-based size standard must do the same.

See FAQ 44.

Businesses which have already applied and know that foreign affiliates would cause them to exceed the relevant size standard should discuss this with their counsel to closely evaluate next steps on how to proceed. It would be wise to consider and address this before the May 14, 2020 Safe Harbor Deadline.

For specific guidance on this issue, please contact Josh Mullen, John  Scannapieco, or Jeff Wagner. For more information and general guidance on how to address other legal issues related to COVID-19, please visit the Coronavirus (COVID-19): What You Need to Know information page on our website.

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Can Emerging Economies Afford a “Green” Recovery from COVID-19?

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The dramatic slowdown in industrial production, energy demand and transport activity in the first quarter of 2020 has led to significantly lower levels of air pollution, sparking debate over whether the coronavirus outbreak will lead to long-term shifts in consumer and industrial behaviours that could reorient economic policy towards sustainable development goals. 

However, rising public debt, combined with significant capital outflows and reduced exports, will make financing green investments a challenge for many emerging markets as their governments seek viable strategies for kick-starting their economies once the disruption from the pandemic subsides.

A report by the International Renewable Energy Agency (IRENA) projected that accelerating investment in renewable energy could underpin the global economy’s COVID-19 recovery by adding almost $100trn to GDP by 2050.

In addition to helping curb the rise in global temperatures, the IRENA report claims that ramping up investment in renewable energy would effectively pay for itself over the long term, by returning between $3 and $8 for every $1 invested, and quadrupling the number of jobs in the sector to 42m over the next three decades.

While welcoming direct spending on infrastructure as a tool for stimulating economic growth after the coronavirus crisis, Thura Ko, managing director of Myanmar-based YGA Capital, cautioned that green energy projects should still be vetted carefully to ensure they are well planned and cost-effective.

“This is particularly important if the government has had to resort to emergency sources of funding, such as borrowing, grants or even quantitative easing. Certainly, if a green energy initiative makes sense and is efficient, then the government should initiate investment there – but not all green energy initiatives are efficient,” Ko told OBG.

As governments consider the role that investment-linked to sustainable development goals could play in post-pandemic stimulus measures, recent polling data indicates that voters across emerging and developed economies are broadly supportive of a “green” economic recovery from COVID-19.

In a survey conducted by Ipsos across 14 countries in April, 65% of respondents said it was important for their government to prioritize climate change mitigation actions in their post-COVID-19 recovery strategies. The figure was as high as 81% in India and 80% in China and Mexico, and fell as low as 57% in the US, Germany and Australia.

Green commitments in the “yellow slice”

Almost all countries globally have ratified the 2015 Paris Agreement, committing them to reduce carbon emissions with the aim of ensuring that global temperatures do not rise more than 2°C above pre-industrial levels.

This includes all countries in the “yellow slice” of the global economic pie: those high-potential emerging markets that makeup Oxford Business Group’s portfolio.

The 10 countries of the ASEAN bloc are committed to collectively meeting 23% of their primary energy needs from renewable sources by 2025.

However, the transition towards renewables in South-east Asia is complicated to some extent by the region’s plentiful reserves of coal, which are viewed by some policymakers as a reliable and cost-effective option for quickly scaling up generation capacity to meet domestic power demand.

Prior to the outbreak of COVID-19, China and Japan were ready sources of finance for coal-powered energy projects in the region, but there are some indications that this is changing.

In April, two of Japan’s largest banks – Sumitomo Mitsui Banking Corporation (SMBC) and Mizuho – announced commitments to curb their financing of new coal power projects under renewed pressure from environmental groups.

Since January 2017 Mizuho, SMBC and fellow Japanese bank Mitsubishi UFJ Financial Group have accounted for 32% of direct lending to coal power plant developers, so Japanese banks’ decisions to rein in lending to the segment will create a significant gap in the financing ecosystem for such projects.

Elsewhere, GCC countries have made steady progress in adding to their renewable energy capacities, in tandem with efforts to diversify their economies away from dependence on hydrocarbons.

The UAE has been at the forefront of this transition and is now home to approximately 79% of installed solar photovoltaic capacity across the GCC’s six members. The country aims to generate 44% of its domestic power needs from renewable sources by 2050, the highest proportion in the region.

Meanwhile, 10 countries in Latin America and the Caribbean – led by Colombia – have set a regional goal of meeting at least 70% of electricity needs from renewable sources by 2030.

In Africa, where 600m people still do not have access to electricity, IRENA has proposed grid interconnections and the development of regional energy corridors as viable mechanisms for extending low-cost wind and solar energy to all countries, as well as enabling cross-border access to hydropower and geothermal energy.

Funding the transition

While climate change can be viewed as a systemic risk to the long-term development of emerging economies, it remains to be seen if governments in such countries will go beyond prior commitments to incorporate large-scale investments in green energy and infrastructure into their post-COVID-19 recovery strategies.

With business and household demand expected to remain depressed for some time after the worst health effects of the crisis subside, policymakers will be required to enact further policy measures to stimulate economic activity.

“If stimulus packages simply return countries to where they were before COVID-19, we will face the same problems tomorrow that we faced yesterday: low productivity, high pollution, and locked-in, carbon-intense economic structures,” Stéphane Hallegatte, lead economist of the World Bank’s Climate Change Group, told OBG.

“The most efficient stimulus packages will be the ones that are designed to create many jobs and support economic activity over the short term, but also get economies on track for rapid and sustainable growth post-COVID-19. Countries can use this spending to make them 21st century-ready by investing in developing the skills of their population, but also in a modern, zero-carbon infrastructure system and a healthy environment.”

If required investments can be catalyzed, green energy and infrastructure development can be particularly effective at addressing depressed demand because they can create a relatively high amount of jobs while also laying the foundations for sustainable long-term growth.

World Bank data indicates that mass transit projects, building retrofits to enhance energy efficiency and renewable energy plants are much more effective at job creation than fossil fuel projects. Looking further ahead, such projects should contribute to lower air pollution, which should simultaneously help to lower mortality rates and boost labor productivity.

Unlike the situation after the 2008-09 financial crisis, the cost of renewable energy generation is now competitive with fossil fuels, meaning fewer trade-offs between short-term pains and long-term gains when evaluating renewable energy investment decisions.

However, Hallegatte recognizes that many energy and public transport projects take a long time to prepare, and argues that they should be added to stimulus packages now – possibly by reviewing and updating existing plans – for the benefits to start being felt in six to 12 months.

He added that emerging economies could explore various avenues for financing such projects, including the state budget, offering attractive incentives to private firms and requesting support from multilateral finance institutions.

Looking further ahead, redirecting fossil fuel subsidies towards more productive and sustainable areas of the economy, as well as introducing energy or carbon taxes, could become part of the tool kit for channeling investment towards green infrastructure.

Private equity (PE) could also prove to be an effective alternative source of funding for green infrastructure projects, as many funds are now assessing new strategies for the recovery phase, but they are likely to become more discerning about where to allocate capital.

“PE funds will be even more selective and scrutinous than before. Underlying business prospects in a post-COVID-19 environment must be clear and visible. A link to sustainable development goals can add to the investment appeal – particularly in relation to an eventual exit – but this does not detract from the need for a business model to be robust and clear,” YGA Capital’s Ko told OBG.

For Ulrich Volz, director of the SOAS Centre for Sustainable Finance, emerging economies should also look at developing their domestic capital markets in order to become less reliant on foreign portfolio investment, which tends to migrate quickly towards developed market assets at the first hint of a crisis.

By doing so, they would be better placed to fund domestic investments through domestic savings, which in the past have predominantly been invested in advanced countries for relatively low returns.

“Some will claim that, in times of crisis, developing and emerging economies won’t be able to afford the ‘luxury’ of green or sustainable investments, but this is a very short-sighted view,” Volz told OBG.

“Growth that is not sustainable undermines long-term development. The COVID-19 crisis shows how risks that seem very far away and abstract can hit us with a vengeance. I would hope that sustainability risks will receive even more attention because of the current crisis.”

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This article originally appeared on oxfordbusinessgroup.com. Republished with permission.