Lessons from a crisis

There’s no lack of crises here in our beloved country, whether it’s because of our own doing or from all over the world.

Every crisis has its lessons and those who’ve learned from past challenges usually survive the next crisis that comes along.

Will it be the same in the case of the coronavirus disease 2019 or COVID-19 pandemic?

That’s up for anyone’s guess for now, but many companies have taken past lessons to heart and their leaders are trying to navigate their respective empires through this crisis of epic proportions.

Tycoon Isidro “Sid” Consunji comes to mind.

Sid, the eldest son of the late construction magnate David “DM” Consunji, is no stranger to adversities.

He once said in jest that he is his father’s most difficult project, but Sid – already a troubleshooter at a young age because of his problem-solving skills – has actually steered engineering conglomerate DMCI Holdings through the 1997 Asian financial crisis.

I asked him what lessons he has learned from that difficult period and how these can be applied to our present COVID-19 crisis.

Start with acceptance

Over a chat online after DMCI’s virtual annual stockholders’ meeting last month, Sid shared with me that it is best to start with the right mindset in challenging times, that is the acceptance mindset.

“All crises are painful. You have to tell your people that there are bad times in life and you need to take austerity measures, belt-tightening. Hindi madali ‘yan,” he says.

Thus, he says, it is important to accept the situation.

“But all crises will come to an end. We don’t know exactly when, but we know it will be over and there will be better times ahead of us. We believe there will be better times ahead of us. We just don’t know when,” he says.

Lesson learned

Sid has learned his lessons well.

In 1997, the DMCI Group felt the impact of the Asian financial crisis, which led to a substantial decline in construction activities. Simultaneously, financial institutions withdrew credit facilities.

Back then, the company had P3 billion worth of short-term credit. But in August that year, its credit lines were shut down, according to the book Creating Sustainable Magic: The DMCI Group Story, authored by literary writer Cristina Pantoja Hidalgo and published in 2017.

Hidalgo writes:

“‘So we didn’t have liquidity,’ Sid says, his frustration still palpable after all these years. We had to talk to our suppliers, our creditors, our customers. Work had to stop.”

There were many challenges for DMCI thereafter, including one business flopping after another. But Sid and his team were undeterred.

“It was when resources turned scarce that Sid brought a bold proposition before the family. He suggested drawing money from DMCI to establish a real estate venture,” Hidalgo writes.

Sid knew there would be a temporary liquidity problem, but with DMCI Homes, the company would sell a residential unit, not just construction services and this would then create liquidity.

“He compared the process to taking medications or having injections to cure an illness. The pain is the price of becoming healthy again,” writes Hidalgo in the book.

“The Consunji family argued for three hours until Sid hurled the challenge: “If you guys can think of a better way to generate liquidity, let me know.”

“In the end, Sid won them over,” Hidalgo writes.

DMCI ventured into real estate, generated liquidity and thus, survived the 1997 financial crunch.

The COVID-19 crisis

The COVID-19 crisis is a totally different challenge, but Sid says during our chat that it is still all about adapting.

“We have to adapt and innovate. Those who will not adapt will be left behind, and whoever adapts well will survive. So, we have to adapt, and develop new habits to survive this one also. Eventually, this present crisis will come to an end,” he says.

For companies, Sid notes, liquidity is important.

“So we are protecting our balance sheet, paying our bankers and suppliers on time. We also need discipline. Even if we want to undertake new projects, we have to hold back for now because we have to survive first,” he says.

Other companies are adapting as well. Hopefully our business sector – from the MSMEs to the conglomerates – could make a strong comeback, with the help of the government and once again lead the growth of our economy.

Indeed, companies that can easily adapt and are willing to innovate will survive.

In love and war, in sickness and in health, in business or in our personal lives, crises come and go. Sometimes, it comes like a thief in the night. Sadly, no crisis ever comes with a manual. We can only heed lessons from past challenges, take these to heart, and hopefully navigate the next major crisis in our lives with enough wit and wisdom.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com