Growth, by necessity, involves risk. No company can avoid all downside risk. Instead, they weigh the cost of prevention against the cost of response. Often, the cost of prevention is prohibitively high, and investments may not be made if the likelihood that a severe impact occurs is low.
Yet, when events occur that significantly challenge a firm’s ability to maintain operations, the natural human capability to adapt is critical to managing risks. There are several areas that firms can focus on to preserve the spirit of growth that is essential to sustainable success:
Local authority versus central coordination
The military model of distributed autonomy with central coordination is well known to succeed in high-stakes missions. The recent Covid HR pulse survey, led by Josh Bersin with MIT Sloan Management Review and CultureX, has highlighted the value of empowering local teams while having some degree of global coordination to enhance the speed of HR response.
No two crises are ever the same. As a result, existing models may be inadequate to make sense of the speed and scale of new, unstructured information. During crisis moments, making links between sensing, interpreting and acting is uniquely human. Local teams can sense signals on the ground and can use this intelligence to interpret where and how to deviate from central responses.
In the aftermath of the 2011 Japanese tsunami, Intel used a split response structure to the incident. Two independent teams were set up. Emergency management (EM) was tasked with caring for the safety of local facilities and staff. Business continuity (BC) focused on recovery of production and return to operations. EM operated locally, and BC entailed global coordination to shift production to different facilities.
Collective versus individual
In a crisis, the welfare of the collective versus the cost to an individual or a single organisation is constantly being managed. Decisions on when and how much to flex existing protocols are also necessarily human.
For example, Medtronic’s decision to open source specifications for ventilators during Covid-19 was a clear alignment to its values, but probably would not have been done under normal circumstances. It has brought unintended benefits, most notably exposure to a range of unlikely collaborators – from large-scale manufacturers to innovative engineers and technology companies.
In a prolonged crisis, decisions have to be made on which jobs will go away, and how to align people towards new activities quickly. This requires an understanding of the bigger picture, while being able to match jobs based on individual capability, personal circumstances and motivation. For instance, John Lewis has found new ways to offer its expert partner-led services remotely during Covid-19, such as wellbeing advice or one-to-one calls for expectant parents. This redeployment will require HR teams to tailor onboarding and training support for these new tasks.
Real versus perceived threat
Response must consider real threat and perceived threat. Modelling the real threat of transmission was not enough for food suppliers to anticipate or respond to demand. For example, the current Covid-19 crisis still lacks a rich understanding of individual and group behaviour in high-stakes situations. How can the government motivate the public to stay at home for extended periods? How can the collective good be harnessed to coordinate care efforts for the vulnerable or for people who are self-isolating? How can employees be encouraged to return to offices as we emerge from lockdown? How can the business sustain preparedness for long-term trends in urbanisation, robotics, water scarcity and rising food prices amid the current crisis?
These questions can be supported by real-time data collection to identify opportunities and bottlenecks. At a time of fear, actions that build trust, such as transparent and regular communication, as well as empathy to individual circumstances, can move people from resistance or paralysis to positive action.
Design for value
During a crisis, choices on how to create more value over time while saving money or cutting costs in the short term rely on reliable information flow, detection of opportunities and fast response. Yet human values and behaviour are at the centre of any crisis. Protecting the natural human capability to adapt is critical to individually and collectively moving beyond fear and into action that propels individuals and organisations to a new phase of growth.
Camelia Ram is research associate at EDHEC Business School