Are Companies Ready For The New Normal?
The unexpected and devastating Covid-19 pandemic has engulfed the entire world. The pandemic has accelerated an already rapid rate of change and uncertainty to new heights. It's nearly hard to anticipate what kind of future awaits us now, let alone a year or even three months from now. So, how can companies that provide products and services that are essential to daily life be managed in order to thrive in such an environment?
>Many factors, such as the fact that remote working became the norm overnight and life came to a halt as a result of the necessary measures to maintain social distance, paralyzed the majority of companies. Many companies that have switched to the usual "crisis management" mode have a "crisis desk" set up. Communication Professor Steven Venette defines the crisis as “a transformation process in which the old system loses its sustainability”. Will companies really be able to overcome this crisis by maintaining the former system? Organizations' ability to make "correct" decisions "quickly" is inversely proportional to the rate of change, the extent of complexity, and the size of the organization. In other words, complex environments like today pose the greatest challenge to large-scale hierarchical organizations' ability to adapt to change. Traditional management, which prefers to lead with a crisis desk style and the motivation of "not making mistakes" as a result of the Covid-19 pandemic, may become a bottleneck, resulting in "decision paralysis," rather than paving the way for companies.
One of the leading international organizations in the field of agility, Business Agility Institute defines business agility as “the capacity of an organization to create value in favor of its customers by taking advantage of change creatively”. While designing the future, organizations undergoing agile transformation reject the practice of putting their products and services first and learn to accept the customer's unmet needs as the starting point for every thought. In other words, in environments like today, where the rate of change and uncertainty is high, they ask the question not like "How can we continue to generate income from our existing products and services?", but like "How should we adapt our products and services to the evolving needs of our customers at this point?”. Here, the keyword is “adaptation”. While developing a long-term strategic roadmap, agile organizations assess their business plans on a frequent basis during 1-4-week working periods called "sprint", prioritizing the most valuable work for changing customer needs. This is accomplished by discarding a hierarchical management system in which decisions are made at the top and communicated down, and by authorizing the customer-facing departments. Thus, practical decisions may be made more swiftly and in a customer-centric manner, and the organization can emerge stronger from such difficult change periods. Moreover, organizational efficiency rises significantly as a result of improved productivity and engagement of empowered employees.
You may have come across different predictions about when the Covid-19 pandemic will end. Optimists believe that things will return to normal in a few weeks as the weather warms up.
The more cautious ones expect that the situation will persist more than a few weeks, but that things will be back to normal by the start of summer. More pessimists believe that the current scenario will last for months, if not years, into 2021. The common expectation in all of them is: "At some point, the situation will revert to 'normal.'” Is it really so?
On March 17, a study published on the prestigious MIT Technology Review website included many mathematical models of the pandemic's development, concluding with the following sentence: “This is not a temporary disruption. Rather, it is the beginning of a completely different life.1In other words, it is possible to say that social distance will continue to shape our lives for a long time. Therefore companies must accept this "new normal" as quickly as possible and adapt at breakneck speed. Because, unfortunately, it would not be wrong to say that an economic tsunami arising from the pandemic is approaching every day.The four dimensions on which everyone agrees on how the pandemic will have an impact on the economy are as follows:
- Broken supply chains: Suspension of production in countries that supply intermediate products for production due to the pandemic. It is possible to talk about a chain reaction with the loss of employment, the decrease in supply, and the cessation of production in the affected sectors.
- Contraction in demand and workforce due to patients and deaths:
- There is still a limited impact, but the situation may change in the near future.
- Restrictions due to quarantine: The factor that will have the greatest impact in the short run. The measures imposed have had a significant impact, particularly on the service and trade sectors, as well as people who work in these sectors. Suffice it to remember that more than half of employment is in the service sector...
- Unemployment and contraction in demand: Unfortunately, the most dangerous dimension. In the medium and long run, the consequence of the wheels grinding to a standstill could be seen as greater layoffs and a consequent decline in demand.
On the other hand, it is also predicted that the global economic recession, which has been predicted since the beginning of 2019 and is slated to start by the end of 2020, would come earlier. The sharp drop in global stock markets over the last two months can be viewed as an indicator that does not cause, but rather reflects, risk. The fact that central banks, particularly the Federal Reserve, cut interest rates to near "0" and the US government flooded the market with cash with a record $2 trillion bailout reminds us of the 2008 financial crisis. In this circumstance, foreign investors' reluctance to invest in emerging economies like Turkey, which they perceive to be risky, could become a significant factor in raising our country's exchange rate risks. It is conceivable to say that the pandemic's impact is felt more deeply in our country, which has a far higher economic fragility than in developed countries.>One of the speakers at the World Health Organization's (WHO) press conference on Covid-19 on March 13 was Dr. Michael Ryan, Head of the WHO Emergency Health Department. Dr. Ryan, who has spent the last 25 years battling acute and widespread health issues around the world, was asked about his experience when the Ebola outbreak erupted in West Africa. And Dr. Ryan delivered an unforgettable leadership lesson in just 1 minute:
You must be the first mover. If you need to be right before you make a move, you will never win. Perfection is the enemy of the good when it comes to emergency management.
Speed trumps perfection. The problem in society we have at the moment is everyone is afraid of making a mistake. Everyone is afraid of the consequence of error. But the greatest error is not to move. The greatest error is to be paralyzed by the fear of failure. I think that's the single biggest lesson I've learned in Ebola responses in the past.2”
Considering today's uncertainties, Dr. Ryan's lesson on Ebola is also golden advice for companies. Approaches where the authority is even more concentrated in one hand in order not to make mistakes with the crisis desk approach, and all kinds of daily decisions are taken by the management and transferred down, can turn the management into a bottleneck and cause decision-making paralysis. While a cost-oriented crisis management approach aims for efficiency, it's possible that staff beyond the crisis desk's collective capability has been deactivated. On the contrary, it has the potential to increase inefficiency more significantly.
Every crisis brings along great opportunities for companies. For this reason, companies that delegate as much decision-making authority to employees as possible by drawing a managerial framework, thus maximizing the organization's collective capacity by putting the customer first, and being able to respond to change as quickly as possible, will emerge from this crisis even stronger. In other words, rather than waiting for the pandemic to pass, companies could be better off adjusting to the "new normal" and adopting and implementing agility as soon as possible in the period of crisis management and beyond. Because the pandemic may not be the only crisis; a major global economic crisis could be lurking around the corner, with long-term consequences.