For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 2 Transform your concept of time

Syria is one of the oldest countries in the world, in the bible Cain and Abel happened in Syria. In the corporate world, management is inclined to view time as being chunks of fiscal years. The short term is about a year; the long term is 5 years. In a crisis the most important aspect is to identify the strategic core elements that you believe will make your business sustainable, regardless of the different situations, because the war will end someday.

Knowing the Critical Success Factors (CSFs) of your industry and how their criticality shifts in a crisis- is of utmost importance.

What are the CSFs in this industry, assuming there was no war today?

If the war ends tomorrow, or in 5 years, would these CSFs still be critical?

At the bank, one CSF was having a high-liquidity ratio and low cost of funds or having enough cash reserves from deposits at a relatively low price.

War is destructive, but it does not necessarily destroy an industry’s general dynamics. It is likely to lead to a shift in the criticality of some factors and the difficulty in fulfilling them.

Having high liquidity or high cash reserves was identified as an integral CSF. You can only lend when you have enough funds, that was not going to change today, tomorrow or in the future. What changed was before the war, all banks fulfilled this CSF easily. A bank could not differentiate itself having this advantage. When the war started and people withdrew their funds, the success factor shifted to become much more comparatively critical than before.

Another CSF was trust. Banking is built on trust. BBSF decided that in whatever we did and no matter what the context was, gaining and maintaining the trust of the public was a CSF.

It is not always about the money or play the long game like a 3rd-generation family business does.

Questions:

Do you think this crisis will eventually be over?

Are you asking questions about the timeline of the crisis? Does anyone know the answer? Do you have control of the answer?

What are the Critical Success Factors of your industry? How has their criticality changed? How valid are they now? Will they be valid next year? 5 years? should your actions fulfill them?

Do you let your actions today shape your long-term aspirations or the other way round? which do your think is better?

If your goal is to maximize shareholder wealth in the long run, are there areas where you could be better off sacrificing short-term profitability, if that builds long-term value?

Linking to dividend paying stocks, for your investments do have an understanding of the what the Critical Success Factors of your investment are? If you do then you can evaluate the company based on the CSFs and you will have a reasonable idea of whether to hold or look for alternatives.

There are more questions than answers, till the next time – to raising questions.