Jack Ma, the co-founder of Asia’s biggest company by capitalisation, said the coronavirus epidermic in China presents an opportunity for entrepreneurs to retool themselves and prepare for the growth that lies ahead when the outbreak subsides.
Ma, the retired chairman of Alibaba Group Holding and principal of the non-profit Hupan College in Hangzhou, told students to “find a direction amid crisis and change” that is besetting the country.
“Reflect on what you really want, what you have, and what you need to give up, or stick to,” Ma said.
Ma told students to “learn digital working methods” and “adopt internet technology.” Alibaba launched its Taobao online shopping platform in 2003 when China was locked down during a nationwide outbreak of the severe acute respiratory syndrome, or Sars.
Taobao is now the world’s largest e-commerce website, reporting 3 trillion yuan (US$428 billion) in transaction volume in 2017 with its Tmall.com sibling site.
Ma then channelled Kyocera Corporation’s founder Kazuo Inamori, whose management and leadership turned the television component maker into one of Japan’s largest companies.
At the age of 77 in 2010, Inamori – three years into his retirement at Kyocera – was asked to become the chairman and chief executive of Japan’s flag carrier Japan Airlines as it headed into bankruptcy protection. The carrier was restructured, and re-listed on the Tokyo Stock Exchange in November 2012.
Inamori had five strategies for companies during times of recession, according to Ma:
Strategy One: Every employees should turn to sales
Every employee should turn to sales, to arouse latent demand among clients, Ma cited Inamori in saying.
“Even in a company with tip-top technology, selling a product is still the foundation of the company’s operation,” Inamori said. “It is impossible to get orders during recessions if employees lack the spirit in making all-out efforts for clients.”
Strategy Two: Spare no effort to develop new products
A recession is a golden opportunity for companies to innovate and expand sales.
“Clients are too free during a recession. They will also propose new ideas after listening to yours. This would create orders that you never imagined before, so that you can expand your business.”
Strategy Three: Radical cost cuts
Recession is the only chance to cut costs, as every employee would strive to make it happen, Inamori said.
“You need to lower the break-even point of the whole company by making efforts to reduce production costs,” Inamori said. “If a company can maintain profitability when the turnover is halved, it would be even more profitable when sales returns to normal.”
Strategy Four: Maintain high production rate
Companies should maintain their usual high productivity rate even in times of recession, by reassigning excess labour from the production line to other tasks to maintain the cadence and vibe of the work cycle. “Once productivity drops, it would not be easy to restore,” Inamori said.
Strategy Five: Establish favourable interpersonal relations
“The most important thing for managing a company is the relationship between the manager and employees,” Inamori said, adding that employers must “love and protect” employees, while employees need to understand the manager, they need to help and support each other.
So, it is time to build on the opportunites that will surely come in the next few weeks and months...
All the best and may you prosper!