Industrial Engineering

Navigating your Business Through The COVID Crisis

Navigating your business through the COVID crisis

ISE Magazine June 2020 Volume: 52 Number: 6

By David Poirier, D. Scott Sink and Jim Tompkins

https://www.iise.org/iemagazine/2020-06/html/poirier-sink/poirier-sink.html

This article is a summary of two IISE Chapter 1 Performance Excellence webinars held in April. Regardless of your business situation in the context of COVID-19, we provide some ways to think through how to develop rapid, appropriate/effective responses that are scalable and sustainable. Our storyline is as follows:

  • We are faced with an unprecedented disruption, a true “black swan” event that is obvious to all at this point.
  • None of us can alter that fact; we are where we are and it is what it is. There are many things we can’t control, but we can manage our mindsets and our strategies and actions to adjust and respond, to survive and ultimately thrive.
  • There are at least four distinct scenarios or situations that organizations face. Each requires different strategies and tactics for success.
  • The general strategy for success has not changed; however, the requirements for creating strategies and executing them have changed dramatically.
  • We’ll end with some tips, learnings, lessons and suggestions that are pragmatic and doable if you meet the critical requirements for success during critical periods of this crisis.

A ‘black swan’ event of epic proportion

A ‘black swan’ event of epic proportion A “black swan” is a rare, sporadic event seemingly unpredictable or unforeseen that took us by surprise and carries massive transformational impact. These are also characterized as events that, in hindsight, were obvious. There have been many disruptions over the past 50 years, none this ubiquitous and severe. These disruptions are caused by many different factors and root causes and the approach to resolution has passed through a number of “eras,” so to speak: the era when technology has been a root cause (think Apollo 13); the era when human errors were the root cause (Challenger disaster); and the era when sociotechnical interactions were the root causes (mortgage crisis). Now we enter an era when a disease is the root cause, but the resolution will enter us into an era of resilience engineering. Clearly this is and will challenge all engineers, and ISEs will be right in the thick of things helping to navigate through and out of the storm.

According to writer Haruki Murakami, “And once the storm is over, you won’t remember how you made it through, how you managed to survive. You won’t even be sure whether the storm is really over. But one thing is certain: When you come out of the storm, you won’t be the same person who walked in. That’s what this storm is all about.

Leading through disruptions requires mindset management work

These disruptions require a tremendous amount of focus, energy, patience, resolve and intentionality. It seems almost trite to remind you that attitude is a choice, yet because thoughts, words and deeds can be subject to “unconsciousness,” it bears reinforcement.

Human beings are remarkably resilient by nature. We see in-credible innovation in the face of significant disruption. People will get “at cause” and be proactive and accountable in times of crisis, and we see that. In some respects, mindset management work is easier in times of crisis than in a normal period.

Having said that, it is still worth noting that leadership needs to ensure people live (thought, word, deed) on the right side of Figure 1. Leaders ensure this and create the conditions for this to naturally occur by rapidly creating new strategy and policy, a clear new vision definition of done. They create a clear migration strategy and plan. They create explicit visible measurement and management systems.

 Specifically, principles and methods of tiered huddles, huddle boards, war rooms, scenario planning, the use of the OKR system (objectives with associated key results) weekly and sometimes daily, etc., all are approaches and methods that are useful in less disruptive times but become super critical in times of major disruptions.

Doom to Tomb, Boom to Hibernate, Doom to Boom, Boom to Boom

on IISE Chapter 1, IISE introduced four situations and conditions that organizations are in as we enter and navigate through the storm. The point we are making is that your strategy forward is perhaps intuitively shaped by the condition your organization was in before COVID-19. Performing an intellectually honest assessment of your “capabilities” in 10 areas is critical to formulating the right strategy.

  1. Financial stability
  2. Customer value exchange optimization
  3. Planning
  4. Execution
  5. Unique value proposition(s)
  6. Energy (hedgehog concept)
  7. Innovation
  8. Leadership
  9. Teamwork
  10. Culture

These are not surprising categories for assessment, and, of course, they’re not new. The answers you come up with in terms of how you fared against these before COVID-19 will have a major impact on the right strategy forward. Added in the webinar “Business Continuity Strategies and Tactics in Periods of Major Disruption” was that there are also the “haves” and the “have nots.” This has to do with the value propositions for organizations as evaluated in the context of the storm. Organizations that can move things or switch from moving people to moving things are well-positioned; people who can’t do so aren’t. Organizations that by definition require people being together are not well-positioned to add value during the storm, which is intuitively obvious.

The key point in the transition from what category are you in – Boom to Boom, Boom to Hibernate, Doom to Boom or Doom to Tomb – is that in a global, ubiquitous, pervasive and extended disruption, the only strategy for success is to reinvent. If you are a “have,” with strong positioning and value proposition in the storm yet weak, you can go Doom to Boom; if you are strong and strong, Boom to Boom. If you are a “have-not” and weak, it’s Doom to Tomb; figure out how to do that as well as you can and start over. If you are a have-not and strong, Boom to Hibernate (such as theme parks). The webinar lists what organizations have to do depending on the situation they are in and specific things to consider.

It’s all about strategy, process, technology and people

As we said in the webinar “Navigating Your Business Through the COVID Crisis,” some things are the same, some are different. Salvation is in your ability to continue successfully integrating strategy (actually rethinking and re-engineering your process for creating, enhancing and reinventing strategy); technology (disruptive innovation); process (changing what we do and how we do what we do); and people (alignment, attunement, focus, intentionality, etc.). If we say keep focusing on strategy, technology, process and people, it’s a glittering generality. As they say, the devil is in the details (people leave off the last part) and so is salvation. Each of these four system components has to be either re-engineered in order to reinvent. It’s Doom and Tomb if you can’t do this. Here are a couple of practical examples.

  • Stick to the basics, what we know works. First who, then what. Get your best thinkers, forget the org chart, take the ranks off your shoulders and “form, storm and norm.”
  • Get a dedicated war room (virtual and physical) and go back to paper and pencil, as W. Edwards Deming told us to do: Put up butcher block paper, buy lots of Post-Its and start to create a grand strategy. Plan across multiple fronts over multiple horizons. Get assumptions explicit and do an importance/certainty analysis (a 2×2 matrix). Study up on creation skillfulness (Robert Fritz and Peter Senge) and create your shared vision(s) for back side of the storm and beyond. The webinars provide many lists of things to consider and do.

Strategic guidance and tips

Leading an organization (or sub-organization), regardless of size, through this storm will not be easy. It will take some courage, vision, clarity and conviction, and plain old hard work. Figure 2 highlights five words that can change the results you achieve in your transformations

John Kotter wrote a seminal article in Harvard Business Re-view that focused on the eight reasons that transformation efforts fail. One of the reasons is that people under communicate by a factor of 10. Creating a shared understanding of the situation (being intellectually honest) and the vision for other side of the storm and the strategy/path forward is a precondition for alignment. People have to hear, internalize and understand – and believe in – the vision and strategy to be aligned.

Alignment is about creating the required levels of coordination and synergy that are required to rapidly translate the strategy into a reality. This sets the stage for visible measurement and management systems, creating the link between the talk, the walk and the results, so to speak.

Visibility for objectives and required results and how we are doing in relationship to the walk and the outcomes, if done properly, then positions for managed (self-managed and team managed) accountability. As we discussed earlier, the “at-cause” mindset, by definition, is an aligned accountability.

Finally, there is discipline. One of the major findings in Jim Collins’ work articulated in Built to Last and Good to Great was the role of discipline in thought, word and deed in high-performing organizations. In times of global disruptions, organizations, again regardless of size, domain, etc., have to find, discover, migrate to and take advantage of the “nexus” of their hedgehog (the intersection of positioning, competencies and passion/energy). Those in Boom to Boom and Doom to Boom have to keep the flywheel of innovation spinning – go, go, go! Boom to Hibernate companies have to refocus innovation on how to hibernate smart and then how to be ready to go, go, go on the back side and not lose a day of opportunity. That’s not a trivial planning and logistics exercise. Think of theme parks and entertainment venues as examples most of us can under-stand.

For Doom to Tomb, the same thing applies, only innovate to “die gracefully, with respect, care for people and customers and suppliers” and then if you have the energy, figure out a new hedgehog and reinvent

A list of things to consider and think about

Regardless of your situation, there are some fundamental things that leaders and managers need to address. Here is a list for you to consider:

  • Preserve the top line by focusing on building trust with key customers. Reach out to customers to best understand their evolving needs and communicate plans to mitigate risk and ensure continuity.
  • Adapt current resources to meet business needs and prioritize based on criticality of products and services.
  • Monitor and respond to market and competitive dynamics. Leverage lessons learned in the market and in past disruptions, track competitors’ reactions, and redefine and revisit budgets and planning.
  • Prepare for bounce-back scenarios based on company performance and market performance, including capacity planning, assessing potential acquisitions and evaluating marketing campaigns.
  • Manage cash and liquidity – stress test cash flow scenarios, ensure prudent cash management processes and assess in-vestment viability.
  • Instill rigorous cost discipline and strict procurement processes, evaluate employee base and limit discretionary spending.
  • Revise financial plans and perform scenario stress tests. Re-visit target planning, be transparent on cash and financial positioning to key stakeholders

References: IISE Magazine June 2020 (https://www.iise.org/iemagazine/2020-06/html/poirier-sink/poirier-sink.html)