People, Risk, And Capital: Lead Out Of The Current Crisis, Not The Last One

In a recent op-ed, physicians Cory Franklin and Robert Weinstein suggested, “if it is true that generals fight the last war and economists fight the last depression, then the COVID-19 pandemic has demonstrated that doctors fight the last pandemic.” The same may be said for business leaders who have led through the pandemic using solely defensive action and retrenchment with a “this, too, shall pass” mindset.  

Conversely, future-seeking leaders in 2020 and 2021 combined defensive action with a strong offense, recognizing and embracing a very different environment characterized by disruption, innovation, and growth – as well as opportunity. As they prepare for post-pandemic operations, these leaders understand important differences between the characteristics of this crisis in comparison to previous ones:

·       Severe global labor shortages:  Due to both demographics and shifting employee priorities

·       More frequent climate events: Higher impact on businesses and their people

·       Transformed business models: Across every industry and country in response to changing work and consumption habits

·       Severe supply chain disruptions:  Creating operational strain with damage to revenues, customer relationships and brand

·       Strong inflationary conditions: 30-year highs at a time when investment is needed

Future-seeking leaders are taking four sets of actions to lead out of the current crisis:

1.     Develop a new mindset (and relationship) with risk: In today’s volatile and unpredictable world, risk has become a mainstream currency of business. Future-seeking leaders recognize that risk plays a new role in routine business assessments, decisions, and actions. The level and diversity of geopolitical threats during the past several years underscore the importance of understanding risks and strengthening strategies to mitigate them, even though not all can be predicted or eliminated. Today’s mainstream risks are interdependent and include workforce (e.g., talent shortages, emotional/physical wellbeing, DEI), climate (e.g., extreme weather, biodiversity loss), political (e.g., Brexit, East/West tension, interstate conflict, wars, grey state aggression), social (e.g., poverty, inequality, protests, strikes), cyber, supply chain and investment.  While most large risks typically do not occur simultaneously, future-seeking leaders allow for the possibility that they can, as occurred in 2020 and 2021. They know the time horizon for risk mitigation is not just a quarter or a year, and that a long-term view requires a change of culture.  It means constantly identifying and anticipating risk, preparing for the unexpected and being ready to act decisively when events happen. 

2.     Turn talent challenges into talent opportunities: Future-seeking leaders adopt talent strategies that involve both offense and defense. They create places people want to be in the midst of what many are calling “The Great Resignation,” which they recognize is to some extent a misnomer: the vast majority of those who quit one job have simultaneously shifted to a different, more attractive job, thus also prompting “The Great Hire.” In this environment, leaders strive to be “net talent gainers,” hiring more employees than they lose and focusing on why people join and stay as well as why they leave They create value propositions and employee experiences to drive success, setting their organizations apart by considering flexibility an advantage, transforming pay and benefits, aligning wellbeing, resiliency and work, and reinforcing culture, values and purpose.

3.     Focus on organizational resilience: Building greater organizational resilience has become a defining mandate of the current environment, with future-seeking leaders understanding it provides a new form of competitive advantage. In general, organizational resilience is the capacity to recover quickly from difficulties and displaying toughness. Leading organizations build culture around resilience from board rooms to shop floors. They also focus on their ability to understand, respond and successfully adapt to events that may adversely affect them. They routinely measure organizational resilience factors ranging from workforce wellbeing, inclusion and skill availability to climate readiness to cyber exposure to investment stability to brand and reputation strength to ESG.  To create resilience across risk factors, leadership behaviors include practicality, strategic risk management, agility, compassion, and transparency, emphasizing dignity, and making the work environment physically and psychologically safe, inclusive and fair.  

4.     Embrace elastic innovation:  Elastic innovation is a mindset that disrupts innovation itself, constantly expanding and contracting market response on a short-term, real-time basis, while simultaneously continuing to manage innovation pipelines for the long term. Innovative businesses are more resilient in economic headwinds because their cultures and business models allow them to pivot quickly as the organization navigates through market uncertainty.  Future-seeking leaders embrace this, focusing on creating the right culture, breaking down barriers, and empowering all leaders to bring forward good ideas from their teams, with many of the best ideas coming from deep within the organization.  They set and hold teams accountable for meaningful innovation goals, and provide resources to achieve them.  Leaders consider and prepare for multiple scenarios, deal with complexity and ambiguity, manage paradoxes and balance opposing views, and see the big picture while attending to details.

Through a combination of integrated actions around people, risk, and capital, future-seeking leaders do not just treat the symptoms of the pandemic, they address the underlying conditions. By doing so, they position their organizations for success no matter the challenges ahead.