Shock Absorbers

Every system has one or more shock absorbers in order to cope when we hit a bump in the road.

“Their” Shock Absorbers

Covid-19 is an opportunity to look at companies in action, under pressure, to see the truth behind the hype.

  • Those with high staff counts tend to go for their employees. Layoffs, short time working, redundancies.
  • Those with asset heavy customers go for the assets of customers they can afford to lose for a while. For banks, those with secured loans and little political leverage, for large organisations their suppliers payment schedules.
  • For those deemed “to big to fail” it’s the Government.
  • For those in critical healthcare, it’s an awful demarcation line we force on staff to make decisions on who to treat and who to save, because we have not built enough of a shock absorber into their system – staff, resources, and reserves.
  • For Governments, it’s supranational institutions,  such as the EU, or the IMF.

The common theme is that all of them are outplacing their shock absorbers, even as they may be sitting on significant cash assets, and paying out generous dividends and bonuses.

It seems that this is a mindset – perpetual growth and good years are normal and somehow deserved, bad years and shocks are somebody else’s fault.

Under more normal circumstances, instances are spread out and whilst we notice them, tut about them, until other issues soon grab our attention and we move on.

Covid -19  is different – it’s brought them all along at the same time, and occupied the news for an extended period more so than any other event I can remember.

All the indications are it will continue for some time, and not be anything like over before we are likely to hit other bumps in the road, from economic fallout, to the compounding effect of Brexit, and other suppressed known unknowns such as mitigating climate change.

Your Shock Absorbers

So as individuals, the tiny economic equivalent of a Higgs Boson, what do we do in the face of this?

Firstly, we should recognise we are not victims, we are co-conspirators. 

We go along , unquestioningly, with the stories we are told. We buy the dream and in order to do so accept the terms – the mortgage or the outrageous rent, the contracts that bind us to non competes and exclusivity, and the corporate offer of everlasting love for us. 

It reminds me of the fable of the frog and the scorpion.

A scorpion, which cannot swim, asks a frog to carry it across a river on the frog’s back. The frog hesitates, afraid of being stung by the scorpion, but the scorpion argues that if it did that, they would both drown.

The frog considers this argument sensible and agrees to transport the scorpion. Midway across the river, the scorpion stings the frog anyway, dooming them both. The dying frog asks the scorpion why it stung the frog despite knowing the consequence, to which the scorpion replies: “I couldn’t help it. It’s in my nature.

Fable

All the indications are that we are in for a sustained period of very disruptive change and that we really have no idea, despite the froth of the futurists, as to what precise shape it will take.

What we can be pretty certain of is that we will need our own, personal shock absorbers. For the vast majority of us, the apocryphal 99%, that will not be money. So what else might we do?

  • Prepare our own personal balance sheet. Assets and Liabilities. How do we protect our assets, and reduce our liabilities to give us time, and options? Other than our homes, and food most of what we buy is optional. Separate need from want. Ditch the baggage.
  • Have a direction. If we find ourselves in rough waters, do we know where the shore is? What is it we will strike out for? What really matters? As Frankel noted, when we have a powerful “why” we can endure any “how”
  • Choose who to rely on. Five is a magic number – the optimum size for a leadership group. We become the average of the five people we most associate with, and of course it’s a prime number. Avoid scorpions.

These are tumultuous times. That does not mean they are all bad – this is an opportunity to appraise the situation, discard the unproductive, and reboot.

All shall be well.

Published by Richard H Merrick

Complexity and volatility create enormous opportunities for those willing to go beyond the boundaries of "business as usual" to explore the edges of their business. I am an entrepreneur, a coach, a creative thinker, and above all, an explorer of possibility.

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