In earlier blogs, we shared our hypothesis that societies and individuals are more resilient to cope with the COVID-19 crisis when they reconcile opposing values like rules vs. exceptions, top-down vs. bottom-up, and being in control vs. being emotional. In this blog, we concentrate on being short-term vs. long-term orientated and how the joining of both can lead to better results.
In our previous blogs, we shared some major dilemmas we are facing now that the COVID-19 virus has settled globally. All dilemma reconciliations have one thing in common: they are a continuous process and you need to take short-term steps within the context of a long-term perspective. If one is lacking, you’re in trouble as an individual, organization and society.
However, short-term actions are often in apparent conflict with long term goals. So we see that, for example, no actions taken in the short term by the local authorities in Stockholm, Sweden, to quickly achieve herd immunity and economic stability might threaten public health in the long run. The future will tell.
But if the perspective is short-term health with a predictable result called economic depression, the optimal solution is not achieved either.
It was well said in the McKinsey article of March 2020: “In moments of crisis, the default expectation is that businesses will hunker down and focus on bottom-line fundamentals. Indeed, many CEOs feel constrained to making defensive moves to protect their businesses. But in this crisis, stakeholder needs are already so acute that the opportunity for businesses to make an indelible mark with human support, empathy, and purpose is greater than it has ever been … Decisions made during this crisis will likewise shape a corporation’s identity and tell a story that will leave traces long after COVID-19 has been quelled.”
Different reference points affect our approaches to the same dilemma
Like with all dilemmas, we see that different cultures have created different approaches to similar dilemmas because they have different reference points. Through our Culture of Business app, we asked 140,000 people to respond to the following statement, the concept of which was originally developed by scientist Thomas J. Cottle at Harvard:
Considering the relative significance of the past, present, and future, indicate your relative time horizons for each by assigning a number (7 = years; 6 = months; 5 = weeks; 4 = days; 3 = hours; 2 = minutes; 1 = seconds) to each of these 3 statements:
- My past started _____ ago, and ended _____ ago.
- My present started _____ ago, and ended _____ from now.
- My future started _____ from now, and ended _____ from now.
We took the average of each of the six scores and calculated an average score per country, for which significant differences can be identified per the below graph. The longest future horizon is found in Hong Kong and the shortest in Singapore.
Our time horizon significantly affects how we do business. It is obvious that the relatively long-term vision of the Swedish contrasts with the “quarterly thinking” of the Americans. Swedes know that if you cut a tree it takes some 35 years before it is back in the same shape. And Americans are much more guided by Wall Street taking your pulse at least every quarter.
And the climate in Italy and California is so pleasant that you might have two harvests a year.
Now let’s consider the results of the smaller survey we conducted through our Corona Resilience app. We asked users from various countries to respond to statements representing opposing ideas. Responses were given on a sliding scale from “Always” to “Never”. Let’s see how 11 nations scored on the following two statements:
- We need to deliver short-term results to achieve few casualties initially.
- We need to develop controlled group immunity amongst people we can trust in the long run.
In the graph above we see confirmed that the USA has a short-term results preference just like Spain. On the contrary, France seems to have a longer-term vision about building trustful relationships but does it apparently at the cost of short-term results.
So what have we learned from the more effective approaches that we see in Germany, Switzerland and South Korea? And what are the key actions one can take to mitigate the effects of COVID-19?
Giving perspective in times of uncertainty
In the face of a global crisis, well-prepared businesses can help protect their workers and their bottom lines. Obviously. But it is not enough. We need to give people perspective in times of uncertainty. Only in that case do short-term interventions get meaning.
According to an article in McKinsey Quarterly, “The power of purpose is evident as the world fights the urgent threat of the COVID-19 pandemic, with a number of companies doubling down on their purpose, at the very time stakeholders need it the most.” And it is obvious when there is so much lack of data that only a higher goal, a raison d’etre, gives stability, something to hang on that gives you direction.
It is very much like Jim Collins said – that a visionary framework consists of shorter-term Big Hairy Audacious Goals (BHAGs) in the context of Core Ideology, which consists of Key Values and Purpose.
The key to managing any crisis is preparation. There are actions that you as a leader can take to ensure your organization is in the best shape possible to withstand what’s ahead. We see three helpful areas in which the reconciliation of this dilemma of short-term and long-term can be achieved:
- Responding to change over following a plan by crafting a strategy
- Minimum Viable Product
- Scenario planning: strategy in uncertain times?
Let’s break each one down.
Responding to change over following a plan by crafting a strategy
Responding to change is often very much helped by following a plan. This dilemma is well described by the variety of strategies of Henry Mintzberg. The problem with brilliant inner-directed strategies is that these are not confined to corporate HQ or any government. Intelligence is widely distributed, and the closer you get to the interface with the end-user or patient, the better such strategies are informed. In a brilliant Harvard Business Review article, Mintzberg argued that strategies typically emerge from the grassroots of the corporation, where market changes begin.
The problem with strategy “designed at the top” (or following a plan) is that top managers or governments are typically furthest from the field and from end users. The danger is that their strategy will be abstract and largely alien from the culture of the corporation or society.
At worst, the strategy will command the impossible; at best, it will command something the grassroots of the organization or care institutions have been doing for years without recognition. Top-down strategy says, in effect, “I think, therefore you act.” It reserves for subordinates the role of putting their energies behind the superior thoughts of their leaders. In fact, nearly everyone has a strategy and all of us want to think.
In a continuously changing environment, it is not always possible for leaders to match their actions and behaviors to the strategy they are trying to execute. Thus, due to changes in and around the organization or community, the results of actions may not match the initial intended outcome. The planned strategy thus provides a broad direction for individuals to move toward, whilst the emergent strategy reflects the organization’s learning capability in responding to the environment.
According to Mintzberg, emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. The term “emergent strategy” implies that an organization is learning what works in practice. Through mixing the two strategies along the continuum, an organization can control its course of action whilst learning in the process.
The reconciling strategy is called the crafting strategy. There are several key ideas that Mintzberg parallels to the potter and her craft:
- First, the potter may create a product that follows in the tradition of her past work, but she may also create strategies that emerge in a different direction than tradition has previously held.
- Second, strategies can form as well as be formulated.
- Third, strategists do not necessarily have to be top management running an organization but removed from the inner-workings of that organization.
- Fourth, the potter may fail to make one piece, but strategies can emerge any time and at any place.
- Finally, just as a crafter may see things that other people miss, the strategist must be able to see emerging patterns and guide them into place as strategies.
We are not, of course, claiming that short-term direction is better for responding to change. We do not even agree with Mintzberg that emergent strategy obviates longer-term designed strategy or that it is worth holding debates between their respective advocates. We believe that top management and governments can create grand strategies out of the initiatives emerging from the grass roots.
In the COVID-19 crisis where fast change and quick learning are so necessary, innovative agile teams can integrate grand and emergent directions. The “virtuous circle” above is typical of their thinking. Agile teams are not adding value, because only simple values add up. Values are combined by creative groups: a car which is both fast and safe; high-quality food which is also easy to prepare. Nobody claims that combining values is easy; nevertheless, it is possible. A computer that is capable of making extremely complex calculations can also be user friendly. The ever-expanding system of satisfaction of values will form the ultimate test for the leaders of this century. And we need to involve more disciplines in that process than just medical people.
In short, we like to say that the response window for a crisis is measured in months, while recovery is measured in years. Those companies and societies that are reconciling different strategies simultaneously will always recover more quickly.
Minimum Viable Product
For the new COVID-19 world, the most challenging dilemmas are the traditional mindset of the existing organization or community versus the untested inventive mindset and the related focus on planning and optimization versus the rapid launch and fast learning. This applies to facemasks, vaccines, and new ways of working.
In the digital world, we regularly face the urge to “go digital”. When we show our own digital products/services to our clients, they initially show excitement, followed by a blank stare. How to do this with the existing mindset? When everything changes and we go digital, one might end in the ultimate niche market, that piece of the market with no customers.
Conversely, we find that following known paths will make you end in a market with no margins. Possible reconciliations are found in giving the organization or communities clear traditional boundaries within which complete freedom can be given. Experienced mentors can give young nerds great perspectives in this process.
In order to check the degree to which organizations have reconciled this dilemma, we asked our limited cross-cultural sample to react on the following two statements, with responses given on a sliding scale from “Always” to “Never”:
- In my organization, we focus on careful planning and optimization of our launched products and services.
- In the current crisis, my organization launches products and services faster than ever so we can learn quickly.
Similarly, we find the necessity of the Minimum Viable Product (MVP) in the current crisis we are facing. A core component of the reconciliation between working products and comprehensive documentation is the Lean Startup methodology as it represents the build-measure-learn feedback loop.
The first step is figuring out the problem that needs to be solved and then developing an MVP to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect questions.
The start-up will also utilize an investigative development method called the “Five Whys”, asking simple questions to study and solve problems along the way. When this process of measuring and learning is done correctly, it will be clear that a company or community is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.
Progress in manufacturing is measured by the production of high-quality goods. The unit of progress for Lean Startups is validated learning – a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty.
Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build, the thing customers want and will pay for, you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.
This will be one of the levers to pull in the actual COVID-19 crisis. There might be a variety of MVPs in the area of personal care like hairdressers, and in the restaurant area where we need to test out products and services that are measured against the number of infections and finally casualties compared across different approaches.
Scenario planning: strategy in uncertain times?
A third and last process that needs to be implemented to increase the chance that short-term and long-term orientations are integrated is scenario planning. Because uncertainty is widespread and COVID-19 has the potential to impact every part of a business for months, scenario planning is a critical tool to test preparedness.
What are the best and worst scenarios and is the organization or society designed for it? What could be the longer-term impact on working capital or bank covenants, for example, or even rent for shops and restaurants if the public space is closed? Ask queries to your finance team to emphasize critical sensitivities. Organizations in some sectors could see a significant increase in demand if more of the population spends more time at home than at work – are they prepared? Supermarkets reduce the variety of products, supplement the stack and develop emergency plans.
Don’t lose sight of other risks. COVID-19 is not the only threat on the horizon – and often organizations are most vulnerable when dealing with a crisis that dominates their attention. The many other risks your company faces are not reduced by an epidemic. For example, cybersecurity must always come first.
We don’t know what the coming weeks and months can bring. Since the World Health Organization upgraded the current COVID-19 epidemic to a pandemic, the tone of the conversation has shifted from containment and prevention to protecting key workers to keep businesses running. National restrictions on movement and gathering of people take effect, and organizations should be agile to respond.
Scenario planning came to maturity at Shell’s Group Planning in the beginning of the 1970s under the inspiring leadership of Pierre Wack. He defined scenario planning as “a discipline for rediscovering the original entrepreneurial power of creative foreseeing in contexts of accelerating change, complexity and uncertainty.”
Many misunderstandings arose around the use of this discipline, mostly because it was too often used as a trick offering a swift solution. It is anything but that. My experience with handling this methodology gives me a similar feeling to the handling of methods of complex business consulting work. Scenario planning also needs to be integrated into the day-to-day business of the organization and not seen as a side issue that is finished after a two-day workshop.
What is scenario planning not? Scenario planning is not a special version of contingency planning, or “what if?” planning. It is not a method of improving the quality of forecasting, either. In essence, scenario planning originated from the philosophy that the forecasting of a univocal environment becomes more useless with every passing day, not only because of the increasingly turbulent world, but also because of the interesting thought that forecasting can itself influence the environment. So a perfect helper for the COVID-19 challenges.
Now, what is scenario planning? In essence, the outcome of a scenario planning process is an organizational culture in which employees are able to act more quickly in different environments. Usually, at first, existing research is consulted on relevant trends in social, economical, political, technological, and ecological environments, and core players are interviewed inside and outside the relevant organizations.
To this end, facilitators, undergo a process from which two to four descriptions of the future emanate, all internally logical and highly possible. And it needs to be done by interdisciplinary groups, not only medical people.
The next step concerns the preparation of the organization of each scenario. This is where the method of reconciling dilemmas is of particular help. Those who prepare themselves for different scenarios will often be confronted with conflicting aspects; scenarios are instruments for arranging perceptions of alternative futures.
Often scenarios are a couple of stories, written or orally expressed, built around a number of specifically chosen plots. Stories organize knowledge and bring a set of points of view, both quantitative and qualitative, to the surface. In this way, decision makers are informed of a wealth of opportunities, opportunities they could never have imagined, in spite of their undoubtedly high intelligence.
Good scenarios often break with stereotypes, and can be seen as exercises for the future. However, they do not give a more accurate view of the future but rather the possibility of starting an effective strategic conversation with employees and stakeholders outside the organization. And that is somewhat different from choosing the most probable future scenario.
The method of scenario planning is particularly suited for those affected by the Covid-19 threat. which have troubles with measuring Furthermore, this method helps to link them together.
Conclusion and tips
During the COVID-19 crisis, there is a need to act quickly to avoid casualties. On the other hand, acting quickly, like a complete lockdown, might result in irritations if a longer-term perspective is lacking. Within a longer-term perspective, like complete freedom to act in the current crisis, you might be facing short-term casualties that will shift the public opinion.
So we argue that you may use three types of interventions to reconcile the short-term vs. long-term dilemma:
- Craft a strategy
- Create MVPs
- Introduce scenario planning
This leads to the following tips:
- If in your organization you are used to applying an inner-directed grand strategy, make sure you set up processes to involve clients and lower-level staff in creating an emerging strategy within the constraints of the major top-down points of (E.g., the top of the house dictates a complete lockdown for all staff to lower risks of infection. As a result you could interview key clients from home to see whether there are ways to intelligently meet them with no risk of infection.)
- If in your organization you are used to applying an outer-directed emergent strategy, make sure you set up processes to involve the top of the house in creating a top-down grand strategy out of the inspirations you got from talking to staff and (E.g., your clients and staff inform you that they like face-to-face training and you want to reduce the risk of infections. The end-result could be crafting a blended learning approach where people keep 6 feet apart.)
- If your organization is used to meticulously planning its product launch by testing and optimizing it, make sure you get the main points in order, such as safety and/or looks, and launch it as a Minimum Viable or Valuable Product. Also make sure you got the right criteria for judging progress after feedback from the client.
- If your organization is used to launching its products quickly, make sure you get the main criteria for improvements in order to learn as quickly as possible and launch it as a Minimum Viable or Valuable Product.
Install a scenario planning process where you work on the right actions today that serve all possible futures optimally.
Free Self-Test: the Corona Resilience Test App
We hope you have some time to complete the 5-minute test, found on our Corona Resilience app, and see its power. It is an app for individual resilience, and within 10 days, we will have one that will include organizational resilience. Please do not hesitate to advise your colleagues and others in your network about this free app. The more data we gather, the better we can make it.