Crisis-driven business transformation

By Koen Harbers

In an earlier piece my colleague argued that the impact of the COVID pandemic will likely be overestimated in the short term but underestimated in the long term.  It goes on to show how creating a responsive, adaptable organization is key to navigate the uncertainties associated with the economic aftermath. current crisis’ economic aftermath. And any future crises. Yet at the same time, many companies have shown exceptional agility during this period.

Managing crisis and innovation
Attributes of business crises response
Maintaining innovation post-crisis
Strategy execution for strategic flow
COVID-19 lessons for organizational change

Managing through times of crisis has the power to create a renewed sense of teamwork, fast and collaborative decision-making, quick realignment of resources, and a just-do-it mentality. The world has seen brewery companies quickly forming new partnerships to produce hand gels. Dyson has been able to develop a new ventilator system within a fortnight. Absent of passenger demand, airlines have quickly transformed their passenger cabins to accommodate freight. This is just the tip of the iceberg as to the extent of innovation and adaptation that has been witnessed, which begs the question why many organizations aren’t doing business like this all the time. We think they should be. By learning from the attributes that make crises stand out and connecting the routines that together enable faster-than-usual turnarounds: the strategy routine, the portfolio routine and the delivery routine.

Taking a step back: what makes managing through a crisis so different?

Having worked in the airline industry, I’ve been exposed to sudden crisis situations several times. One in particular stands out. Following the eruption of the Icelandic volcano Eyjafjallajökull, a giant ash-cloud covered most of Western Europe, leaving many airline carriers to bring their operations to a sudden halt. I still vividly member departing from Geneva on my way back to Amsterdam, an hour ahead of schedule, the pinkish edges of the cloud evident as we approached it, only to have our journey diverted to Dusseldorf instead. The following day, back in Amsterdam, it became apparent that thousands of others were not that fortunate and were stuck at their destination with little outlook on returning any time soon. Airport operations were confronted with an almost unimaginable overload of stranded passengers (try imagining the exact opposite of the photos of empty airports we saw the last few months). Call centers were unable to cope with the unanticipated volumes. We had no option but to act. Out of sheer necessity we started sending out communication to our passengers via social media, a channel hardly used by any company at that time (remember, it was 2010). Day one started with general updates on flying conditions. By the end of day two, we were sending out direct messages to customers (a first for any company for which we had to gain permission directly from Facebook HQ). By the end of the week we were running a make-shift social media service center with nightshifts joined by VPs and first-hour employees alike. The week thereafter, half of the rebooking process through social media channels was automated. Ever since, KLM’s social media presence has been awarded with countless customer service and innovation awards [1].

What this example shows is how, out of a crisis, great things can emerge if an organization is receptive to it. Without being exhaustive, the following attributes are considered to be highly influential in creating an altogether different mindset in response to a crisis:

  1. A necessity to experiment. Under normal circumstances, most managers have a desire to be exactly right before proposing – let alone acting on - anything. People are rewarded to come up with smart ideas, forecast the cost and benefits and stay within reasonable range of those predictions. In a crisis, we embrace the inherent uncertainty and instead take an experimental approach: we try out things, see what works, and if it doesn’t, we quickly abandon it and go on to the next thing.
  2. An element of time pressure. Most managers are astutely aware of, but still find it difficult to not succumb to, some form of analysis paralysis. The craft of procrastinating and delayed decision making - which more often than not results in inadequate priority setting (or none at all) - plagues many companies. Under time pressure, the negative effects of ‘taking no decision at all’ becomes immediately clear - to everyone.
  3. A shared goal. A wealth of choices has the ability to overwhelm any management team. Add to this organizational siloes and department goals, and even ‘what it means to win’ becomes fuzzy and subject to interpretation. The COVID crisis has left many companies struggling with the sudden demand shifts or even survival, which simultaneously provided them with a very clear measure of success.

Obviously, nobody wishes such destructive forces of nature upon the world just to create an innovation and collaboration mindset. The devastating impact felt by many entrepreneurs and employees is real. Nor do we think companies can only learn this way. The point is: now that we are all reminded of the spirit that can come from crisis management, how can we prevent ourselves from slipping back into our old ways as soon as the urgency to respond is over?

A step forward: how to maintain business agility after the crisis

Not only do we think companies should be able to sustain the collaborative spirit and innovation mindset that emerges from a crisis, but this should be the primary objective of business transformations. It is about connecting three routines from strategy to execution to achieve a state of strategic flow. This concept borrows substantially from well-documented scaled agile practices [2], but also from a belief in a more fluent notion of strategy itself: balancing between deliberate (planned, envisioned) and emergent (context- and learning-driven) strategy [3]. This requires organizations look beyond changing work patterns to agile for the delivery organization alone. A reported 78% of respondents in the 2020 ‘State of Agile’ report[4] mention their organizations already expressed interest in unifying teams to the “concept to cash” value stream. Rethinking how they review and fund their project/program portfolio(s) should come next. One of our clients revealed that the single element they’d like to keep coming out of the crisis is the fast-paced decision making that the portfolio routineenables. Last, to fully support the organization, the strategic planning process needs to be addressed. During the COVID-19 crisis, another one of our clients emphasized the impact of increased visibility and transparency in terms of responsiveness, leading them to accelerate its adoption across other business units. It also elevated them to the executive office, recognizing the importance of common objectives and an aligned strategy review process.

All three highlighted routines by themselves are not new. What is new to many though, is the following:

  • They are connected. Each routine requires both input and the output of the others to be effective. None of these should be treated as isolated concerns in separate departments, or as a one-directional street from program definition to execution. And by connected, we emphasize this means in terms of people. We favor constructive dialogue between people over reliance on slick PowePoints any time.
  • They are called ‘routines’ for a reason. This serves to emphasize their continuous nature; moving away from their often infrequent or even event-type traditional counterparts. In crises, the pressure-cooker context will demand routine check-ups as well as a heightened need for connectedness.
  • Each represents a group of practices. Individually they add value, but they enable and reinforce one another as well. Through the lens of crisis management attributes described earlier, we highlight three shifts per routine that help sustain them, below.
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Where to start?

We emphasized a lot the collaborative spirit and innovation mindset required to navigate through crisis situations successfully. Both refer to cultural traits. Yet it’s good to emphasize that culture change always comes last. It is the consequence of, rather than a prerequisite for, changes in a company’s structure and its processes. They have the ability to enforce newly favored interactions over others, to grow into routines and habits over time. This requires the capability to embrace and deliver organizational change, continuously.

The good news: the COVID-19 crisis is very likely to have taken you through many of the change management steps already. Undoubtedly it created a shared sense of urgency and likely a coalition of some sort in response. Even if your accomplishments might not have made the media like the examples shared in the beginning, most companies rose to the occasion when it came to the rapid facilitation of working remote, readying offices for a safe return, and creating impact scenario’s on the bottom-line. What’s left now is to recognize all this as an unwanted, yet giant learning opportunity. And realizing this does not mean you can afford to relax when things come close to (a new) normal.

The bad news: should you let this go to waste, you might already have fallen behind your competitors who didn’t – and you will undeniably be worse off than everybody else.

Summing up

  • What sets a good crisis apart is the way it influences decision making by providing a shared goal, adding time pressure, and thus creating a necessity to experiment.
  • All these attributes can be replicated by altering your perspective on three company processes (strategy formulation, portfolio review, delivery) - to see them as connected routines.
  • Doing so allows your organization to maintain the collaborative spirit and innovation mindset needed to cope with the extended period of uncertainty
  • Use the lessons from navigating the COVID-19 crisis as an accelerator for organizational change, or risk being hit twice…

References:

[1] For further reading on airlines’ response to the ashcloud:  brandba.se 

[2] Notably the Scaled Agile Framework, but also LeSS Huge and even Spotify-based models

[3] Also see Mintzberg H, Waters JA. 1985. Of strategies, deliberate and emergent. Strategic Management Journal 6(3): 257 – 272. Equally recommended here is Measure what Mattersby John Doerr

[4] 14th State of Agile report, Digital.ai: explore.digital.ai

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