Part Two of a Three Part Series - By Robert Bolton
COVID-19 very rapidly redefined the world of work. For many of us, things are not going to return to the way things were — nor should they.
This is the second post of a three-part series addressing the future of work in a new reality. To read part one, please visit Reinventing work in a disrupted world.
COVID-19 has taught us that agility and resilience are not the only capabilities that organizations needed yesterday; they also needed antifragility. Those that had that trait fared better during the initial crisis. Antifragility can be best described as the ability to thrive as a direct result of stressors, shocks, attacks, or failures. The concept was first described by Nassim Nicholas Taleb, author of Antifragile: Things That Gain from Disorder. Taleb offers this definition: “Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”1
COVID-19 as a catalyst for improvement
The pandemic has produced a wealth of data about work processes and has exposed weak links. The COVID-19 reset provides the opportunity to build antifragility as a “whole systems” approach through the following:
- Develop a new operating model: While specific COVID-19 impacts have varied from workplace to workplace, a common thread is that businesses have been forced to consider changes to their operating model in order to survive. Many organizations have reacted quickly, doing whatever is required to keep the lights on. Others have looked at the challenge as a chance to reset and identify new opportunities in the face of a trying environment. For example, after a near-total shutdown from COVID-19, the live music industry faced the challenge head on by finding new ways to monetize music consumption such as transitioning to digital subscriptions and streamed concerts. In the first quarter of 2020, online music subscription revenues increased by 70% year-over-year. The number of online music-paying users reached 42.7 million, a year-over-year increase of 50.4%.2
While operating model restructure is always more than simply a technology pivot, extreme automation will dramatically change the size, structure and service delivery of work, including sustained remote work. Adapting to new workplace realities means building a new model, with technology front and center. This new model must deliver insights and analytics; a customized, digital employee experience; and end-to-end process management.
- Reinvent ecosystems: Organizations must regularly communicate plans and ideas for growth possibilities with networks of strategic partners, suppliers and governments. Dependencies and risk exposure should be clearly understood. The COVID-19 reset can help build organizational antifragility by improving visibility into the goals, motivation and limitations of partnerships.
For decades, supply chains followed ultra-efficient, just-in-time configurations. That approach was intended to reduce costs, but it also increased risk. Companies must now take a deeper look at their partner networks through the filter of multiple scenarios and their organizational implications.
Organizations must also examine their employee ecosystems. Trust will be tested when home-bound employees begin to re-enter their respective work locations. Employees will need to trust their leadership teams to provide workspaces that are clean and safe; to ensure social distancing is possible; to provide masks, sanitizers or other protective equipment; and to know that work alternatives exist for those in high-risk health categories.
- Reframe the employee deal: This starts with focusing on all factors that define the employee value proposition, including compensation and rewards, development and advancement opportunities, and work environments.
Some examples of how companies have recently reframed the employee deal include: extending time-off policies; providing “hazard” pay for employees working in essential jobs; offering flexible arrangements for those taking care of sick family members or supervising children while schools are closed; providing stipends for setting up a home office; offering virtual exercise classes; and adding mental health resources to combat anxiety, social isolation, and potential burnout.
As we navigate through the COVID-19 challenge, people will remember how their employer treated them during this uncertain time. With high unemployment, some employees may be grateful just to have a job. But as things settle into a new normal, employee options will increase. Those companies that prioritized their employees will be rewarded by retention and healthy recruitment. Those companies that wrestled with their values and lost, will pay a long-term price.
- Plan now for economic recovery: The economy’s recovery will likely occur in stages, being dependent on public policy, health and economic factors, and significantly, consumers feeling comfortable returning to public spaces and resuming their pre-COVID-19 routines. Companies must start preparing by prioritizing who will come back to work first, identifying what will be needed to ensure their safety and the safety of customers, and determining which changes implemented during the outbreak should continue even after it diminishes.
Because companies have had varying degrees of risk exposure to COVID-19, different recovery patterns will result:
- Hard reset: These companies struggle to recover due to “permanently” lowered demand for their offerings, insufficient capital to ride out an extended recession, limited jobs that are telework eligible, and/or have experienced poor execution of digital transformation. Post-COVID-19 survival will depend on making big changes in operations. Representative industries: Hotels, Airlines, Entertainment venues, Bricks and Mortar retail.
- Transform to re-emerge: These companies will recover, but will need to commit capital reserves to transform operating models so they can emerge stronger and more in line with changed customer priorities. Representative industries: Real Estate/Construction, Insurance, Healthcare, Durable Goods, Automotive, Travel and Leisure.
- Modified business-as-usual: These companies perform essential business and thus continue to operate “normally” despite COVID-19 impacts. They have suffered effects of the consumer shutdown recession, but are likely to recover more quickly as consumer demand returns. Representative industries: Banking, Consumer Goods, Transportation, Agriculture.
- Surge: These companies will scale post-COVID-19 because consumer behavior changed during the outbreak to be sustained in their favor. Investors likely have sensed their potential to lead and have provided capital to scale aggressively during recovery. Representative Industries: Online retail, Technology Media and Telecom, Food Delivery, Telemedicine, Asset Management, Life Sciences/Pharma.
Building antifragility into your business
When planning for an economic recovery and building antifragility capabilities, there are three critical areas to consider:
- Recognize new trends. Market and customer expectations have changed. For example, a UK bank has found that many customers are happy to do business through expanded digital channels, including mortgage interviews and other “higher order” services. As a result, not all branches will re-open. It’s imperative that corporate leaders evaluate the COVID-19-induced market shifts – trends that are likely to stick around – and understand how each trend affects their business model.
- Move fast. Pace matters. In periods of uncertainty, assets need to move quickly – whether talent, resources, or technology. Many companies are reluctant to fund big moves, preferring a “temporary pause” during an economic downturn. This gives the bold first-mover advantage by making opportunistic acquisitions, capturing consumer attention, and customer loyalty before competitors enter the arena. Moving first isn’t as critical as moving fast and investing smart.
- Adopt a digital mind-set. More than being technically adept, a digital mind-set means understanding the power of technology and how it multiplies the world of possibility. At both individual and enterprise levels, a digital mind-set will be required to embed the flexibility, experimentation, and innovation needed for future survival. Companies that retain their analog mind-set will be quickly passed by.
No matter what stage of recovery you’re in, these fundamental actions will build antifragility. In my next blog, we’ll discuss why adopting a workforce-wide digital mind-set is essential for implementing these changes.