LEADING YOUR BUSINESS IN A TIME OF CRISIS

Six agile ways to prepare your business for 2021

Ian Pascoe Ian Pascoe

Complex economies rely on a global arrangement of deeply interconnected pieces, fitting together seamlessly. Of course, each system has some level of redundancy built in, so that alternative supply chains can be substituted if necessary and production shortages from one source can be filled by another.

But 2020 taught us all a lesson about how fragile these backup systems turned out to be. When truly large failures occur, they break apart connections throughout the entire supply chain – and all the way down to the end customer. In addition to the direct human cost of the virus, society itself is starting to buckle under the strain.

Simply put: Our collective failure to prepare was akin to placing a heavy bet on continued stability. Any massively disruptive event was therefore certain to wreak havoc on every corner of the modern world. Make no mistake – with the COVID-19 pandemic now upon us, the smooth and steady path is no more. Vaccines take a long time to test, produce, and distribute; and the post-COVID world will look less and less recognisable with each passing day.

Fortunately, there is still a way forward. You’ll need to leave your comfort zone, and embrace new organisational methods. Many of your old instincts have turned into a liability, and so you must learn to ignore them when the situation warrants. You must understand – and quickly – that your strategies and traditions were very likely made for another time. Yesterday’s game was largely about consistency and incremental growth; today’s is about adaptation and transformation.

If the pandemic has eaten away at your savings, then your margin for error is small. As time is short, you must be willing to re-build the plane while you’re already up in the air. The following six moves should be implemented as soon as possible to inject some much-needed agility into your business:

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  1. Use up-to-date forecasts to inform decisions

Shifting markets, the march of technology, new government incentives, potential future outbreaks, access to future loans – these and other unpredictable variables mean that your operating budget needs to be revisited on a continuing basis. Tying yourself to outdated estimates leaves you powerless to meet new challenges, or properly exploit new opportunities.

Static budgets made sense when the road ahead was clear and stable, and long-term plans could be determined with confidence. But with conditions on the ground changing every few weeks, flexibility is a far more important ideal to pursue. Budgets still have a role to play in setting a general direction for the future, and making your expectations quantifiable. Yet the assumptions used to formulate each budget will quickly fall out of date, making it increasingly necessary to produce updated forecasts that reflect the latest information.

Of course, the benefits here depend on your ability to use this extra flexibility to maximum advantage. You’ll want to set out the clearest possible version of your strategic goal, and make sure that everyone who is well-positioned to advise or contribute is included in both the budget and forecast process. Determine time-frames for each objective, identify key stepping stones along the way, and make it a priority to measure your progress frequently.

These steps will get you half of the way there – but keep in mind that the results of any process can only be as good as the inputs it has to work with. You’ll need accurate, up-to-the-minute data on your key drivers of growth, along with the right software to turn those data points into realistic projections for the months ahead. Only then can you finalise a course of action and work out a sensible plan to help make it happen.

An extra benefit of this process is that it clarifies your path forward – not just for internal use, but also for the sake of potential investors who need to see that your business is adequately prepared for the turbulence ahead. Satisfying their concerns will be a necessary part of completing the transformation that your business needs for future success.

 

  1. Throw out your 2019 strategy and make an agile 2021 strategy

Your plans from a year ago may have been models of wisdom and responsibility. You may have been this close to a real breakthrough that would have launched your business to the next level. You may even hold out hope of a return to those days when success seemed within reach. If only an effective vaccine, or even treatment, would be found. If only borders would reopen, and tourists would come back. If only.

But in most cases, opportunities exist right now and are there for the taking – ‘if only’ more businesses would focus on tomorrow rather than yesterday. Consider the recent developments in one of the hardest-hit industries: Aviation. With standard international travel now difficult or impossible, flights to nowhere are the new big thing. Airlines like Asiana, Qantas, EVA Airways, and Air India are filling up airplanes (albeit to reduced capacity, in compliance with pandemic-related regulations), and sending them up to the sky to fly around in a circle.

Part sightseeing journey, part nostalgia-fuelled adventure for those who miss travel, these flights to nowhere may seem like a desperate gimmick – but with these flights selling out in a matter of minutes, they are also a huge success in an industry that has sorely needed some good news. Some cash-strapped airlines are offering passengers a free voucher for a standard future flight if they buy a trip to nowhere now, in a win-win deal that helps keep the company in business.

Alternative innovations include VR-powered flight experiences to recreate the sensation of travel. Museums are likewise using VR to increase access to their exhibits. Many urban hotels are promoting ‘staycations’ to give guests a holiday feel even in their own city. Clothing companies are making stylish masks. And, most in-person services have gone online.

By themselves, these initiatives will not be enough to save entire industries. But they provide a clear lesson for the rest of us: Stop waiting for conditions to go back to normal. Let go of that old normal, and assume instead that right now is the baseline going forward. Focus on what’s in front of you, develop a bold strategy to capture the available markets as best you can, work to fill in your blind spots, and continue to make adjustments wherever necessary.

 

  1. Bring in resilient leaders

Different journeys require different pilots. A lifetime of leadership experience may not be an asset at this moment, if that experience was accumulated through year after year of stable markets. More than ever, now is the time for resilient leaders whose decision-making instincts embrace change, accept risk, and remain undeterred by prior setbacks.

Many veteran leaders share the above qualities, or can adapt to them. Moreover, they tend to better appreciate the nuances of keeping teams together over time. But there may also be a certain advantage to having younger leaders on your team as well. The solution to many of today’s business problems will surely lie in the realm of technology, and younger generations often have a firmer grasp of what has been done, what is possible, and what is likely to catch on. For a great number of businesses, younger management has thus far been better at adapting to the new norms of the pandemic period.

With adaptation now taking centre stage, progressive operational structures also hold a clear advantage over more traditional, hierarchical methods of team-building. A decentralised model of constant ideation, rapid experimentation, and collective learning from successes and failures alike can give your business a much better chance of striking gold than a centrally planned structure where tasks are set by higher-ups and carried out by juniors.

This looser organisational model flows from an agile mindset. It works by empowering your entire team to generate ideas, based on a shared vision of what success looks like. Many of the world’s most innovative companies follow this formula, yet many traditional leaders still hesitate to implement it, because such an arrangement goes against their instincts in two key ways: 1) It involves giving up a measure of control by creating autonomous teams that pursue new ideas without management approval; and 2) It involves a great deal of trial and error, whereas many managers prefer to invest in a sure thing.

But this moment calls for speed and creativity – and rigid hierarchies are anathema to both. Central planning replaces true initiative with bureaucracies and bottlenecks, leaving key decisions in the hands of those furthest from the front line. Agile teamwork covers far more ground by turning lower-level employees into leaders, and building from their insights. Today’s organisations need to focus on resiliency at the top, so that forward-thinking leaders can make tough decisions, empower their teams, learn from failures, and identify tech-based solutions from a position of knowledge.

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  1. Focus on your core skills by outsourcing non-core tasks

Adapting to a radically shifting business landscape during an economic crisis is hard enough on its own. You don’t have time to also be reading books on marketing and accounting while you’re trying to run a company. The core areas of your business are going to need your complete and undivided attention, at least for the foreseeable future. If you haven’t already gotten your non-core tasks under control to your complete satisfaction, now is the time to outsource them.

Outsourcing lets you keep your overhead low and your attention entirely devoted to the main business of your company: Adapting your products and services to the current moment, expanding your customer base, seeking out new investors, and responding quickly to the needs of the market.

Anything outside of those tasks – from HR, to IT, to accounting and marketing – constitutes a demand on your time that can and should be handled externally. Those who specialise in such services already handle these kinds of tasks better than your company can, absent a massive investment of time and money.

An often underappreciated aspect of this difference comes from technology. Many people are under the impression that the power of data analytics and AI software will even the playing field between those who specialise in a given task and those who simply need to get it done in a hurry. But nothing could be further from the truth.

As technology improves both efficiency and capability, the gap between specialists and non-specialists widens rather than shrinks. Today’s software allows for sophisticated filtering techniques in recruitment, optimal SEO techniques in marketing, improved efficiency in accounting, and more reliable network systems. But getting the most out of these programmes requires training and experience, along with a strong base of knowledge in the field as well as regular oversight to ensure that each tool is being used in the best way. Leave these areas to the experts, so that you can be a better expert in your own specialised field.

 

  1. Make decisions. Stop watching and get off the fence

Keep moving forward, even when you are in uncharted territory – and even if you don’t have as much information as you would like. Every moment you wait, your own savings dwindle as your competitors manoeuvre around you to take a better position. Shake off your paralysis, and act on what you know.

You know your customers, you know your market, and you know yourself. By all means, assign members of your team to do more research and gather the facts that are available. But in the meantime, your people need a leader. So lead.

Move in a way that is proportional to your level of certainty. If your data is limited, and the way forward is not entirely clear, then take a small step in that direction. As soon as possible, look around again to see if your position has improved, or if the way forward is any clearer. Adjust your direction accordingly, and then take your next step. Repeat until the way forward becomes abundantly clear – and then commit to it fully, advancing forward with a bias for action.

If this responsibility sounds heavy, remember that you have help. As described in Part 3 above, an agile operational structure can take some of the weight off of your shoulders. By rearranging your workplace into independent teams with a shared goal, your organisation can conduct research and gain insights far more quickly than if all of this information had to be absorbed, discussed, and decided upon by upper management.

Lastly, when studying the market, learn from trends but also recognise their limitations. Changes are happening quickly, and trends are often a better guide to the past than the future. Technology moves quickly, as do cultural shifts – particularly in our present moment. Your idea might have an extra ingredient that your competitors missed when they tried something similar. Knowing when to push forward could make all the difference between a lost opportunity and a direct hit.

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  1. Aim for sustainability in business and society

Periods of rapid change offer a rare opportunity to rebuild with a stronger foundation. Think again about your values as a company, and what kinds of initiatives those values can inspire. If two paths appear before you, and one of them seems to offer a greater financial reward, while the other adheres much more closely to your identity as a company, consider deeply the long-term effects of both choices.

Money is a necessity, but there are things it is powerless to buy. Deciding to help people rather than pursue maximum profit could give you and your team a much stronger sense of loyalty and purpose, while generating goodwill within the community.

Indeed, the idea of community is worth bearing in mind. With unemployment high and many citizens equally anxious about their finances and their health, many don’t know where to turn. Kindnesses performed now will be remembered for a long time to come.

Businesses, particularly those that are locally owned, have long been the stitches that hold communities together. During an economic crisis, as businesses fail and their parts are sold off to outside parties, those threads are ripped from their base. Large businesses and investors walk away with huge assets for pennies on the dollar, while the communities around them are often left bare.

Such outcomes inevitably work to the detriment of the people and businesses that remain. There are, however, ways for community-minded companies to help. These include sourcing materials locally, hiring local talent, entering partnerships with nearby businesses, universities, or other institutions, hosting community events, keeping the local environment clean, providing products and services at cost for important initiatives, and engaging in other standard CSR activities.

Seek out these opportunities, even if you are guided by self-interest alone. Businesses should serve their communities, for the same reason that each of us cleans our home and tries to make friends with our neighbours. At the end of the day, you and your business still need to exist and operate within the community that surrounds you.

Public health, economic prosperity, social cohesion, and environmental responsibility all depend on local leadership – and you should be doing your part to help wherever you can.

 

Your business isn’t agile yet – but it needs to be

Most companies were built for a different era, and that is why they struggle to move past the problems of 2020. But some businesses were made for this moment. Those companies are easy to spot; they are the ones already focussed on the solutions of 2021.

Agility starts with recognising limitation. The world is too complex, and human knowledge has expanded in too many directions, for any person to grasp more than a tiny fraction of it. Even worse, this knowledge deteriorates with distance. A professional basketball player will have an excellent idea of what his team needs to do next; a spectator in the arena will understand somewhat less; and a classmate of that spectator might only be vaguely aware that there’s a game going on. When it comes time to set up the next play, nobody would think to call a time-out and track down the classmate for advice.

Yet many traditional businesses operate in precisely this way, with operational decisions needing to be approved by a team of managers that are entirely detached from the action. By putting these decisions in the hands of the boss, several outcomes are more or less guaranteed:

  • Your company’s response times will be slower, because each problem has to wait in a queue before it can be solved.
  • Your employees will lose motivation and initiative, as they learn there is no point in coming up with new ideas of their own.
  • You will waste the institutional knowledge of your employees, instead giving front-line decisions over to those least-equipped to make them.
  • Your leaders will be bogged down with minutiae, when their time would be better spent on top-level strategy and meetings with investors.

Agility in business is an attempt to reverse each of these outcomes. By deciding upon a shared set of values and goals, then empowering your teams to pursue them independently, your company can free itself from bureaucracy, and its leader can step back from day-to-day operations to handle other tasks.

For this setup to work, certain preparations must be in place – some cultural, and some practical:

  • Everybody needs to feel that they are a valued part of a worthwhile mission.
  • Regular training must give employees new skills, along with an appreciation for the bigger picture.
  • Team leaders need to instil a spirit of sensible risk-taking for the greater good.
  • Employees should have permission to fail, as long as the risk is worth taking.
  • Ideas should be solicited from everyone – particularly the specialists in each department.
  • Promising ideas should be tested quickly and cheaply, with lessons learned from each test.
  • An oversight group should meet regularly, and include at least one representative from every department, so that team progress can be evaluated and institutional knowledge shared across teams.
  • KPIs must be tracked regularly, to provide timely data on current progress to the entire company.
  • Successful ideas should be actively pursued by the company, regardless of who produced them.

If handing this level of control to your teams seems unwise, then you should immediately realise that you have failed to either give them enough training, or establish a shared sense of purpose across the organisation. Pursue those goals first, and then let your people show you what inspired teamwork can produce.

Results from other companies show dramatic improvement across the board when switching to an agile operational model. Employee engagement, customer satisfaction, operational performance, and financial performance routinely see double-digit percentage gains on the relevant metrics. These increases are rarely instantaneous, of course; people and departments take time to adjust to new expectations, and many of the benefits take time to make themselves felt. But the upward trends are unmistakable, and usually lead to better candidates applying to join the team.

One reason for these successes should be fairly straightforward: People naturally seek respect and recognition for their talents, and being trusted to contribute to the direction of the company creates a sense of pride that inspires commitment. Another reason may be less obvious, but is well worth understanding, as it cuts to the heart of why agility is the perfect tool for this moment in time.

 

Agility isn’t a destination; it’s a loop

In a static environment, optimisation is synonymous with efficiency and scale. This new decade, however, promises to be anything but static. The faster changes and larger disruptions that we’ve all witnessed mean that adaptation has taken over as the key attribute for success.

As we’ve seen, hierarchies are not ideal for responding to rapid shifts in the environment. Fluid, loosely coordinated teams of specialists will achieve far more, particularly if some of their members are tech-savvy. Interestingly, the theory behind this idea was best developed by a strategist entirely unconnected to the business world.

The OODA Loop was invented by John Boyd of the US Air Force. In his quest to determine why some strategies and tactics perform better than others in dynamic situations, Boyd discovered that units with a tighter and faster OODA Loop would consistently succeed over their rivals.[1]

An OODA Loop measures how quickly an entity can perform the following set of tasks:

  • Observe what is happening in your environment
  • Orient yourself to the new situation, analysing possible moves to make
  • Decide on a course of action
  • Act to execute your strategy

[1] As described in The Ultimate Guide to the OODA Loop, by Taylor Pearson, from which the image was also taken.

 

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Each loop ends with a committed action, which in turn alters the surroundings and overall situation. A new loop can therefore begin immediately, starting with an observation of the newly modified environment. Through this lens, the advantage of fast decision-making becomes readily apparent. Entities that can quickly run through several iterations have far more opportunity to respond to changes, refine their tactics, and find a winning formula before their adversaries can do likewise.

The concept of the OODA Loop was designed specifically for success in a world where disruption is the norm. By isolating and simplifying the key formula for staying ahead of one’s competitors, the OODA Loop demonstrates with great clarity why decentralisation is preferable to hierarchy, and why empowered teamwork focussed on a common goal can achieve superior outcomes when unencumbered by bureaucracy.

The OODA Loop is simply the theory of agility, stripped down to its basics. Yet the value of this process, as we’ve already discussed, can only be as good as its inputs. Observation must be continuous, up-to-date, and accurate. Orientation and decision-making can be carried out by the various sets of teams you have trained and empowered. Action (also discussed above) should be taken depending on the level of certainty: A small step when the situation calls for caution, and full commitment when the path forward is clear and obvious.

 

The pieces remain interconnected. Unexpected events wait for their moment to wreak havoc. But your business is now agile. It thrives on instability, using each disruption as an opportunity for advantage. Your ability to recognise what is happening – and pivot at a moment’s notice – lets you outmanoeuvre your competitors and lead your industry forward.

 

For this kind of journey, you will need a guide. Grant Thornton in Thailand can manage your immediate needs, then chart a clear plan of action to bring resilience to your business. Through sustainable, agile transformation, we will help you meet and overcome the challenges of an uncertain future.