Volume 2 Issue 2 - 2009
Asia During Crisis | Upside of Crisis | Leading Talent in a Crisis Economy 

The Upside of Crisis

How Winning Firms Transform to Create the Future

Robert Laud, Ph.D.
Beatrice Grech-Cumbo 

With change coming fast and furious in today’s business climate, some firms will emerge as victors in the next four or five years, while many will not. While it’s hard to predict which industries will fare best, we can be certain that the successful firms will not be the ones taking a “wait and see” approach. Instead, they will be the ones facing the difficult process of finding solutions to immediate needs while identifying opportunities for long-term growth. They will not just fix what is broken, but adjust to changing circumstances, viewing their new circumstances as a portal to the next generation of business opportunity.

Organizations know that change is critical to their success, but they often overlook that:

• Traditional forms of competitive advantage are eroding fast.
• Innovation in products and services has a shortened shelf-life; good ideas are often quickly replicated, perhaps a world away.
• Product lifecycles and time to market are shrinking, while customer expectations are growing.

Fortunately, taking a structured, analytical approach to your organization’s future can provide unique insights, leading you to the right questions, the right conclusions and – ultimately – the right place. Working through four logical, sequential stages can ensure that the short- and long-term change process is sound, supported and successful.

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Do You Know What’s Really Driving the Change?

Before embarking on a structured approach, it is important to examine the way your organization approaches transformation. Never before have we seen the broad scope of transformation, downsizings, consolidations and restructurings that we’re seeing today. Couple that with yet unknown changes in the US financial and political landscape, and foreign market turmoil, and it is no wonder that so many companies feel paralyzed.

There is considerable good news, a silver lining perhaps, for those companies looking deeper. Emerging issues in health care, extended delivery systems, clean technologies, education, computerization, biotechnology, finance, infrastructure support, broadband development and energy will provide entrepreneurial opportunities to both individuals and companies that are willing to take risks.

History has shown that a new genre of competitors has arisen from each crisis; they looked for openings, took on the competition and created new products, new services, and, better yet, even new industries. Since we know that only a certain percentage of companies survive over time, we see the need for new corporate behaviors that will lead companies to think differently, act differently, and imagine differently. Success can be achieved, in part, by a change in thinking—from survival of the fittest to survival of the fleetest (organizations that are nimble, responsive and willing to embrace the new opportunities).

Try to look at change through a new lens.

• Crisis conditions create opportunities to foster and embrace innovation. It can be true that the best defense is a good offense. While others are focused on “getting by” and surviving, tomorrow’s winners are focused on creating conditions for new and better ideas and processes.
• This is a time for long-term productivity investing, developing new models, new visions and missions. While the “fixes” may be short-term, only the view of the long-term will provide the solid foundation for a transformation that generates success.
• Today’s situation is similar to the dot-com bubble a few years back. The communication sector meltdown led to high levels of entrepreneurship that resulted in today’s technologies and capabilities. It focused on the new business opportunities that the collapse created. Translation: Entrepreneurs did not stand still.
• Don’t limit yourself to short-term fixes that suit the old economy at the expense of more meaningful transformation and long-term productivity. History bears out that it is through crisis that the explosion of new industries happens and competition moves to a new level.
• Forward-thinking companies will see any current government support and stimulus packages as forerunners of innovation. Companies must understand that government bailouts are time-based and temporary. Therefore, organizations need to think of the large, permanent transformations that should necessarily follow. Winners invest in the next generation of products and services. If, for instance, the government stimulates activity in alternative energy, the forward-thinking companies should be thinking about ways to transmit and distribute energy as well as the new ways to generate it.

Innovation has been the lifeblood of the global economy. Building the next generation of growth opportunities means moving beyond the current information and digital ages into the innovation age. In the old economy, companies were as good as their latest success. In the future, they will only be as good as their next innovation. And that doesn’t mean just one. Innovation comes in waves, not as singular events. The day one innovation is launched is the day several others should be well through the product pipeline. Fortunately, making that happen is not as much of a mystery as some might think. There are, in fact, four stages that can help organizations thrive -- even in turbulent times. 

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Stage One -- Awareness: The Right Questions—the Right Analytics

Stage one is all about awareness, reconnaissance and accuracy. Organizations need to think about what issues are making their particular transformation necessary, and what transformation will look like. At the same time, companies need to assess if they have the ability to transform, innovate, move quickly, keep customers, keep employees, forecast markets and become part of the new economy. To do all of that, the organization needs to address some fundamental questions:

Once strategists and leaders start answering these questions at a high level, they need to begin thinking about validation,implementation, potential risks and sustainability. Even organizations that have perhaps operated blissfully unaware of the changing world or those that have decided that some change is needed will benefit from spending more time on organization and market intelligence. This includes looking at the heartbeat of the organization, namely its portfolio, and determining what you really have, why you have it and whether you should keep it. And, do you really have an innovation culture and a stream of great new ideas that you can get to market? 

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Stage Two -- Setting the Pace: The Role of Change Leadership

Changing organization behavior is never a simple task. Regardless of the critical need for the change, leadership will face numerous challenges in assessing and mitigating risk, assuring customer satisfaction, adapting to new government regulations, weathering economic shifts, encouraging innovation, and creating the future. Thinking innovatively about new structures, alliances, cultures, processes and products will be key to the future. If leaders don’t innovate in times of change and crisis, their organizations may suffer from inaction, competitor moves, and market shifts led by the nimble and fast.

Part of the pace that leaders must set is clarifying the balance between short- and long-term thinking and planning. Fixing today’s problems without planning for the future is not enough. Neither is focusing on a five-year plan and neglecting the fact that some part of the organization is already crumbling. Shoring up the here and now and shaping up for the future are equal partners in the new look of success.

At the individual employee level, your people need to know more than just that their leaders are managing change. They need to believe that this, too, shall not pass. They have to get on board – or be left at the station. Leaders need to consider how ready employees are for the changes, how to motivate them if they aren’t, and how to help them succeed.

Some questions to help you set the pace:

Focusing on employee feelings has ramifications beyond internal morale and support. Customers will be quick to “read” how your employees value the organization. There is nothing worse than customers who sense from employees that your company will not be in business in the near future. To generate confidence among all stakeholders, employees must feel they are part of the solution, not merely victims in the process. 

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Stage Three -- Setting It in Motion: Actions Speak Louder than Words

Even the best organizational transformation strategy is useless if it sits on a shelf gathering dust. The key is putting the plan into action. When the stage two answers have been addressed, the organization needs to move – and move quickly. At the same time, the action can’t be – or even appear to be -- knee jerk. Rather, the organization must orchestrate its actions so that advisors can begin planning and executing those plans. While the thinking process is critical and can be important, energizing and useful, there is nothing more valuable and practical than solid actions that provide the foundation for the organization’s future. In times of crisis and uncertainty, organizations should commit to allowing just 30 days as a reasonable amount of time to set sail for what will clearly be a long journey.

In those 30 days, you should:

This may seem like a very significant amount of work. It is, but that’s why we call it a crisis. By starting early, companies can minimize potential damages, keep employees motivated and solidify customer relationships. Plans and strategies can certainly change, and probably will change, after the initial 30 days, but building your change team, identifying risks and gathering good reconnaissance will strengthen whatever direction you choose. 

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Stage Four -- Setting Up the Future: How Did We Do?

While a solid plan and concrete actions are central, so is taking stock. Measuring the impact of the stages in organizational transformation involves asking some hard questions that will guide you in the ongoing transformation process and help bridge the gap between the short- and long-term initiatives. Several months into the transformation, ask yourself:

These are not easy or one-time questions. They are complex and multi-faceted. They require tremendous insight, market awareness and organization knowledge. Success requires not just answering these questions or sharing those answers internally. It requires gauging the first wave of transformation as the basis for what you have in place and what you need to do. Without testing the organizational direction at periodic points, you could be on the wrong journey. 

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Take a Bow

When your measurements indicate that the change is well underway and you are achieving your goals, it’s time to make sure that everyone impacted by the transformation knows what is happening in the short-term and is committed to the long haul. Many organizations keep the organizational light under a bushel. Yet nothing motivates like success. You need to trumpet how you’ve successfully navigated change to key external stakeholders, including customers, market analysts, vendors, strategic partners and others. Then it’s time to consider revisiting stage one and looking at market change to determine the fine tuning that can make your change stronger, more solid, more successful and more enduring. 

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Contact

Beatrice Grech-Cumbo is the Practice Leader for Aon Consulting’s Organizational Performance and Implementation practice. Robert Laud, Ph.D., specializes in innovation and organizational strategy for Aon Consulting across all industries. They can be reached at Beatrice_Grech_Cumbo@aon.com or +1.312.381.9508 or Robert Laud at Robert_Laud@aon.com or +1.973-.540.8909. 

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