By Chris Blasinsky
ALEXANDRIA, Va.—Preparing your business for radical changes requires a broad awareness of market surroundings. But who could’ve foreseen in January 2020 the incredible role “disruptive” services like at-home and third-party delivery would be playing right now? And are these elements part of a much larger picture of how the market will continue to develop?
Dr. Oliver Schlake, professor at the Robert H. Smith School of Business at the University of Maryland, discussed how organizations should craft resilient strategies by changing their future awareness threshold during the Fuels Institute’s FUELS2020 Virtual Experience.
To better prepare for disruption, Schlake suggested that businesses can position their operations to respond to consumer needs, regardless of the circumstances, by observing obvious and not-so-obvious trends, beginning with the VUCA principle:
- Volatility: Consequences are outside the normal or perceived frame of reference. Regarding COVID-19, there was a lack of preparation around second or third order consequences where the ripple effects are grossly underestimated—like the number of Americans living paycheck to paycheck—which the pandemic has exposed at a statistical level that has never been played out before.
- Uncertainty: The absence of a certain outcome when multiple outcomes are possible. In other words, when we don’t have a clear view of what the future may be. Most people tend to attach “probability” to the future to simplify and lend certainty to the situation. “The negative side of working on probability is that the events we are facing now, which we would call a low probability-high plausibility event, is they are often ignored or downplayed,” Schlake said.
- Complexity: No higher instruction to define various possible interactions, “where things are more complex than we initially want them to be,” he said, using the rush to buy toilet paper that led to global out-of-stock situations. This situation exposed the incompatibility between the personal and industrial use supply chains, which led to massive shortages.
- Ambiguity: Critical information is open to various kinds of interpretation. A lot of information and data available right now around COVID-19 is highly ambiguous, with few points peer reviewed or fact-based. What this leads to is little to no reliable statistics for the future nor a level of comfort working with a set of hypotheses.
The trouble with trends, said Schalke, is we tend to fall into “pits” that hinder decision making and our ability to change course and avoid a future crisis. He listed five prevalent pitfalls:
- Illusion of control and predictability. In other words, arranging deck chairs on the Titanic instead of focusing on safety drills. “We ignore that there could be unpleasant surprises and underestimate the risk and danger” and are therefore unprepared for icebergs, he suggested.
- Perceiving the future as pure chance. We overestimate the uncertainty, underestimate our choices and as a result our decision making is reactive and we miss opportunities.
- Waiting for the crisis to hit. Our threshold for action too high, meaning we extensively look for facts and data before we act and ignore the weak signals. Consequently, valuable reaction time is lost and creates “panicky crisis management,” he said.
- The human urge to find patterns. Humans are wired to recognize patterns, which is why many people compare the COVID-19 pandemic to the Spanish Flu of 1918. “We have to be careful that the future, as it unfolds, doesn’t become a pattern recognition game for us” and we apply old recipes to new problems, he said, adding, “I usually approach the future as a new game plan.”
- Searching for the “right” future. We take comfort in predicting the future and often lean toward simplified optimistic or pessimistic scenarios. Consequently, this limits our imagination. “The way the future usually turns out is surprising, and there should be multiple futures kept in mind,” that allow us to adjust to alternate plans when expectations are not reality.
Reimagining the Future
Schlake shared five obvious and not-so-obvious trends to help business look at what they can do today to plan the right path forward and avoid some of the COVID-19 pitfalls.
- Obvious Trend: Fix our most obvious COVID-19 failures. Everyone will offer fixes for some of the immediate failures, whether supply chain issues related to toilet paper, lack of access to masks and other PPEs and online schooling.
- Not so obvious trend: Instead of fixing surface problems, find the root causes for failure. Many things have failed during the pandemic that were flawed business models before the crisis, said Schlake. Shopping malls had been struggling for many years, for example, and short-term school outages happen every year with inclement weather and natural disasters.
- Obvious Trend: Rebuild and recover the economy. Given the level of unemployment in just a few short months, there is a harsh reality to consider that some of these jobs lacked resiliency in the first place.
- Not so obvious trend: Reimagine the economy with different parameters than we consider today, and whether the last mile is now the last quarter-mile with delivery models, whether personal drones or autonomous vehicles set up to make pickups for consumers.
- Obvious Trend: Consumers want to get back to normal and in doing so they favor what’s familiar and know how to do.
- Not so obvious trend: Discovery of new lifestyles. Quarantines are infusing new ideas around predictable routines, where staying at home is the new going out and some people are enjoying the slowdown. “Does anyone miss their daily commute?” he asked, noting that new lifestyles have been forced into the market and many will have staying power.
- Obvious Trend: Invest in specific pandemic preparedness, and prepare your business to overcome a similar crisis in the future.
- Not so obvious trend: Build capability for a range of problems. For example, take a “Swiss Army Knife” approach to building versatile, adaptable, creative and flexible capabilities, as the next global crisis may not be a pandemic.
- Obvious Trend: Build rapid response ideas and teams to respond to the next pandemic. However, this approach is more of a short-term, “strategic muddling through” approach that lacks key directives.
- Not so obvious trend: Craft future robust strategies to future-proof your business for resilience, redundancy and preparedness. Build and test a multi-scenario plan and remember that a “Plan B” must be developed before it’s needed.
Schalke shared the importance of building business advance teams within an organization to establish a general posture and directive, collect forward intelligence and weak signals, and embrace the art of the long view when rethinking for future-proofing strategies.
Chris Blasinsky is the NACS content communications strategist; she can be reached at firstname.lastname@example.org, and on Twitter and LinkedIn.