Tag: change behavior

  • Four Strategic Priorities for the Post-COVID-19 World

    To build resilience going forward, the first question to answer is not, “What’s in it for me?” but “What if?”

    By now, everyone knows that the shattering impact of COVID-19 has brought on a business crisis without precedent in recent memory. On one level, though, the pandemic represents nothing new. For years, we have been hearing and talking about the impending “VUCA” (volatility, uncertainty, complexity and ambiguity) world. Over and over again, we were told to prepare for seismic change that was sure to arrive, to boost agility in anticipation of abrupt, profound disruption. COVID-19 was a misfortune long foreseen; only the dates and other specific details were missing.

    Regardless, the pandemic will fundamentally reshape how we do business from now on. Even if lockdowns end soon and the virus is staunchly suppressed never to return, its effect will linger. Now that the whole world has experienced the VUCA that only emerging markets used to face, it can never again be treated as an abstraction.

    So when business leaders share with me how their business strategies will likely change in the post-virus period, many say they’ll continue with initiatives they’ve already started, such as digitalisation or social responsibility, but faster and with higher intensity. I have to point out to them that this might not be enough. Some of their key strategic priorities will have to be modified in a radical way.

    To start, the basic purpose of business strategy is to steer companies towards sustainable sources of growth and profit. There are many tried-and-true frameworks for guiding strategy, e.g. Michael Porter’s five forces, which allows firms to orient their competitive position according to coordinates of threat and power. For decades, this classic way of thinking has provided a useful lens for analysing strategic moves of players within an industry. It no doubt remains relevant today. However, Porter’s neat chessboard does not account for whipping winds (think pandemics, political revolutions, climate change events such as the Australian bushfires) that may kick up suddenly and blow away the pieces. Anticipating the disruptive events that live outside Porter’s framework will be a major part of business strategy going forward.

    I see four new priorities that strategists will need to put on their radar for the years to come.

    1. Aim for survivability and resilience before economic efficiency

    It would seem meaningless to talk about an efficient dead organisation. In the post-COVID-19 world, contingency planning should be built into every link of the value chain to ensure survival. Instead of structuring partnerships on the basis of leverage and getting the better end of the deal whenever possible, firms will have to be much more strategic in choosing which alliances are essential, and which are transactional. Rather than “What’s in it for me?”, the first question ought to be “What if?” It may be necessary to forego some of the most lucrative partnerships in favour of those that can withstand a missed shipment or delayed payment here or there when fate intervenes.

    To increase reliability, therefore, redundancy will trump efficiency with regard to critical resources. Investing too much in one partner, supplier or market can be as bad an idea as betting your life savings on one horse. For example, many major multinationals may be regretting their decision to rely so heavily on China as the pandemic exposes fissures in the nation’s prosperous façade. Apple and Foxconn’s joined-at-the-hip relationship is causing trouble for both companies, amid a vicious cycle of COVID-19 factory shutdowns and declining demand for premium smartphones. The uncertainty will only intensify as the rivalry between the US and China continues to escalate. (More about politics below.)

    IKEA is an example of how a major company can balance long-term loyalty with diversification in the supply chain. The company deliberately maintains a large number of moderate-size suppliers worldwide, helping them improve production quality. It engages in nurturing, long-term relationships rather than squeezing every last cent.

    2. Quantify and plan for ecological and environmental threats rather than just describe them

    Today, many executives and analysts talk about various types of threats in a descriptive way, with very little in-depth forethought about how to deal with them should they arise. The good old concept of scenario planning is still with us, but very few businesses seem to practise it in a systematic and thorough way. Moreover, conventional risk assessment typically omits threats with no known probability distribution function, such as environmental devastation and sudden increases in refugee flows. And today’s businesses, already overwhelmed with “clear and present” business challenges, are hard-pressed to devote attention to what they consider low-probability events.

    But recent history shows that extreme upheavals are far from rare. In the last century, the world has experienced at least five dangerous virus attacks, from the pandemic of 1918 that infected about one-third of the global population to COVID-19 in the present. There were also at least two devastating nuclear reactor meltdowns, two world wars and several near-misses, numerous earthquakes and tsunamis, countless regional armed conflicts that threatened supply of essential goods. Climate change, overpopulation and rising worldwide inequality have only increased the likelihood of these threats occurring again in the future.

    Businesses should thus dedicate more resources to quantify various types of threats although there is no broad consensus on the best way to do this. The main goal is not to be accurate, but to train the organisation to plan for various “unimaginable” events. What does not get measured does not get done, as many business executives often claim. Thus, deep qualitative analysis and scenario planning should be complemented with a number of computer-assisted algorithms providing data and various simulation models. Leaders will have to learn their way around AI and machine-learning tools – such as heat mapping algorithms that can quantify political risks based on social-media sentiment analysis – in the course of strategic decision making.

    3. Build a strong organisational immune system rather than maximise short-term profits

    When it comes to measuring and anticipating threats, technology is an important part of the package, but it can’t overcome a deep-seated antipathy to hard truths. In the business world to come, advantage will belong to firms that convey bad news upwards quickly rather than flinching from it.

    Companies that can spot problems when they look small, learn from them and build preventive measures rapidly possess what I would call a strong organisational immune system. Just as our white blood cells identify and destroy invader cells early before they wreak havoc in our bodies, companies need long, sensitive feelers and hyper-responsive capability at all levels of the organisation to stay in the pink of health.

    The downfall of Nokia’s smartphone business is a perfect example of how immune-compromised organisations collapse from within. Well before the iPhone came along, a “culture of fear” had set in at the Finnish firm. Senior and middle managers had developed a poisonous habit of sugarcoating and avoiding the serious problems with their devices and proprietary OS. Nokia had ample time and resources to develop a competitive response to the iPhone, but those advantages were squandered as toxic internal politics left management spinning its wheels.

    It should be said that some top managers believe that using fear will lead to higher economic performance by reducing organisational complacency and inertia. This might have worked reasonably well in a fully controllable and predictable environment in which it is impossible for people to report good news only and hide bad news as long as they can. In today’s volatile context, however, it will result in priceless early warning signs going unheeded.

    According to some observers, a Nokia-like scenario may have been behind China’s delayed response to COVID-19, stemming from long-standing misalignment between the central Communist Party authorities in Beijing and local officials, who knew of the virus in its early stages but lacked incentive to report it quickly. The result – massive human and economic harm – speaks to the high costs of complacency in this new world. Under the revived Nokia, the new board sought to build an organisational culture based on the following motto: “No news is bad news; bad news is good news; good news is no news.”

    4. Integrate government politics rather than focusing only on business economics

    Globalisation had a good run. The notion that the world is flat – unencumbered travels, international business deals, outsourcing to the lowest-cost countries, trade deals, etc. – had few high-powered detractors for several decades leading up to the 2008 financial crisis. Ever since the advent of Brexit and the Trump presidency, however, the idea of business without borders has been on the retreat. As I write this, international air travel is all but frozen entirely, and global supply chains have been chopped to bits. Nation-states, already making a comeback before COVID-19, will likely increase their leverage over multinational businesses in the months and years to come.

    Beyond national security, firms in sectors deemed “essential” to national public welfare – covering a wide range of sectors from food to medical supply, machinery and electronics equipment, transportation and energy – will be the first to feel the pressure to localise. Governments have learned the hard way that it can be dangerous to depend on foreign trade for items that make or break crisis response, such as the reactive agents that are key to COVID-19 testing or even low-tech medical gowns and face masks. They will be keen to maintain or rebuild these precious supply chains on their own soil. This could carry significant implications for businesses that seek overseas expansion. Firms should expect even more severe and close governmental scrutiny and rejection of their proposed joint ventures, mergers and acquisitions, R&D collaborations, even in non-defence related sectors.

    This seeming adversity could create big opportunity for some firms that integrate government politics into their business strategies. For one, homegrown innovation capability will be valued by national governments and benefit from higher economic and regulatory support. Additionally, rising patriotism – creating “good” jobs for your own people – could benefit these firms in their own countries, much like Alibaba and Tencent and Baidu have profited in part from relatively low foreign competition in China.

    What’s bigger than Big Business?

    You may have already noticed some interrelationships between these four priorities. Indeed, in the post-COVID-19 world, these four levers typically operate in combination, rather than in isolation.

    Broadly speaking, strategy after COVID-19 will be less about beating your economic competitors, and more about how businesses can contribute to combating a larger, shared enemy, like climate change, pandemics or perhaps socio-political woes such as inequality. There’s nothing new about this. The US in World War II, for example, saw tremendous cooperative effort between businesses, as well as between the private and public sectors. The COVID-19 “new normal” may actually be a return to an older equilibrium between business and society, and wide stakeholder collaboration.

    It will hopefully serve as a meaningful wake-up call for societies and businesses to take bold, radical actions that could propel humanity to a superior quality of life.

    Author: Quy Nguyen Huy is the Solvay Chaired Professor of Technological Innovation and a Professor of Strategic Management at INSEAD. He is also a director of the Strategy Execution Programme, part of INSEAD’s suite of Executive Education programmes.

    Acknowledgment: I am grateful for feedback from INSEAD Knowledge managing editor Benjamin Kessler, as well as strategy professors Guoli Chen, Felipe Monteiro, Daniel Simonovich, Phebo Wibbens and Christoph Zott.

  • Is Your Business Ready for the Post-Shutdown ‘New Normal’?

    If you lived through the trauma of 9-11, you know that the way we do some things –such as travel – changed forever. The reality of doing business post-COVID-19 will be no different, and its reach will be far more impactful.

    Unlike the sudden shutdown, reopening may happen gradually and with various caveats, such as wearing masks, moving work spaces further apart and checking employee temperatures at the beginning of the work day. Regardless of what government and health guidelines require or suggest, now is the time to prepare for doing business in the new world of coronavirus, which likely will be with us for many months – or perhaps years – to come.

    As you plan for re-entry, evaluate your current practices during the shutdown and consider which are applicable when you re-open. Create workflows that consider the following questions:

    Questions to Ask Yourself and Team

    1) What changes have the virus forced upon you?
    2) What processes are you doing differently? Which are working? Why? Which are not working? Why not?
    3) How is the virus and shutdown affecting each product or service? Are there special considerations for some and not others?
    4) How are you communicating with employees? Is it the same? Different? Better? Worse?
    5) How are you keeping your team engaged and motivated?
    6) What is causing your and your team’s stress? How are you handling it?
    7) What innovations has your team developed during the crisis that could be implemented post-shutdown?
    8) How well have you – and team members – handled change? Have new “stars” emerged who showed greater leadership?
    9) Has remote working been a positive experience? Should you continue it at some level in
    the future?
    10) Has providing flex-time hours been a positive experience? Should you continue it?

    Working through these questions and developing new “rules” for each scenario will help you anticipate your business life in the future. Depending on the size and type of business, you may need to consider different procedures for each division, department or individual employees.

    Once you have evaluated your situation and developed your plan for the various scenarios, you may want to consider reopening your business in phases on a priority basis. Here is one possible re-entry schedule:

    3 Phases to Work Through

     Phase One: Return employees onsite who aren’t able to effectively or efficiently work remotely because they don’t have all the necessary tools or need to be more
    closely managed.

     Phase Two: Employees working well from home are returned onsite as needed and work on a flexible schedule.

     Phase Three: Employees working extremely well at home can continue working remotely longer, or they may never need to come into the office daily.

    While this unplanned shutdown has been painful and will require us to work differently, it is providing an opportunity to reassess business practices and make changes that will create a more positive company culture. With the right changes, your team can become more productive, and your business can become more profitable.

    For More Information

    About the Author: Shelley Smith is a company culture curator, author and president of Premier Rapport www.premierrapport.com. Culture isn’t built in a day; it’s built every day.

  • How To Persuade People to Change Their Behavior

    Our innate anti-persuasion radar raises our defenses, so we avoid or ignore the message or, even worse, counter-argue, conjuring up all the reasons why what someone else suggested is a bad idea. Sure, the governor said to stay home but they’re overreacting.  Maybe the virus is bad in some part of the country, but I don’t know a single person whose gotten it.  And besides, many people who get it are fine anyway, so what’s the big deal?  Like an overzealous high school debater, they poke and prod and raise objections until the persuasive power of the message crumbles.

    So if telling people to do doesn’t work, what does? Rather than trying to persuade people, getting them to persuade themselves is often more effective.  Here are three ways to do that.

    1. Highlight a gap. 

    You can increase people’s sense of freedom and control by pointing out a disconnect between their thoughts and actions, or between what they might recommend for others versus do themselves.

    Take staying at home. For young people who might resist, ask what they would suggest an elderly grandparent or a younger brother or sister do. Would they want them out, interacting with possibly infected people?  If not, why do they think it’s safe for them to do so?

    People strive for internal consistency. They want their attitudes and actions to line up.  Highlighting misalignment encourages them to resolve the disconnect.

    Health officials in Thailand used this approach in anti-smoking campaign.  Rather than telling smokers their habit was bad, they had little kids come up to smokers on the street and ask them for a light.  Not surprisingly, the smokers told the kids no. Many even lectured the little boys and girls about the dangers of smoking. But before turning to walk away, the kids handed the smokers a note that said, “You worry about me … But why not about yourself?” At the bottom was a toll-free number smokers could call to get help.  Calls to that line jumped more than 60% during the campaign.

    2. Pose questions.

    Another way to allow for agency is to ask questions rather than make statements.  Public health messaging tries to be direct: “Junk food makes you fat.” “Drunk driving is murder.” “Keep sheltering in place.” But being so forceful can make people feel threatened. The same content can be phrased in terms of a question: “Do you think junk food is good for you?” If someone’s answer is no, they’re now in a tough spot. By encouraging them to articulate their opinion, they’ve had to put a stake in the ground — to admit that those things aren’t good for them. And once they’ve done that, it becomes harder to keep justify the bad behaviors.

    Questions shift the listener’s role. Rather than counter-arguing or thinking about all the reasons they disagree, they’re sorting through their answer to your query and their feelings or opinions on the matter.  And this shift increases buy-in. It encourages people to commit to the conclusion, because while people might not want to follow someone else’s lead, they’re more than happy to follow their own.  The answer to the question isn’t just any answer; it’s theiranswer, reflecting their own personal thoughts, beliefs, and preferences. That makes it more likely to drive action.

    In the case of this crisis, questions like “How bad would it be if your loved ones got sick?” could prove more effective than directives in driving commitment to long-term or intermittent social distancing and vigilant hygiene practices.

    3. Ask for less. 

    The third approach is to reduce the size of the ask.

    A doctor was dealing with an obese trucker who was drinking three liters of Mountain Dew a day.  She wanted to ask him to quit cold turkey, but knew that would probably fail, so she tried something else. She asked him to go from three liters a day to two.  He grumbled, but after a few weeks, was able to make the switch.  Then, on the next visit, she asked him to cut down to one liter a day. Finally, after he was able to do that, only then did she suggest cutting the soda out entirely. The trucker still drinks a can of Mountain Dew once in a while, but he’s lost more than 25 pounds.

    Especially in times of crisis, health organizations want big change right away. Everyone should continue to stay at home, by themselves, for two more months.  But asks this big often get rejected.  They’re so different from what people are doing currently that they fall into what scientists call “the region of rejection” and get ignored.

    A better approach is to dial down the initial request. Ask for less initially, and then ask for more. Take a big ask and break it down into smaller, more manageable chunks. Government officials responding to the pandemic are already doing this to some extent by setting initial end dates for social distancing measures, then extending them. But there might be more opportunities, for example when experts allow for some restrictions to be lifted — say, on small gatherings — but insist that others, such as concerts or sporting events, continue to be banned.

    Whether we’re encouraging people to socially distance, shop only once a week, thoroughly wash hands and wear face masks, or change behavior more broadly, too often we default to a particular approach: Pushing.  We assume that if we just remind people again or give them more facts, figures, or reasons, they’ll come around.  But, as recent backlash against the Covid-19 -related restrictions suggests, this doesn’t always work over the long term, especially when your demands have no fixed end date.

    If we instead understand the key barriers preventing change, such as reactance, and employ tactics designed to overcome them, we can change anything.


    Author:

    Jonah Berger is a professor at the Wharton School of the University of Pennsylvania and the author, most recently, of The Catalyst: How to Change Anyone’s Mind (Simon & Schuster, 2020).