In the course of running a company, business leaders face significant challenges on a daily basis. Sometimes, those challenges are easy to anticipate - if not always to overcome. No one expects budgeting, hiring, or operational processes to be effortless, but great leaders plan ahead and rise to the occasion when things get difficult. However, sometimes there are disruptions that no one can see coming - from natural disasters to global pandemics and beyond. Known as "black swan events," these crises impact companies in different ways, depending on the preparation of the executives in charge.
Resilient companies are agile, able to pivot in the moment to rise above unforeseen obstacles. They are the companies that understand the need for adaptability in an unpredictable world. And the other companies, the ones who fail to overcome these challenges? They are the ones whose leaders cling to seven deadly words: "But we've always done it this way!"
So how can companies prepare for disasters that they cannot predict? How can leaders ensure that they are building resilient companies and not falling victim to those seven fatal words? Here are three introductory strategies that can help executives set their companies up for success, no matter what challenges they may come to face.
Don't Rely On "Lean" - Prepare to "Flex"
COVID is the most recent example of a black swan event that has affected global and local markets, but it is certainly not the first event to do so. Consider the Fukushima Daiichi nuclear disaster in 2011. Global markets were impacted in myriad ways, including the total collapse of Toyota's auto supply chain operations. How could a single catastrophic event shut down an entire supply chain? Easy: in their commitment to Lean practices, Toyota had streamlined their sourcing of one common component to a single provider...which was decimated by the tsunami and subsequent nuclear disaster. Without any alternative in place, their supply chain stayed down for months.
In cold chains (for example, those used at UPS and FedEx), if any part breaks, the whole system goes down. To escape that fate, leaders should shift from a fully lean process to a flex approach, in which backup processes exist and pivoting in times of crisis is an option. With the rise in technology and globalization, this strategy is more important than ever, as seemingly isolated events have the capacity to affect any company in any economy.
Hire Great Skills "Translators" & "Go Wide"
In a pick-up football game, there is often one player the team captain doesn't trust to make plays. To keep that player out of the way of a critical play, the captain might tell him to "go long." In business, "going long" might look like hiring employees who are deeply skilled in one area and continuing to deepen their skill set in that single area. But just as in football, "going long" in skills development is not as helpful to a company as "going wide." Great leaders "go wide" by hiring employees who bring dual skill sets (for example, operations and IT, or supply chain and finance). And then they help their employees explore other silos and develop "wide" skill sets. In other words, they connect the dots sideways, not up and down. By hiring talented "translators" (employees who possess multiple skill sets and can move between business functions smoothly) and providing opportunities for skills development across multiple departments and business units, executives benefit their employees as well as their company's long-term success rates. When unexpected events shake up a company's internal needs, more employees will be able to rise up and meet those needs because the company invested in broadly upskilling their workforce.
Encourage Innovation at Every Level
If an executive ever starts to feel comfortable resting on their company's accomplishments to date, they need only remember that there was a time when AT&T and IBM ruled their markets. But those juggernaut companies were behind the wave, not ahead of it, and when markets changed and challengers arrived, they got left behind. To keep ahead of the curve, companies must create mechanisms for the smart, skilled people they hire to express their ideas and explore them, taking risks in the pursuit of excellence. Finding ways to do this structurally is no small feat for most companies, but it is a worthwhile challenge that will pay dividends for companies in ways both large and small. Not only does investing in employee innovation create opportunities for companies to capitalize on great ideas and surge ahead of their competition, but it also creates a happier workforce, wherein employees feel seen, heard, valued, and challenged by their leaders, and are more likely to be productive and loyal participants in their workplaces.
The velocity and vectors of internal and external change are affecting the working world in ways that are not only unexpected, but are also arguably "unexpectable." If leaders fail to recognize that, they may be doomed to say those final seven words: "But we've always done it this way!" COVID is the evidence: executives must be ready for black swan events, because they will arrive, and when they do, no company will ever be the same.
***Each of these strategies will be discussed in more detail in future installments of this series, starting with a deep dive into lean vs. flex methodologies.