Much as the pandemic forced most individuals to retreat into their homes, it has also placed businesses into survival mode. Many have failed, while others have had to overhaul their structure and operations significantly.
We have always placed our hopes in the emergence of a vaccine to relieve us of the turmoil brought about by Covid-19. But business outcomes can’t be contingent on this sort of solution.
The long-term lesson for business owners and leaders is that everyone must prepare to deal with at least one major crisis during their tenure. And the implication is that decades-old models emphasizing efficiency above all must change to accommodate flexibility and even redundancy.
Shifting focus from the response
By definition, a crisis places us in a state of stress. Yet, in the broad sense, stress is not universally a bad thing. Some kinds of stress can lead to adaptation and even growth in people, and the same is true for organizations.
A person experiencing stress in life can draw on support from friends and family members to help them pull through. In organizations, we turn to our leaders for similar inspiration. However, this places a heavy emphasis on the individual mindsets, behaviors, and skills of those in a leadership position.
That can be a good thing if a business is helmed by people with a sense of deliberate calm, bounded optimism, and the ability to quickly restructure decision-making hierarchies.
But if your team doesn’t possess leaders with such qualities, its survival may be at risk, and the potential to improve in the long-term can be limited.
To further complicate matters, many of the shocks triggered by a crisis like the pandemic may only be felt in the future.
For instance, while the housing market experienced an uptick as mortgages saw improved rates and increased demand, commercial real estate is not forecast to respond immediately. We’re all still waiting to see how things will shake out regarding remote work versus returning to the office.
How are you going to respond if people demand different working arrangements for everyone? What happens to your commercial lease? Will you let go of in-house talent and explore the market for freelance contractors?
Such problems might not appear insurmountable at first. We can always rework our policies to be more accommodating. The pandemic taught us the value of being agile, and more organizations are now open to the possibility of restructuring in the future.
But focusing on the outcomes of a successful crisis response also carries the risk of ignoring factors that put organizations at risk in the first place.
Before the pandemic, scholars and experts in risk management, from Bill Gates to Black Swan author Nassim Taleb, had called attention to the dangers of exposure to ‘ruin problems.’ They highlight that too much connectivity and a near-universal focus on efficiency is making organizations fragile.
When a business over-extends in the name of efficiency, it gets spread thin and loses redundancy. Simultaneously, you become more exposed to shocks, and their potential adverse impact gets magnified.
Such problems are structural in nature. And until we focus on them, it hardly matters if we have good crisis leadership or manage to navigate current challenges successfully. We’re only in survival mode until the next big disruptive event, always relying on a few individuals to get us out of trouble.
Seeking redundancy, increasing options
People often turn to nature for comfort during times of stress, and organizations would do well to do the same in search of a solution. A top-down process doesn’t design natural systems. They survive through countless iterations and exposure to random events.
There is a significant amount of redundancy in all living things. We have two kidneys, our brain has two hemispheres, and our DNA contains tons of genetic redundancies. Part of this is for functional backup, but these redundancies also create nonlinear fitness advantages or improve performance under varying conditions.
Organizational redundancy has been frowned upon in our relentless pursuit of efficiency. It yields diminishing returns, but only if you think in the short term.
Cast your gaze farther into the future, and think about how a potential disruption could cause stretched-out supply chains to break down. Consider how resources invested might suddenly never be recouped.
Today’s crisis of uncertainty and change is not a blip on the radar. It heralds an age of periodic disruption. To survive, organizations must evaluate not just the here-and-now benefits of redundant elements but also how they increase options and resiliency in the future.