 Okay, we're back. We're live. I'm Jay Fiedel. This is ThinkTech and it's Thursday morning, business in Hawaii. And we have today Ray Tsuchiyama, an old friend and host and guest on ThinkTech for many years who has thought about and written about what it's like under coronavirus, especially for the CEOs. How do they change the way they run their companies? How do they respond to the crisis? So all you CEOs gather around because this is the kind of conversation we're going to have. Ray, welcome to the show. Thank you very much, Jay, and happy Prince Kuhio Day. Thank you very much for that. So you have a bunch of slides and I want to allow you the opportunity to go through them and present your thoughts, at least initially, and then we'll get into a discussion about it after that. Thank you very much. And we'll start with the first one that shows a friend of mine at the Honolulu Japanese Chamber of Commerce. But what is really, really significant about this photograph is the words since 1900. And that was the year of the great Bipartic plague in Honolulu that led, unfortunately, to the great Chinatown fire, which destroyed more than 30 acres in central Honolulu, and really resulted in Japanese and other ethnic business people at that time banding together and working to grow the economy of Hawaii after the Bipartic plague. So again, it's an indication or a sign that a plague or epidemic did have outcomes to business and economy in Hawaii right there. Just for context, Ray, the Bipartic plague was a bacterial plague. It was spread by fleas on rats, as I recall. And it was of great concern in the late 19th century, early 20th century in Hawaii. And it was one of a number of diseases that had decimated the population and economy of the state over the 100 years prior. And it was not like coronavirus. It didn't have the same contagion level, but it did kill a lot of people. And certainly the business community was very concerned about it. And it led to, as you and I discussed before the show, it led to a kind of rethinking of how we deal with business enterprises and how we deal with crises along those lines. Please continue. That's absolutely correct, Jay. But there were similarities with the Bipartic plague outbreak in Honolulu of 1900 and today in 2020, that is to say, the basilis seemed to come from originated from central China, number one. And it came to Hawaii and also infected people randomly assumed. And the Board of Health at that time was giving a really broad powers, almost dictatorial powers to quarantine Chinatown. And they were the ones in charge. And the pandemic ended in five months. Unfortunately, it did result in the fire. But you're absolutely right. In the 19th century, there were smallpox, diphtheria, typhus, cholera, many, many epidemics. And of course, the longest running one that has its own quarantine is Hansen's disease in Kalau Papa. And so far, drugs did treat patients that it's okay for them to be in society and back to society. But that's a quarantine that has been around since the mid 19th century, in fact. Putting it in context, Ray, if you looked at the year 1800 or so, we didn't hear in Hawaii, we didn't have a lot of these. We didn't have most of these diseases. We didn't have any of these diseases. And Captain Cook and following, they brought them here for us and the Native Hawaiian people suffered throughout the whole century. And we're decimated in population because of all these various diseases. So by the year 1880 or so, correct me if I'm wrong on the year, the monarchy developed a Department of Health. And they were really tired of all these pieces and outbreaks. And so they gave a lot of people, a lot of resources to that department. And that still exists today. The Department of Health in the state of Hawaii is one of the biggest departments we have. It has thousands of employees. It is proactive. It is on the streets and in the homes. It occupies the same influence and the same proactivity and concept that the Department of Health did at the outset. So we have to be cognizant of that. And the question ultimately, which I hope we can discuss today, has the Department of Health met that standard vis-à-vis planning preparing for the coronavirus. Anyway, go on please. Well, let's go on to the first slide in business. We look at the CEO and COVID-19, the first priority for any CEO in the world, in Hawaii, is of course the employees of the company. But I also add that the CEO is responsible, has to lead the company to survive. Plus, I think many people, including myself, see the COVID-19 crisis as a time to innovate and have new growth in business and new products. So that's, I think, my key number one. And for the CEO to really point to health sites or headquarters approved materials, there's a danger for fake news among employees, among families and so forth. They really have to be a leader in looking at the right sources of information, like the CDC, the Hawaii Department of Health, WHO. The other area, the number three that people have been doing is to divide into micro teams like A, B, C, D. And each one is like a micro company. Because if one person gets infected or sick in the sales department, the sales department entirely has to quarantine. So you want to have micro groups, teams involving different parts of the company so that you can have survival of the company. Are you saying that even if you didn't have these teams before, the CEO should establish these teams upon the crisis? That's really what I'm saying. And also that if the CEO has a COO, never travel together, never meet together in this time, so that if the CEO gets sick, the COO can come in as the number one from number two, just like a vice president moving into the presidential role at the United States federal level. So you're absolutely right. A lot of things that we see with COVID-19 should have been already in planning or in contingency mode before such as crisis. You're absolutely right. I want to go back to your point too for a minute because we've seen that on the national level. The dissemination of accurate information is critical to responding to any crisis and especially a health crisis. And we've seen that in the national response here. We've had a lot of inaccuracy and fake news coming from the White House and inconsistencies. And this is a big problem because a crisis, by definition, a crisis of the community of the citizenry, of the population is a crisis of people. And so in order to calm them down, in order to get them on board, in order to have them take your advice, you have to be consistent. So I think one of the biggest tools both on the national level, state level, and of course on the business level is good information, well communicated. It's a major tool in dealing with any crisis, especially this one, don't you think? Absolutely. And I think the CEO also is a position where does that right or correct information lie? And that's where I would say the Chamber of Commerce is stepping up, Honolulu Japanese Chamber, many business associations, trade associations are stepping up to that role also. But you're right that Dr. Fauci is a very much a trusted figure in the society today. Candy coding is not acceptable because if you candy code it then later on you're going to be found to be inaccurate and then you lose the confidence of the community. That's right. Second slide. The second slide kind of goes to what does the CEO do to really get the right advice? And I would say leverage your trusted advisors, your board directors, consultants, even retirees who come back to fill in roles. Maybe you find at a time of crisis your sales ahead is not really achieving or doing at the level that you want. You bring in an interim sales director from one of the retirees, for example. You have to talk to your competitors, what are they doing in all this, and in the Chamber and other associations. But before you send everybody home, which is what companies are doing right now, you must know what your employees are doing in terms of operations at the company first. But what is the outcome? Can they achieve the same outcome? And how do they do it at home? And you bring in IT, of course. And now everybody's buying millions of laptops. And I say, I was talking to an IT professional, and he says, oh yeah, laptops are a new toilet paper. Because people, I'm serious, they're buying millions of time. You can't get them. And we're at the end line of the supply chain from the US, mainland. Servers, yeah, let's buy three servers to create more bandwidth or file. Again, it'll take time. And when you send people home, then you're exposing your files or servers to all kinds of malware, ransomware, phishing, all kinds of this. So you have to be very careful and say, who should get access to? What do you have to look at the exact work that people do? Do they have to get into your server for a file, or they can do other types of work at home? So that's the key. Don't look at IT first. You have to look at your business first. Yeah, you know, one thing is that people think that in a crisis, the scammers and the hackers and the fellows that do mischief on computer security are going to join in the community effort to survive. But that's not true. Actually, they come out of the woodwork. And you have additional security problems of mischievous people taking advantage. It is kind of a shodden froid of the misfortune of others. So you can't expect they're going to be good now. They might be worse. So you have to double down on security. You're absolutely right. And you have to have very good training. But again, you have to look at how your business works and have your employees very, very aware of what you just said. Next slide, please. Now, going back to my theme here, throwing IT at people does not increase productivity. And there was a very famous MIT research project in the 90s that had the mystery of IT and productivity. It didn't rise. And then they discovered that you have to change management. You have to change teamwork. You have to change for, especially for millennials in your workforce, OKRs, objectives and key results that you trust the employee that they will meet the objectives in their own time, in their own schedule. And there are software available for CEOs to look on, monitor every employee at home and how they're accessing service. Don't do that. You lose your employees because you want to create a very good environment for your employees to be successful. Now, you know, I spoke to an IT professional this morning. And, of course, they do a lot of video conferencing these days in order to address these very same things that you have on this slide. And what he said was he was more busy now in trying to put things together along these lines than he ever was before. It's not like he's at home relaxing. He's under tremendous pressure every day to have conferences and get people on board and change the system to be resilient for the crisis. Very interesting. It's not easy. Again, like you said, Jay, in the beginning of the program, if companies had done this already, had a very solid OKRs in place that they could manage and trust employees when they go home to do the work and have outcomes that really contribute to the company, you wouldn't have all this crisis. The pandemic crisis just sets a light on how companies should do better planning. Next slide, please. This is the, before the final slide, which is a pandemic, but I would also like to say that companies should really go forth and think and innovate. You are not going to do the same things going forward that every B2C customer marketing survey is worthless today. So you have to rethink how you're going to sell to you, the customer, how you're going to sell to your market. The market is completely changed. And also that IT will be very significant going forward. It will be even more doubly significant because you have people working at home going forward. But coming, yeah, go ahead. But in so many companies, and maybe Hawaii has a fair share of companies like this, the tension is, you know, why change? We've always done it this way. So we should continue to do it this way and resist change of any kind. The thing about the virus and the crisis is, it is change. You can't resist it. And you must come up with new ideas to deal with it. So in that sense, it's going to, you know, elicit or require new thinking, which ultimately it's sort of like the Airbnb and Groupon phenomenon that we find new systems because we have to. Necessity is the mother of invention. And of course, if IT is going to be so significant in the economy going forward, then we also as a society, as a state, have to look on that, look upon computer science in K-12 at universities in business as the number one priority going forward for the state. And that's something that I hope the governor, the mayor, the UH president, and the superintendent of schools are looking at to see, to really foster an integrated computer science initiative throughout the society. Yeah, one good example would be education, especially higher education, where, you know, the University of Hawaii has not adopted online courses to do any significant degree, even though we've had MOOCs, you know, on a national level for years. And now we have to do that. The university has to do that. And they're establishing systems and people, students are in fact attending classes and MOOCs type classes to finish the semester. So that's a positive thing, and it will outlive the virus, it will outlive the pandemic. And at the end of the day, we will have more people who know more about how to do online classes and we will do more of them. So that's a positive change, although in a sea of trouble, it's a positive change. You're correct. So even before the crisis, a state like Arkansas under its governor really put computer science as a major initiative in K to 12, even before the pandemic. So this is an accelerate change for Hawaii being isolated. We have to develop a strong workforce in computer science that has a base in K to 12, and then have new industries, new products based on software development that we can sell globally. And people will enjoy and have better products than money, you know, through PayPal and other e-commerce to Hawaii. That's what we need, a new economy. Yeah, please go on. Last slide. So last slide is quite an appendix. Just that CEO should be aware that when they send their employees home that they should have a training session or program that these phishing or malware or security issues will be exponentially attacking that employee at home through their Wi-Fi that anybody can hack. So you have to be very careful of how you do IT or emails or accessing the company server. Because once a hacker gets into your server, the ransomware could be 50, 100, 200,000, maybe millions of dollars just to restore your files back to a company. Yeah, remind you of that shipping company in Europe, Scandinavian shipping company that was hacked and they had a terrible time. They were down and rolled their shipping stock for a while. And they were only moderately prepared for it. This is maybe three years ago. But let me say that, you know, what this all evokes for me is that there's no room for a lie in the CEO job or in the CEO job in a company today, anywhere in this country and probably the world. And this is going to separate the men from the boys, the women from the girls. And a CEO who doesn't follow this kind of thinking, a CEO who doesn't respond to the virus and make the changes necessary to deal with it, who doesn't come out the other side with better systems is the CEO who may very well lose his job in the process of the crisis. This is not a drill. The CEO must respond and he must take your advice rate. You must feel like a very important person. Well, I'm trying to help the community because we have a landscape of small to medium businesses, many family businesses that the CEO's father or grandparents established since before statehood or just before afterwards, they're in their own building that they own. They're thinking of selling their own building or other income producing properties. It is a very crisis time for a lot of small businesses. And they have a product that sold well in the pre COVID-19 economy to local people or exclusively to tourists. There are no tourists here and local people are like me, it's a question of the homes. We're not going to malls or going to these small shops. So you're right. I think that I hope these little advice or guidelines will help CEOs really develop the right mindset. First, the right planning and they can retain their great core employees because that's the heart of our community. Yeah, and self-reliance is really an essential part of that, a concept of self-reliance around the state. You and I were talking about it before the show and we are not self-reliant. Although there have been governors in the past, I'm thinking of John Burns who spoke to that and George Ariyoshi and maybe others too, but we have not achieved self-reliance, not in agriculture, not in diversification. And I recall one appearance at the Hawaii Venture Capital Association where a young programmer stood up and he complained. He said, you know, these big institutions in tourism go to the mainland for their software development, but we have developers here. We have programmers here and we know as much about tourism, for example, as anyone in the world. We have the expertise in an operational sense. We should become more self-reliant and use our own people and develop systems. And it's not just software, it's everything. We have to learn to have the self-reliance of an island state, an island economy. And this epidemic is, I think it's going to show us we don't have that self-reliance and we better change our view of the matter. What do you think? Well, as early as five years after statehood, Governor Burns said he desired, quote, a Hawaii economy based on research, unquote. And that's barely in the 60s. He envisioned, and many others envision also the University of Hawaii as an engine of economic growth. Again, another thing that we should go back to, it becomes even more significant. That is a current one, research university on the island in Hawaii. We have to leverage that. Bishop Street and New Age has to partner for the future. So I have a tough question for you, Ray. So we're talking about CEOs, talking about doing the right thing. We're talking about self-reliance, seeing the state as a place where we can and should develop self-reliance. But you know, since statehood, since you and I have seen the state develop, a lot of capital concentrations in this state have been acquired by mainland firms, mainland investors, mainland controlling interests. So the CEO doesn't necessarily work for, he's not necessarily oriented to you know, the local market, the local concern, the local need for self-reliance. He's taking instructions from somebody in LA who owns his company. What do you say to him about all this? Well, again, the number one priority is the local employees. He or she has to look after the employees. That's really the responsibility. I feel a leadership here, right now, right now. But going forward, you're correct that it's aligning what you have in resources. And we've always been capital poor, your absolute right. Capital has to come here from Japan or mainland or whatever. And that's something that we really have to work on, be self-reliant and work with less leverage of resources, the limited resources we have here in much more ways that we really need to think of. Being like Singapore, they're a bit of nowhere, but really leverage language and entrepreneurship and trading to attract companies to come there and then develop their own capital and then send people out to sell things and market commerce globally. So there are other models we can look at. But right now, you're right, we're beholden to the swing, upswings and downswings of Wall Street to the stock market and investors in companies in Hawaii or throughout the world. Well, one last question, Ray, and that is, I'd like to know your feeling about this, either optimism or pessimism about how well we're going to do, how well our companies are going to do, not only during the crisis, but after hopefully soon after the crisis has been ameliorated or has been minimized somehow. Are you pessimistic? Are you optimistic? What's your thought going forward? How do you feel about it? I feel that CEOs are working very hard right now, ultra hard. That's number one. But I think the future will depend how bright it is, how rosy it is or how complicated it is on how CEOs look at this phase, which is just about survival for the next six months, and beyond that, how to innovate and seek new ways of growth. We're talking about growth. How do you grow? How do you restore 40,000 to 60,000 lost jobs right now in the hotel industry? How do you recover that into new growth areas throughout the state? That is an unbelievable task. And I think we need a lot more alliances, a lot more partnerships in society to move this forward. In innovative ways, three, five years from now, we may have a completely different economy, but again, it depends on how people can innovate. Ray Tsuchiyama, host and often a guest on Think Tech Hawaii, business counselor, tech counselor, par excellence. It's so great to be able to talk to you, Ray. Thank you so much for coming on the show. And thank you again. And let's move forward in the spirit of Prince Kuhio, King Kalakawa and other leaders of Hawaii. Stay safe, Ray. Aloha.