It wasn’t the first pandemic. Ebola had plagued other parts of the region before. But leaders of a green energy company in West Africa were not expecting it to strike again, at least not in their area. So when a new Ebola outbreak emerged, the company was still focused on growing the sales of its low-cost solar cells to consumers through retail outlets and a partnership with a union serving agricultural workers. Then the pandemic hit its headquarters city and shut off all commerce. The venture’s American founders and its local general manager quickly decided to send employees home for a month-long quarantine with a bonus of a month’s wages in advance, enabling workers to buy what they needed for their families and to stay well.
The founders were stuck on the other side of the ocean, dependent on a distant and now disappearing work force. To support them, the leaders had to reach into their own not-very-deep pockets for the cash. The company’s finances were already precarious after a brush with a corrupt employee’s embezzlement. The founders wondered whether they could find new investors for the still-fragile but promising venture. The leadership team used the time to observe the region’s needs, such as the hit to education and the food supply, and consider how to rebuild a different but better company that could serve more needs.
This company had learned the truth of Kanter’s Law: that everything can look like a failure in the middle. Unexpected obstacles and difficult predicaments can arise in the middle of any human and organizational endeavor. Give up, and by definition it’s a failure. Persist, pivot, and persevere, and there’s hope for finding another successful path.
Now the Covid-19 pandemic presents the world with a massive, messy, miserable middle, causing tragic losses of lives and livelihoods, and with no end yet in sight. Although there is no precedent for the magnitude of this crisis, there are lessons to be learned from previous disasters and classic turnarounds — including Ebola pandemics, Hurricane Katrina, the Gulf of Mexico oil spill, the global financial crisis, and business recoveries from near-financial ruin. I have found that the difference between climbing back to success and continuing to lose lies in culture — the tone set by leaders, the treatment of people, the spirit of partnership, the flexibility to redirect activities, and the imagination to innovate.
Middles are turning points when businesses and communities face danger and damage in their ongoing activities and experience losses for which they are poorly prepared (even if warning signs have been around for years). When crisis looms, losses can spiral out of control, turning into self-reinforcing losing streaks, where everything gets worse before there’s a chance to catch a positive wave.
Some entities go downhill fast, especially when leaders make a major mistake: to deny its gravity, defend their own past actions, or even view the crisis as a personal affront. In a classic how-not-to-do-it example, BP faced big losses following the Deepwater Horizon explosion and oil spill in the Gulf of Mexico. Then-CEO Tony Hayward’s response? He was widely reported to have said, “I’d like my life back,” rather than expressing compassion for the people whose lives and livelihoods were threatened or lost. And he pointed fingers at suppliers and officials. These and other behaviors characteristic of losing streaks — such as hiding information, making decisions in secret, or looking for scapegoats to blame — make matters worse. The consequences of this kind of culture are felt throughout the organization. In downward spirals, in-fighting replaces collaboration, as fault lines are exposed and buried resentments surface. Feeling helpless and insignificant, people become passive. Productivity declines, and innovation shuts down.
In contrast, organizations with a people-first culture of listening to stakeholders and serving others are better able to emerge from downward cycles with a positive trajectory ahead. For example, in the early days of the current pandemic, Chinese electric car maker WM Motor closed earlier than other manufacturers, because they trusted the reports coming from their employees. To keep the company going, they used the time to quickly innovate, including creating “touchless test drives” so that potential customers could try out the cars without risking human contact. WM even increased payments to many of their 3000 suppliers, so that suppliers, too, would survive and be available.
Three clusters of actions help leaders renew the accountability, collaboration, and initiative that will make their enterprises ready for life after the crisis.
The first, most immediate key to bouncing back is to set the right tone at the top. In the best turnarounds and disaster recoveries, leaders stress open communication and a spirit of accountability. Even before solutions are clear, they offer assurance that they are guided by values and a sense of purpose. They put the same information in front of everyone, using evidence to guide their decisions. They encourage frank communication, act decisively, admit what they don’t know, and make clear when and how they will communicate. They empathize with victims and recognize acts of heroism. They make investments that signal their belief in their mission and their people, putting this ahead of financial considerations. As celebrity chef and restaurant owner Ming Tsai has said, the goal is to keep the mission clear and avoid hemorrhaging money, rather than worrying about making money.
This approach paid off for the West African green energy company. During the crisis, the company had brainstormed about new markets and customers for its products, because they felt the noble purpose of lighting the country was worth the effort. Its leaders’ positive treatment of workers was noticed by several major corporations in the region. The big businesses decided to move a portion of their electricity purchases from the old monopolistic and possibly corrupt power company to this venture, seeing it as trustworthy and accountable. Finding big corporate customers was a new direction with reliable revenue; the profits could be used to expand services to more of the region’s underserved populations.
A second set of actions involves collaboration and initiative — mobilizing people and partners to examine, adjust, and fix operations. Teams focus on the nuts and bolts of what can keep running and how, or what should be modified quickly to take new problems and opportunities into account. This is when flexibility is key. An organization might form rapid improvement teams to work on such matters as fixing gaps in supply chains, redeploying workers to where they’re most needed. In the best turnarounds, I’ve found that leaders don’t make structural and organizational changes until they have observed the first wave of responses to the moments of disruption. At the onset of crisis, parameters are not yet known. But as information emerges, as the turnaround leadership team observes the company’s strengths and weaknesses, they might determine where to reduce expenses, where to reallocate capital, and what roles people can best play. At this point, they also rely on the people in the field, actually doing the work of making the product or delivering the service to find and implement improvements. Early in the emergence of Covid-19, seeing declining demand, a small business making plastic parts for boats used employee ingenuity to pivot to making face shields, which required modifying operations and ensuring sufficient supply; they won a major government contract and had to hire several dozen more workers.
Behind many successful crisis responses and business turnarounds are teams steeped in a sense of shared purpose that know how to self-organize quickly to maintain and enhance operations. When a mysterious power outage took down electricity for a large swath of the American Northeast and Midwest, one major airline didn’t have to wait for orders from headquarters to recover. It built on its tradition of employee involvement, which had helped the airline turn around its financial fortunes. Empowered associates who had a shared purpose — keep the airline running safely and on time — cut red tape, found creative workarounds to keep planes flying without power in airports, shifted service to hubs where passengers from other airlines were stranded, and saw an uptick in customers lasting long after the crisis was resolved.
Other companies turn to partners to mount a collective response. Farmers have long joined agricultural cooperatives to handle distribution; neighborhood restaurants or retail shops have formed associations to market jointly. In the wake of the global recession, a giant tech company initiated a digital platform in partnership with other large companies to connect them with small suppliers and facilitate the contracting process; this ensured qualified local suppliers and helped the small business sector recover. In the current pandemic, a produce distributor to large buyers such as hotels, restaurant chains, and schools quickly pivoted to sell directly to consumers, organizing farmers to change practices, lining up partners to reach consumers, and developing online capabilities. Coalitions like this can fill gaps in current operations.
A third cluster of activities is oriented to the longer-term future. How will it be different? What needs and opportunities suggest innovations that could be developed now? Which crisis responses are likely to become permanent modes of action? In the best turnarounds and disaster responses, leaders devote a portion of time to thinking beyond the crisis to transforming and innovating after the worse is over. They might assign dedicated teams to scan the environment, think “outside the building” beyond their current industry or sector, and develop models for the future. Or they might engage a range of employees and stakeholders in brainstorming about what is next.
After a major economic crisis and a protest-filled acquisition, an Asian financial holding company took the dedicated-team approach to imagine the firm of the future. While others grappled with operational details, the “new bank” group looked outside banking for inspiration. They examined the markets they were in and the ones they could open. They explored technologies that could transform financial services. While not ignoring colleagues handling the day-to-day, they maintained a relentless focus on what life would look like after the crisis. “New bank” ideas helped them emerge as among the region’s most successful enterprises.
A major media company undergoing a turnaround that saved the company took more of a grass-roots approach, opening communication channels in a formerly secretive company. They used their own broadcast technology to include thousands of employees in open brainstorming sessions. They invited representative audience members to join the conversation. They cut red tape to pilot employee-driven new ideas. They began to see what media like audience-produced content might look like in the future. And the bonus was that a lower-level staffer proposed what became a blockbuster new program.
Encouraging people to imagine the future counters the passivity and feelings of helplessness characteristic of losing streaks. Launching a future-oriented initiatives in parallel with immediate crisis management and mitigation efforts is important for morale as well as the future business. It provides a sense of purpose, a chance to turn present pain into future possibilities.
Getting through the middles without giving up is not a matter of freezing things in place while waiting for a return to “normal.” Every crisis, and every effective response to it, creates a new normal complete with new routines and new technologies. Just as metal detectors and other scanners burgeoned following terrorist attacks, temperature checks will undoubtedly become ubiquitous in the wake of coronavirus attacks, with new kinds of detectors still to be invented installed in public places. Further outside the building, a widespread crisis exposes institutional fissures, divides, and unsolved problems. That can drive a quest for new standards. Customers might want to change their requirements for suppliers. Legislators might want to add or tighten regulations. Unions might see an opportunity to organize under a worker safety banner. Government officials might want to fix long-standing public education problems by taking a new tack. Following the current crisis, which has moved most formal education on-line, schools will undoubtedly include a larger digital component. Experience with remote work could finally accelerate flexible schedules, stay-at-home days that ease commutes and traffic congestion, and attention to child-care needs and work-family issues.
Empowering teams to spend some of their time brainstorming about how they can help make a difference to their communities can unite and inspire people during the difficult middles, and it will certainly create good ideas for innovation when attention turns to the business future.
Leaders who emphasize their broad responsibilities to people, partners, and communities will help their organizations emerge from the messy middle with a reservoir of good will and a stockpile of ideas. That in itself is a source of hope.
Source: Harvard Business News
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