Tom Nyman is the Chairman of the Board at Netigate, here interviewed about the coronavirus crisis. Tom has first hand experienced of previous crises and will share his business advice. He was there during the 90s and then the finance crisis. He is also asked about the business mogul Jan Stenbeck. What would he have done during the spread of COVID-19? Read the whole captivating interview below.
Tom Nyman, tell us about your self!
I am today the main partner and Chairman of the Board of Netigate. For many years I’ve worked in finance and business development. I was among other things part of the Stenbeck world and also the Douglas world. My experience stretches from upper management, various board memberships and much more. Professionally, an accurate summary of me would mainly be businessman, entrepreneur, and investor.
You have experiences from various earlier crises, such as the IT-bubble and the financial crisis, any other ones before the coronavirus crisis?
Well, there have been some on a personal level of course. But if we stick with the business related ones Sweden had a larger crisis during 1981-1982. It was shortly before the so called super devaluation, a cost crisis. Then we had the crisis in the beginning of the 90s, a large housing crisis, partly due to the war in Iraq and Iran. The interest rates where at one point sky rocketing around 500 per cent so that was a tough one. After that we had the IT-bubble in combination with 9/11. Thereafter came the 2008 financial crisis, so you can say I’ve been there for a few of them. Fast forward until today with this coronavirus crisis, which probably will be the worst of all of them.
Can you share some of your take aways from these previous times of crises?
There are of course some general learnings that we can bring with us for the coronavirus crisis. I believe you have to act very fast. If as an example, you need to cut costs, it needs to be done quickly, or you need to rethink your business model. You have to be swift, that is extremely important to be able to get through the crisis. You have to adapt a different style of management during a crisis. Less groupings, much faster decisions to mention some. So that would be the general take aways. Then of course, all crises have a certain element of uniqueness. The dot com bubble was mainly affecting the tech companies whereas the rest of the economy was mainly business as usual. The 2008 crisis was mainly a financial crisis, a banking crisis that in some markets touched the housing market. So in that sense they all differed.
You mention acting fast. It takes a lot of courage to act quickly so as to not act premeditatively and jump to conclusions?
There is something in that, true. But in a crisis I believe you have to dare take those fast decisions and to be of the opinion that, to get through this we need to be very agile. It is very easy for example to wait too long to cut your costs. A common mistake is to be a bit slow with that and once you cut you just touch the edges. The consequence of that is that you then need to do another round of cuts, then another. That is extremely demotivating for the employees. It hurts morale internally to a large extent. If the situation warrants a cost cutting exercise, always attempt to do a bigger one to begin with, to cut the Gordian knot so to say. Then, hopefully, that is it. I believe that is important to keep in mind. So courage, as you say, swiftness, and to dare. It might actually be better to act too quickly and not getting it completely right, than to wait until it is too late.
Does that also apply for this coronavirus crisis? What would your advice be to other business leaders now in the starting phase of this crisis?
That obviously depends what industry you are in. What is unique with the coronavirus crisis is that it unfortunately reminds us more about the one back in 1929 and the 30s. Firstly, we have a supply chain crisis, as China has closed shop and it is close to impossible to have deliveries of parts and components. Thereafter there is a crisis in demand, since more or less a larger part of the world is in a lockdown. From that follows that we don’t have any demand in the economy, and that is very worrying.
I truly hope this will not lead to a depression, but the risk of that is high. So I do believe it’s important to quickly adjust your costs. We can see it already, with the announcement of mass layoffs and downsizing from a number of companies daily. That is what we can do now, the only control we have is on costs.
For certain industries there is no longer any demand, the aviation, hotell and restaurant businesses among others. For those, specifically they can do little else than trying to control cost. I believe we are facing a great crisis ahead of us but you cannot help but try. Using the dot com crisis as an example, it was an exodus for years. But times of crises also gives birth to innovative successful companies. Creativity, energy and innovation come out of these situations so we have to try and see the small seeds of optimism that grow in the middle of all the darkness. You have to be fast and adapt.
So in what way does the coronavirus crisis remind you about the one in ’29?
We have a situation where the whole society is closing down and that is of course unique. It isn’t exactly like in the ’30s but if we look at the run up to where we are today. The banking crisis in 2008 was largely solved with a heavy increase of debt around the world, followed by the Federal debt in the US, which I believe is somewhere around 22 trillions of dollars. That is around twice what it was in 2008. So a lot of the ammunition to combat this has already been exhausted. We already have close to zero in interest rates, and very high debt. We also hade a trade war in the 1930s so there are definitely some similarities.
There are many differences as well but it is very concerning and we have a window of opportunity here where politicians need to act. If we don’t do that we will have mass unemployment and bankruptcies. They are now talking about that the BNP will go down with 27 percent in the US, those are dramatic numbers. They speak of an unemployment rate of 20%, that is a huge cause of concern, even dangerous, for society as a whole.
Not to be too pessimistic about this but it is extremely worrying. Of course, there are opportunities as well in crises such as the coronavirus crisis, but it is an uncomfortable development that has to somehow be stopped.
What would you say to the Swedish PM, Stefan Löfvén, if you were having a coffee now, in regards to how politicians must act?
I believe the first support package they announced in Sweden, it is good. It primarily helps the larger companies. So now they have to put in measures to help small and mid-sized business. I think they have to give companies a two or three month respite. I would like to hear them saying that they will take over salaries or taxes for that time to help smaller companies out.
Hopefully we will see the peak of the spread during May or June sometime, after which we can start returning to normal. That is of course a hope at present, it might not pan out that way. But that is why we need a reprieve where society steps in.
Let’s say that would cost the state 30 billion SEK for three months to take over salary costs for small and mid-sized companies. Sure, it is an enormous sum of money. But looking at the bigger picture, where we risk a wipe out of a whole generation, with unemployment and the risk of criminality that follows. So it is tremendously important to do something, and quickly.
We covered acting quickly and cutting cost. What about communication for employees? For those still employed, how is the communication made in the best way, especially if you need to cut cost and let people go?
You have to communicate in a very clear manner, and be empathetic to those, that unfortunately, have to go. You have to have a tremendous respect for those affected right now, it is not easy entering the job searching market in these times. Getting employment right now can be hard.
Then, for the people remaining, well this is why I say that if you need to cut costs, do it properly. Rather be a bit harsher to start with so you don’t need to go back to square one and have to do it again. That will also create some sense of security for those who stay on. You have to be frank and clear and also be as honest as possible.
Hopefully you can also paint a future, you know we have a company and product that we believe in. When we are through this darkness there is a light at the end of the tunnel. So a combination of seriousness, frankness but also some kind of hope.
Speaking practically, what channels should be used to communicate and keeping in touch with those working from home?
You can use different kinds of tools and technology from Microsoft or Facetime and similar products, even Netigate. It is important to use technology where you can see each other and then have a reoccurring set up. You don’t want employees to feel like they are left all alone, it can take some extra measures of self discipline otherwise. We can’t make the assumption that everyone has that.
It is important with regular meetings as well. Obviously we have to count on people’s own drive, that there is a good team spirit, so it is a combination of that. You cannot just retort to micro-management, there has to be motivation individually as well, of course.
It puts employees to the test, to sit alone at home without their co-workers…
Of course it does, and this is unique as well, I don’t think we ever have experienced that in this way before. This is a new way of working for a lot of us. We will have to see how long it lasts, they are talking about a Stockholm lock down as well now, so that is a challenge.
There are a couple of positive aspects to that appearing, regarding sustainability, environment and that we actually have the technology so people in office jobs actually can continue working. So there are elements of positivity among all the negative news at the moment.
Changing the topic slightly, you have worked with business mogul Jan Stenbeck, what was your relation like?
Well he was a fantastic, very special person, extremely intelligent, very driven and a visionary. I worked as a business controller, CFP and CEO in one of his daughter companies during the time. So from time to other I had a personal relation with him. He is extremely demanding, very tough but extremely skilled of course.
What would Stenbeck do during this coronavirus crisis?
He had tremendous courage, was very hard and probably would have acted very quickly. He also was a visionary and working towards the bigger picture, he believed in things and took the long-game. If you can say one thing it is that you have to believe in your line of business, your company and be in it for the long haul. We will get through this, and there are big opportunities to build upon.
He was a person who worked hard and invested heavily in businesses. Sure, he also cut costs but he also invested a lot simultaneously.
About the Netigate platform, you mentioned it as a good tool for people working from home. Can you expand on that?
Yes, of course. Our product is primarily targeted towards customer care and employees in regards to follow up and feedback, but it can also be a good tool for crisis management in your business now during the corona virus crisis. Who among the employees are sick, who are working? You can do regular follow ups, collect information about if people have the tools they need to carry out their work. Is there anything you as a business need to improve on right now? It is definitely a product that can be used for crisis communication. Also to be able to improve the way people work from home and identify problem areas during the coronavirus crisis.
Netigate did a panel survey during this coronavirus crisis. It shows that those working from home to a lesser degree know what to focus on. It also highlighted a lesser degree of optimism about the future compared to those still working from the office, what are your thought around that?
I am a personal believer of a management style where you walk around and speak to people, I think it is important for people to be seen and to feel needed. To immediately get positive or constructive feedback is important. That is obviously harder when people are working remotely, conversations might be done over the phone in stead, where you can’t see each other.
Those insights from the panel survey, it makes sense, and that puts a greater demand on us as leaders, but also on the tools we are using. That we are using the right tools to compensate for the meeting in person. We have come far with this, but it raises the bar for all of us. The physical meeting is important, that won’t go away. You see that in the feedback, some motivation is lost working from home.
However, this is a necessary development, both in the digital way of working and also speaking of the sustainability aspect. Mother earth is getting some time to heal right now. To go in this direction work-wise is right and we have to monitor this progress. Then again, the physical meeting is still important.
Airlines have cut their activities a lot, we see a lot of people on leave or that has been given notice. We cannot fly, we cannot consume like we did just a few weeks earlier. Can you share your thoughts on this?
Now, this is something that came over us from one day to the other. The important thing here is that we will manage, and it makes you appreciate the other things in life that matters. The health and wellbeing is of most importance, that we keep our health. Your near and loved ones, that you have shelter and food on the table, that is the main thing right now. Hopefully we can all learn to see a more humble perspective.
Then of course, once we are through the crisis, there will be good things appearing on the other end. As an example the sustainability aspect, that we get used to this way of working and such. Once we are past the chock, and when the worst of the crisis is over, I think the positive things will show more clearly.
Right now however, in at the starting point of this crisis, well people just feel it is hard overall I believe.
Continuing on the coronavirus-theme, from the companies that have made big announcements, are there any that have communicated really well?
One company that comes to mind is SAS, if you watched the CEO at the press conference, he gave a very good impression. He was very clear, up front about the circumstances… in combination with a sense of hopefulness. He praised his employees that have been given notice, and that he would be the first to have them back after this.
After that SAS and Investor made a very swift change together with the health care sector, where they will educate flight personnel for the health care industry. I think that is a really nice initiative in these times. It is an excellent example of good communication, foremost being able to help people readjust their skills to help a growing demand of healthcare workers. That is extremely important in these times.
Large companies sometimes have a reputation to be slow from the planning stage to execution…
It went extremely quickly as well, we’re speaking of days when they released that communication. So that is a good example of when big business are acting fast during the coronavirus crisis, it’s impressive. It also means for smaller companies, that we need to act even faster.
If you were to make an attempt at predicting the future, how do we see the coronavirus crisis developing?
I hope we can avoid a depression. If that happens it can become really unpleasant. We were not there during the 30s of course, but I have read broadly on the topic. There were a lot of terrible consequences with mass unemployment and a wave of bancruptcies. I really hope that is not where we end up with the coronavirus crisis. Nonetheless, we are up for a bumpy ride ahead.
Best case scenario, this will go on for another half year before the worst is over, but that is currently very uncertain. It almost goes from day to day. Right now we are seeing a heavy increase of corona cases in the US, and also big layoffs. Remember that China closed up, and China stands for about 50% of global growth today. Then we have Europe with all its problem already predating the coronavirus crisis. I’m thinking about the state of Italy, Greece, about Brexit and also Germany, which is a country heavily dependent on exports.
Then we’re adding the coronavirus crisis on top of all this, and thereafter we are seeing the US entering lockdown. That is uncomfortable in my opinion. I hope that after a tough year and by the help of heavy injections from central banks and governments, that we can get the economy running sometime during the autumn at least. That is at least a decent scenario. Other scenarios exists of course but I am hoping and believe in this one.
Being an avid reader, what channels do you follow?
I actually watch a lot of YouTube, broadly speaking. A lot from George Friedman, one of the world’s most prominent geopoliticians. Lest not forget Nouriel Roubini, a world renowned economist. He predicted the crisis in 2008, and was early in understanding this crisis actually. Already last year he said that this year could be “the Perfect Storm”, 2020. Although, he couldn’t have foreseen the chaos erupting from the coronavirus spreading of course.
Other than that there are a number of other interesting smart people I follow. So it is a combination of a lot of YouTube, books in all shapes and form, and also, a number of papers.
I would say I read a mixture of fiction and fact. The last book I read was the Amazon one about Jeff Bezos, a recommended read.
What newspapers and magazines do you read?
Newspapers I mainly read online. When travelling there is a lot of Dagens Industri, or Affärsvärlden (Swedish business papers, editor’s note) but I obviously don’t fly at the moment. Otherwise it is mainly Dagens Industri, the evening papers to a degree and the broadsheet Svenska Dagbladet. I also read a lot of American or english speaking papers, mostly online.
I have to say thought that it is a lot of YouTube because you can follow so many different topics widely. One example is Chris Martenson, in the US, who has been covering the coronavirus crisis now over 55 days. He has been spot on from the start. He posted a picture of Wuhan 55 days ago. Already at that point he said that this is coming our way, back then I didn’t quite believe that. So he has been right from the beginning. He updates his channel daily and I recommend following him. His company is called Pete Prosperity. He gives a very accurate point of view. Both in terms of the spread of the coronavirus but foremost of the economical situation.
Before we finish, those readers that want to get in touch or want to follow you, how do you do that?
You can get in touch by email or perhaps easiest is to follow me on LinkedIn. My email is tom.nyman (at) podinvestment.com.