One phrase which is being increasingly heard around businesses in the Covid-affected world is “Pivot or Perish.” It is charmingly alliterative, sounds urgently epigrammatical enough to smack of business wisdom, and fits the bill as a headline for virtual workshops, webinars and online symposia. It also contains an uncomfortable kernel of hard reality.
The worldwide economic crisis fueled by Covid-19 is an example of what Nassim Taleb called a “Black Swan” event – an extremely unlikely scenario that comes to pass, with wide-ranging and deep consequences that cannot be predicted in advance. Black Swan events, such as the 2008 financial crisis that Taleb described, are characterized by their extreme rarity, severe impact, and the widespread (but erroneous) insistence they were obvious in hindsight. They can cause catastrophic damage to an economy by destroying markets and investments, but even the use of robust modeling cannot predict and prevent a black swan event. So, if you have been beating yourself up for not preparing your business better for Covid, give yourself a break – you couldn’t have.
However, there is one ray of light in this environment of doom and gloom. When economies recover, as they eventually do, the recovery is also correspondingly swift. Such recoveries are characteristic of recessions – typically, the economy suffers a sharp but (hopefully) brief period of economic decline with a clearly defined trough, followed by a strong V-shaped recovery. Unfortunately, that recovery often comes too late for many businesses.
When the recovery does happen, it does not become Business As Usual, however. There is now a new normal – market spaces have changed, often beyond recognition. Some old categories and sectors have all but disappeared, and new opportunities and segments have emerged. Consumer drivers and attitudes might have altered. The challenge for businesses in this environment is to ride out the trough, remain strong and profitable till the recovery begins, and prepared for what might emerge as future opportunities for growth.
Thus, the task for businesses during the crisis is two-fold –
- To remain tactically agile and flexible in the short term, focused on survival, while …
- Remaining strategically aware and prepared for what is going to come
Another point to keep in mind is that the conventional strategic planning process in most organizations is ill-suited for Black Swan recessions, as they are too geared to the past, to pre-Covid scenarios and realities. Depending on them to lead your business out of trouble may be a mistake.
At Vertebrand, we have consulted for many organizations, large and small, across industries, who have sought ways to fundamentally reinvent themselves. Our approach for them, we believe, might comprise a suitable strategy to counter this generational challenge.
We call it the Hop, Step and Jump. As the name suggests, it has three stages.
- The first stage is the Hop. You have to literally learn how to get by hopping on one leg, i.e. surviving when you’re hobbled by the collapse of demand and pressure on supply networks. Cash flows have dried up. You need to recalibrate and be tactically agile just to survive.
As you’re still hobbled by the crisis, you cannot afford to spend big or make too many sweeping changes. Short-term tactical tweaks that can be effected quickly without major investments or personnel changes are your best bets. These will be geared towards ensuring short-term survival, but must dovetail with your long-term organizational vision. The idea is to buy you time to Pivot effectively.
- The next stage, assuming you get through the first, is the Step, i.e. how to step up for what lies ahead. While you’ve survived the worst, the world that is going to emerge will look very different. You have to change, and prepare for what lies ahead so that you can quickly take advantage of new opportunities.
This is when you prepare to Pivot. For that, you must understand the world that is likely to emerge, and prepare your organization and business to succeed in the new situation. Creating likely scenarios, evaluating their likelihood and impact, and roadmapping for the most important of them – all this will lead to an action plan for the possible future.
- The final stage is the Jump. You’re now ready, having prepared your business and rejigged your organization. When it is finally time, you must be poised to take the leap, and scale up quickly to exploit the new opportunity that is there.
Now, we have detailed action plans in place, and are ready to execute on them at an organizational level. Part of this also involves tracking key indicators and metrices that will tell us in advance which of our likely scenarios may play out. The key at this stage is speed of thought and execution, as we scale up rapidly.
If all this sounds complicated, please remember that we at Vertebrand can help you at every step of the way. Our proprietary Triple Leap workshop will walk this journey with you, and even help you execute your post-Covid plans in partnership mode, if you would like us to. Do get in touch with us. Black Swans may be rare and unpredictable, but can be negotiated safely with tactical agility and strategic nous.