After the Crisis the Turnaround – Beyond the control of damage control

Author: Eric Van den Broele

To my knowledge, this book has only been published in Dutch. (Na de Crisis de Ommekeer – De controle van de damage control voorbij) That is a pity. Yet I translate the summary because of the ideas in the book. It has a lot of them. I state some of them here.

An instrument during Covid19 was to financially support the organizations to continue to pay the wages.

The question: ‘How long can an organization survive after a crisis without external help?’ has therefore remained unanswerable.

No one has a crystal ball, but support measures can be given to financially survive. They must be distributed with wisdom. To this end, a so-called ‘shock resistance score’ (https://graydon.be/nl/resources/blog/strategie/hoe-maakt-u-echt-impact-met-de-schokbestendigheidsscore) of the organizations must be examined. The question is whether the organisations that were no longer really viable before the crisis are still ‘entitled’ to a survival support measure. To this end, it is insufficient to simply follow the statistics of artificial intelligence: a circle of wise men (experts) must examine these cases piece by piece, in order to make a weighted and supported decision.

Such a shock resistance score has more possibilities than during a major crisis. Even if a mayor has plans to redevelop a town square, the shops must be able to survive. However, they then have to go into a kind of ‘lockdown’ and lose sales. If the works take too long, they can go under. On the basis of a shock resistance score, the Mayor can document himself in advance and plan to prioritize the financial support from the start. And he can determine the budgets to guide those stores through the difficult period.

There are also ethical issues associated with this: if an organization’s shock resistance score is poor, suppliers may be able to cautiously refuse to deliver unless payment is made immediately.

But the knife cuts both ways: the government can also demand that the legal reserves be expanded by the organizations, just to increase their shock resistance score. Currently, this should be 10% of the capital. Failure to check this leads to non-compliance, which de facto weakens the competitive position of the organizations and therefore of the region.

After a crisis in which large government support was used, a recession can follow. Unbridled giving money cannot last. So choices have to be made. Balance must be sought, with social and societal justice. A crisis exposes anomalies. This raises questions

  • What do we want to do with our society?
  • Are we aiming for unbridled entrepreneurship with freedom – happiness?
  • Or entrepreneurship with sustainability, attention to the environment and society?
  • What do we support ?
  • Do we continue to aim to create more and more jobs by organisations, or do we look at sustainable, fulfilling work with future prospects?
  • Do we want companies with strong shock resistance?
  • What about companies with holdings abroad? Are we going to continue to make those holdings richer?
  • Is it time for a conversation with the private about how to do this? How do we have that conversation?

So questions are about

  • Hallmarks of undertakings
  • The impact on companies
  • What direction we want to go in as a society.
  • What do we do with companies that are on the verge of bankruptcy before the crisis?
  • What about start-ups in turbulent water?
  • What about shock-resistant companies that were little affected by the crisis? What about their mortgage? Their investments?

The government must make the right social choices. To this end, data mining is super important. Belgium is more equipped in this respect than neighbouring countries. It can order studies to know the effect of the measures in great detail. This provides post-crisis a number of lessons learned that in post crisis can help prepare a next crisis with rescue plans. To this end, intangibles can also be measured indirectly. Research into intangibles is needed to stimulate innovation and detect crime during and after the crisis. By working together regionally with the federal (justice) department, you create the test ground to find out how best to dose the approach for companies.

This data mining can also be used to determine the effect and effectiveness of the support measures: which support measures have worked to what extent. Which companies receive which support during the reconstruction? Which ones don’t ?

In addition, the government must continue to activate dormant savings. This requires trust. For example, with funds whose units are insured against a decrease in the value of the fund. Inclusion is important.

Focus on SMEs that develop technology that promotes environmental well-being.

Extra credit via payment term of 90 days instead of  30. With a tax advantage slightly higher than the loss of profit. This provides continuity in the customer portfolio, goodwill, loyalty, retention for supporting entrepreneurs.

Encourage to put financial surpluses into loans to customers or suppliers. Or to take minority participations.

The government as a business angel? (Is that possible?)

Symbiosis with organizations from other sectors: vans that are now half empty…

A third dimension is therefore, in addition to quasi-bankruptcy pre-crisis or during the crisis, also whether the company was not only economically healthy, but also socially responsible companies. Whether they can become later.

Check, among other things, whether the customers are activated.

  • Where do you give the right financial injections?
  • Where do self-reinforcing chain reactions occur?
  • How do we achieve maximum effect?
  • How do we limit the Flemish dependencies that come to the surface during the crisis?

In this way, among other things, make the crisis a catharsis.

Benchmarks for (only) a first direction are those of the nine-grid of Graydon.  (https://graydon.be/nl/ITAA-YourInsight)

We learned that we depend on long logistics chains, that we are dependent and vulnerable, that our economic credo is not shock-proof, that decisiveness is lacking, that local trade was creative, that web technology is powerful, that social cohesion in many neighbourhoods has become stronger, that commuting has been questioned, that a new approach to the working environment was possible…

Furthermore, incentive of equality is necessary for effective better prosperity. Otherwise, the rich will become richer, the poor poorer, with all the consequences for social robustness. To this end, the dissemination of knowledge is necessary. That doesn’t happen spontaneously. This makes one stronger. Organize learning how to make connections and associations, avoid specializing too quickly. E.g. through a course ‘overarching consideration’. Show common ground between sciences, between abstract thinking and everyday experience. Teach them to reflect on the environment, on themselves, on their future. (Jacques Attali: ‘Peut-on prévoir l’avenir?’ 2015)

In addition, a self-confident region in a self-confident Europe is needed to stand stronger. To this end, the growth capabilities must stimulate people to know and acknowledge their own values. Belief in one’s own abilities, interest in the other…

For this, four tools are needed: social structure or governance format, communication, technology and economics.

In terms of leadership in the crisis, it is necessary post-crisis to rethink the structures and their power:

  • What was helpful?
  • What was pointless?
  • What was bothersome?

In terms of institutions, one must therefore check which ones can be renewed, which ones have to grow, which ones have to shrink and which ones are allowed to leave.

In order to organize society, economy and technology for the people of tomorrow, we must therefore prevent or counteract the far-reaching brain drain from our region (Flanders).

In addition, our region must support its social cohesion. Tackling ‘the others are wrong’ thinking, tackling human (social) poverty (not the lack of prosperity alone). To this end, it must stimulate binding action and communication. That starts with connection in neighborhoods. The aim that everyone is involved and takes responsibility. Ask how to engage people from other communities. Decision-making at subsidiary level based on interests. That creates

  • Chances
  • Social cohesion
  • Hope
  • Creativity
  • Integrates cultures

This can only occur in the long term, thanks to a long but sustained lead time. The state should not be a dogma. The state must create opportunities that correct unevenness of opportunity.

In terms of economy, re-shoring is needed. It is equivalent to securing our supply, control over the flow of goods and services. About its quality. Shorter transport links. It is more efficient and cheaper in the long run. Consequences can be: better air quality, decongestion of our roads and more circularity.

Then there is the issue of the failing entrepreneur. It must be able to restart; instead of seeing him or her as a kind of criminal, see him or her as someone who can learn from his or her experience. Or accompany him or her to paid employment.

With technology you can do a lot in terms of artificial intelligence. However, it is also dangerous relative to GDPR and human rights.

All this is to be resilient. This is necessary for the organizations and our region to be able to meet the others in full confidence and respect.

One thought on “After the Crisis the Turnaround – Beyond the control of damage control

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