I’m often reminded of a line from Ernest Hemingway’s novel The Sun Also Rises, in which a character is asked how he went bankrupt. His answer: “Two ways. Gradually, then suddenly.”
When dealing with change (bankruptcy-related or otherwise), there are often warning signs along the way — gradual shifts that are easy to dismiss as temporary or not yet consequential, until one day, abruptly, they arrive.
The point is that sudden threats to organizations are rarely truly sudden. The signs were there, but they were missed.
We’ve all heard of the examples: The streetcar company that didn’t appreciate the advent of cars; Kodak sticking with film until it was much too late (despite the fact that it was a Kodak engineer who invented the digital camera); Blockbuster turning down the opportunity to buy a struggling Netflix for a mere $50 million in 2000.
And yet, it keeps happening. Partly because our view of the world is a function of what we believe to be important. Blockbuster, for example, assumed that “movie night” was its main offer – the ability to pop into a store and instantly have a movie whenever you felt like it. Waiting two days for the mail to arrive seemed like an inferior alternative. As it turned out, Netflix, not Blockbuster, was the one to anticipate streaming as the next, best iteration.
Whatever the specifics, the human tendency to embrace evidence that supports our pre-conceived notions and dismiss that which does not (“confirmation bias”), can lead us to ignore the weak signals of change until it’s far too late.
So, how do we avoid getting caught in this trap? There are a few ways…
Check your assumptions.
If we are aware that we tend to think about the future as an extension of current reality, we may be able to step back and see from a different perspective. This requires using our imagination and asking the right questions.
For example, several universities have worked hard to establish a hybrid form of classroom experience for the fall semester. One of the rationales for this effort is survey results in which students demonstrate a strong preference for “a classroom experience.”
But what classroom experience were they envisioning? Was it the familiar kind that they enjoyed pre-COVID, or was it one in which they had to wear a mask all day long, sit far apart from others, commute on public transportation, and bring their own lunch?
Or, consider our current “Zoom fatigue,” and the near-universal lament that it falls short of in-person meetings. Perhaps the pandemic will be what pushes the technology to improve quickly, to the point where it feels like we really are in the same room together. Now that demand for remote meetings for small companies and individuals has skyrocketed, is it possible that an affordable version could become available? Would that change how we feel about video conferences or even about telemedicine? How would that impact your plans?
Your assumptions about what’s coming and when — most of which is based on past experience — may be limiting your ability to “see” the future.
Listen to your constituents.
Your customers, clients, stakeholders, constituents — whatever words you use to describe the people your operation serves — are an important source of insights. If you can hear what they have to say (and if they’ll be honest with you), you’ll learn a great deal more than simply tapping your network of colleagues, friends and family.
I worked with an entrepreneurial doctor who had created a software tool he felt would make challenging decisions easier. He was certain that other doctors would feel the same way (many colleagues told him they liked the idea). So he went ahead and built the product. But when I interviewed doctors to get perspectives and testimonials for an investor pitch deck, I heard a different story. While they liked the concept, they hated working on computers and were reluctant to use anything that required more time staring at a screen.
Whether developing a new approach of your own or evaluating that of a newly arrived competitor, you’ll want to engage the perspective of those who don’t share your world view and who have no vested interest in telling you what you want to hear.
Keep an eye on trends and results.
A common element among companies that find themselves in “sudden” difficulty is the fact that internal indicators, while signaling a challenge for some time, were ignored.
A decline in sales can be rationalized as “a temporary blip.” An emerging, competing technology can be written off as “not ready for prime time.” A reduction in foot traffic can be due to “external factors beyond our control” (retailers love to use bad weather — or good weather — as justification).
While it is certainly possible that a temporary and/or inconsequential shortfall is exactly that, it’s wise to remember that most forest fires begin with a single spark. If you wait until the flames are visible from miles away, you’ve no doubt missed the opportunity to put them out easily.
Keeping a close eye on trends and where they are going will help you identify small threats before they become overwhelming.
Whether or not things are going well, it is important to make a habit of checking your assumptions, listening to a broad range of voices, and paying attention to the shifting world around you.
Knowing that we humans tend towards confirmation bias, set aside time periodically to check your interpretation. Look for early, weak signals and consider the impact these might have on your operations, were they to grow in strength and number.
To paraphrase “the most interesting man in the world,” from those old Dos Equis beer commercials, stay curious, my friend!
“If you don’t know where you are going, you’ll end up someplace else.”
— Yogi Berra
I just received my copy of Bloomberg Businessweek (yes, I’m the one who still gets it in physical form!).
The cover article, “Not in the Mood,” explains that for the most part, since the start of the pandemic, Americans are not making babies.
Early on, some had predicted just the opposite — expecting a baby boom similar to what we’ve sometimes seen in the past when couples were unable to leave the house.
Imagine, now, that you are a crib manufacturer, trying to anticipate demand for the next few years. Or an automaker, unsure how much manufacturing capacity to allocate to minivans. In both examples (and countless others), a baby boom or a baby bust can have far-reaching — even existential — implications for your business.
That’s where “scenario planning” comes in. First applied to business strategy in the 1970s by Shell Oil Company as it anticipated how decisions by OPEC might impact worldwide oil supply and pricing, this strategic tool allows organizations to plan for uncertain future outcomes.
So, what is scenario planning? Well, here’s what it’s not…
It’s not the tired old approach that anyone who’s ever developed multi-year budgets in a corporate setting has used — the kind where you make your future financial projections based on one set of assumptions, and then create an “optimistic” forecast based on revenues being 10% higher than the base case, and a “pessimistic” forecast based on them being 10% lower.
That’s fine as far as it goes. But it’s only useful to the extent that the future is very similar to the past, and that whatever happens occurs within a very narrow range of outcomes.
Scenario planning, by contrast, is a process of trying to envision a broad range of possible — often extremely diverse — outcomes (stories), from which you plan accordingly. Using our baby example from earlier, this isn’t “What if there is a 5% increase in births next year?” This is, “What if there is an 80% swing in either direction?”
Some things to keep in mind when developing scenarios…
Ask big questions.
The process begins by considering significant, often environmental factors that can have an impact.
What if there is political unrest in a country in which a major parts supplier operates?
What if demand for your services drops by half?
What if the current administration stays in power? What if it doesn’t?
What if most remote workers continue to work from home and don’t return to offices when it becomes safe to do so?
Develop two or three scenarios.
While you should begin by thinking about several different possibilities, you’ll ultimately want to narrow down the number you consider to just two or three that seem feasible. Evaluating too many can be overwhelming and limit your ability to move forward.
The goal is not to predict the future — it’s to envision possible situations that might leave you vulnerable or open up opportunities, so that you can consider how to prepare for unexpected situations.
Then, as time passes and relevant indicators begin to suggest which scenario is looking most likely, you can start taking the actions you had prepared for moving in that direction.
Identify elements that you can predict well.
Demographic trends are not hard to anticipate. For example, it’s easy to know how many 18-year-olds there will be five years from now. Universities have been aware of the coming decline and have been preparing for several years.
Likewise, while those in the health and human services fields don’t know how and when managed care may come to complex long term services and supports, they do know they’ll need to have better data gathering and managing capabilities in order to succeed when it does.
Identify elements that you can’t predict well.
For example, many large companies developed extensive and far-reaching supply chains over the past several years, relying on companies in multiple countries to coordinate efficiently and with just-in-time connections.
Companies that had prepared for a scenario where access to one or more of those countries might suddenly be interrupted, based on trade disputes or other factors, would have been better off today, even if they had not envisioned a global pandemic as the reason for the disruption.
Evaluate your internal capabilities and commitments.
Different future realities will require different responses. How well prepared are you?
For example, if telehealth, that was not very prevalent pre-COVID, keeps its current penetration at the 80+% range, how will you, as a healthcare provider, respond? What if, instead, insurance companies reduce payment levels for telehealth delivery once the pandemic is past, and penetration drops to 30-40%?
In these scenarios, you might consider the following questions: What lease commitments do we have? How easy would it be to reconfigure the space for current requirements (and reconfigure it again once the pandemic has passed)? What technology platform have we adopted and what improvements can we make to it? What cybersecurity procedures do we have in place? How are we positioned relative to our competition?
Steps you take today (or don’t) may dictate how prepared, flexible and ultimately successful you will be going forward.
The future may be uncertain, but it’s a pretty safe bet that it won’t be a straight line from here to there.
Scenario planning, unlike its more traditional cousin, the multi-year budget, is a means of preparing for the extremes — both positive and negative. After all, it’s there where the greatest risks and opportunities lie.
“A crisis is a terrible thing to waste.”
— Stanford economist Paul Romer
Yesterday afternoon, I logged into what must be my 150th Zoom conference. What was once an occasional event has turned into a daily barrage of virtual backgrounds and unknowingly muted speakers.
Fortunately, it seems we are all getting better at this new reality.
Well, maybe not all of us. There is a regular participant in one of my standing group calls who, despite having been on many of these over the past several weeks, has not progressed in his ability to use the technology. For the duration of every call, he appears mostly offscreen and from far below, giving the rest of us either a view up his nose or of his ceiling (sometimes both).
Technological ineptitude? Maybe. But it struck me that perhaps he just has a certain expectation regarding the pandemic’s longevity.
In other words, if you believe that we will be in this situation to some significant degree for the next 18-24 months, then it is worth learning how to use Zoom effectively. If, on the other hand, you view COVID-19 as just a brief inconvenience, why bother?
Only time will tell which perspective is correct. But if you think, as I do, that it’s the former, it’s worth taking steps to position yourself and your organization as well as possible — now and for whenever “normal” returns.
Three suggestions in that regard…
#1. Find the Opportunities.
During a single week in March, universities across the country moved all their classes online. At the same time, office workers stopped commuting and began working from home. Initially, there were no format changes — it was the same approach, schedule and routines, moved to Zoom.
That’s logical. But it wasn’t innovation. It was a band-aid; a frantic, crisis-based attempt to patch a leak. Early on, for students, teachers and workers, the new experience was worse in nearly every way.
Soon, though, people started devising ways to make the online experience not just acceptable, but better than what existed in our former, offline world.
For example, one of my clients replaced its bi-weekly Monday morning meeting with much more frequent (and much shorter) daily check-in calls. These have already proven to be more effective and they plan to stick to this approach going forward.
Another client, one that had a major conference planned for April in Florida, shifted everything online. As a result, they had participation from members who had never attended the annual in-person events.
Further, and thanks to some innovative approaches to session management, they had much more interaction and engagement than ever before. Their responsiveness has significantly strengthened relationships among members and they, too, intend to retain some of these elements post-pandemic.
The point is, the opportunity is not to simply try and recreate what worked before until the world returns to normal. It’s a time to rethink things entirely and design a better, future-oriented approach.
#2. Support the Transition.
As the move online has occurred, different companies — of all types and sizes — have responded in vastly different ways.
Some have simply set up Zoom accounts and invited their employees to have at it. Others have done much more, including offering guidance on lighting, audio, camera positioning and wardrobe; supporting their teams in upgrading home office and network equipment; and providing training on how best to communicate effectively in a virtual world.
Keep in mind as well that there is much more going on here than just technology — the shift to online communication represents a potential reshuffling of the “personality deck” within your organization. For example, those who are less likely to speak up in an in-person meeting may find their voice through Zoom chat. On the other hand, the extroverts who always speak first in meetings may find the virtual world to be a less natural forum.
Whatever the changes that result from our current upheaval, it behooves your organization to help staff adjust as smoothly and quickly as possible. If, instead, you simply “wait to see what happens” as the rest of the world continues to figure things out, you risk looking unprofessional, foolish or, worst case, missing out on important opportunities.
#3. Find Ways to Fail.
Clearly, the pandemic is not something anyone would wish for (facemask and plexiglass manufacturers being the notable exceptions).
But it does provide cover.
Cover to try new things, implement long-needed changes and take risks that might otherwise feel too precarious. After all, while in normal times it may be prudent to move slowly and incrementally, with a crisis at hand, it is clear to everyone that hard decisions must be made and quickly, with an implicit understanding that nothing is certain.
For example, this may be the ideal time to cut back on or eliminate non-core programs that are not directly connected to your organization’s real reason for being. In times of crisis, these types of difficult, resource-allocation decisions may become possible.
Or maybe you have conferences, events or galas that were planned for the summer or early fall and that you are considering cancelling entirely. Your stakeholders know that you have to make quick changes with little or no experience to go by — now is your opportunity to experiment with bold new approaches.
Overall, the downside of failure is as low as it will ever be. If you are prepared to react and adjust quickly, the chance to learn is great. Sitting things out may mean missing an opportunity to stretch that may never come again.
Nobody knows what’s going to happen. That’s what makes these times both frightening and filled with opportunity.
As Professor Jody Greene at the University of California, Santa Cruz writes in her article, Imagining the Post-Pandemic University:
“Suddenly forgotten in all the outcry about how much students miss in-person classes and how hard it is to engage them remotely are the number of students who did not show up to in-person lectures and the percentage who were asleep, online shopping, or looking at their phones when they did.”
Maybe, instead of asking when things will return to normal, a more strategic question is, “How do we innovate in a way that makes the future even better than the past?”