Things used to be PODS: Predictable, Ordinary, Defined, and Steady.
That was until a Harvard Business Review article in 2014 told us that the business environment had become VUCA: Volatile, Uncertain, Complex, and Ambiguous.
Things have changed again recently.
In our view, the environment has now turned to DUST. The crises that businesses face have become more Dangerous, Unmanageable, Sudden, and Transformative:
Dangerous – pandemics, wars, extreme climate events, cyberattacks, which can lead to loss of property, data, other resources, and lives
Unmanageable – solutions can take time, effort, money, and collaboration between organizations and countries – all of which are lacking these days
Sudden – events occur with little or no warning and can unfold rapidly, leaving little or no time for analysis or preparation
Transformative – crises often trigger major organizational changes – to supply chains, business models, and working practices, for example
This environment requires a different level and pattern of response. It is vital that the whole organization – not just top management – is able to act rapidly with creative solutions.
HR in the DUST
HR can help to increase organizational readiness and resilience in this new environment by focusing training and development efforts on five key issues.
Problem-solving: What problem-solving skills do your staff have? When a novel crisis strikes, standard operating procedures, and established routines and protocols may be of little help.
New problems may have to be analyzed and solved from scratch. Can we separate causes from symptoms? What options do we have to deal with the causes? Training in rapid, structured problem-solving is not difficult or time-consuming, and could prove invaluable.
Decision-making: Faced with a problem, many of us want to deliberate, research, and consult before making a decision. But if events unfold at pace, decisions have to be made quickly, by those who are on the spot.
Deliberation will be limited. There may be no time for research. Only those who are on hand can be consulted. This means that mistakes will be made, so we need ‘no regrets’ decision making – if it turns out to be wrong, correct it as best as possible, and move on.
Many of the key decision makers in a crisis will not be senior managers, but frontline staff. Development workshops can hone critical thinking skills and Simulations can be used to rehearse crisis responses in a risk-free setting.
Decision-making skills can be developed through experiential and role-playing methods. These approaches can be engaging, and are not costly.
Leadership: The obvious crisis leadership attributes include assertiveness, confidence, decisiveness, determination, empathy, and the ability to act fast and reassure others.
The problem is, when a crisis develops suddenly, you don’t know who could be thrust into a leadership role. You need regular communication that keeps everyone in the picture, and a culture that allows those with concerns to speak up and make suggestions.
When the COVID-19 pandemic struck in 2020, many initiatives were implemented by ‘pop-up leaders’ – individuals and teams who found quick ways to solve problems and keep their businesses operating.
Sometimes, leadership falls to the ‘best in team’ individuals, depending on circumstances, and the nature of the problem.
This is a case for offering leadership development to everyone in the organization.
A Grey Rhino for the orchestra
Due to lockdown restrictions, symphony orchestras were not able to give live performances during the COVID-19 pandemic.
But one US symphony orchestra, Fortis (pseudonym) continued to perform by livestreaming home and concert hall performances. Although their conductor was stranded in Europe, they developed a new repertoire.
A symphony orchestra is structured and run like a commercial business. Fortis had centralized decision-making, long-range planning, scripted performances, and division of labor.
But in the pandemic, it was not managers, but musicians and other staff, ordinary members of the organization, who developed ways to respond.
One of the musicians said: “We are much more like a jazz ensemble. Leadership has come from the admin and staff side and the musician side. We’ve combined different kinds of music and programs that you would never do before, and it’s just very, very different. We’ve been able to be more creative and take chances.”
Scenario and contingency planning: Looking at different types of crisis, McKinsey distinguishes between Black Swans, Grey Rhinos, and Silver Linings.
Black Swans are unpredictable events with high impact, such as war, alien invasion, or political collapse in a major economy.
Grey Rhinos are probable events that can also have a high impact, such as the COVID-19 pandemic. Silver Linings are opportunities that can arise when crises strike.
Use cross-functional teams – and your board – to choose future scenarios of each type, and develop contingency plans for handling these should they arise.
The scenarios they develop may never happen, but the value lies in the way of thinking about these kinds of crisis.
And these teams encourage cross-department information sharing.
Stress inoculation: Wellness programs can help staff to deal with the stress of rapidly changing and uncertain environments.
Interestingly, research has found that scary fiction, on television and in movies, can also increase resilience to real-world crises.
Useful genres include horror, supernatural, zombie apocalypse, psychological thriller, pandemic, science fiction, and alien invasion, for example.
By simulating particular scenarios, these encourage audiences to rehearse responses, and to manage emotions more effectively.
The value again lies with the mental preparation, rather than with any particular type of crisis.
A Silver Lining for Deutsche ReGas
When The Russian Federation began its ‘special military operation’ in Ukraine in 2022, Europe, the US, and other allies decided to end their reliance on Russian gas.
The need for other energy sources prompted Stephan Knabe and Ingo Wagner to create a new company. Based in Lubmin on the Baltic Sea coast, Deutsche ReGas now supplies liquified natural gas (LNG).
With no previous experience in this sector, they invested their own money, with support from the German government.
They bought a floating storage and regasification unit (FSRU), Neptune, to re-gasify LNG from America, Norway, and Qatar. The project also involved upgrading the port at Lubmin.
Germany bureaucracy is slow-moving, so getting approvals and permits was a challenge, but this was all achieved quickly.
The Lubmin project took only three months to complete, and was the first privately financed floating LNG terminal in Germany.
Deutsche ReGas began pumping into the German gas grid, ahead of schedule, in December 2022.
It looks like the business environment will be DUSTy for some time to come. To increase readiness for the next crisis and improve resilience, you need to start now.
By the time the next crisis hits, it will be too late.
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