JOSHBERSIN - APRIL 11, 2020 - UPDATE APRIL 19, 2020
One of the most shocking aspects of the pandemic has been how "fragile" our society is. A tiny virus has managed to turn our lives, economy and society upside down. Not only were we concerned about our own health, our financial systems were compromised, and we debated state and federal government, voting patterns, and the unequal burden the virus placed on the poor.
We realized that one of the issuesto be reset is "resilience," that is, the ability to adapt to change and get back on our feet, is perhaps one of the most important things for organizations.
How strange. Just a few months ago, we weren't even talking about it. Yes, we were worried about climate change and a possible recession, but no one was redesigning companies, organizations or societies to be "resilient but resilient". Now we are doing it.
For four weeks, I spent non-stop Zoom meetings, talking to HR and business leaders from around the world. I heard stories of how their companies "responded" and what kind of crisis management measures they took. All were inspiring and educational.
But what struck me most was the need to "design" our organizations to adapt quickly to change, but also to be flexible and resilient to impact. So, in the coming weeks, I will spend some time discussing this topic, which will lead to important research in the HR field. In the meantime, we will learn how we can make society more "resilient".
Here are a few things to think about.
First, Black Swan events have become common and may increase in frequency.
We thought Black Swan events were once or twice in a lifetime events. In retrospect, not so much.
I've lived through the 1987 stock market crash, the 1989 Loma Prieta earthquake (in my own neighborhood), the 1991 Oakland Hills fire (I was evacuated), the 2000 Internet company crisis (I was laid off), 9/11, the Iraq war, Katrina, the 2008 financial crisis, Brexit, and many more. If you add in corporate-specific crises, they happen much more often than we think.
I would like to say that in the business world they happen quite often and they could happen even more often in the future (cyber events, global climate events and political instability are always around the corner).
Boeing's realization of the problem with the 737 was a Black Swan event. Wells Fargo discovering the sales scandal was a Black Swan event. When a company suffers a cybersecurity attack, faces a sexual harassment allegation targeting its executives, experiences a major fire or explosion (e.g. PG&E), these are all Black Swan events.
How do we design for them? Here are four things to consider.
1/ Resilience requires "distributed control and centralized coordination", not "centralized control and distributed execution".
After many conversations with HR leaders over the last month, I realized that we need to organize accordingly, which led me to the military.
Recent research from the Army and Air Force predicts that surprising, non-linear attacks will become more frequent and more severe. So they've studied in detail the measures to be taken.
I won't go into all the details, but one of the most striking points(Stanley McChrystal describes it well) is that they are promoting a model of well-trained, experienced distributed teams, empowered and empowered by coordination and data. That's what we should be looking at in HR.
Historically, we have designed HR as a "low-cost, high-value service function" that understands employee needs, reacts quickly and delivers at scale. In a crisis, this is not an optimal model. We need to delegate authority quickly, make sure the people responsible have high skills and experience, and coordinate actions. It's a very different design.
Let me give you an example. Last week, I spoke to a global retailer with stores all over Italy, and a few months ago, HR leaders in Italy reported to headquarters that no one was showing up to the stores, so employees were being sent home. They gave the headquarters a "red alert" that a problem was coming. Similar signals came from China.
If the company had thought about what all these signals meant, it might not have taken any action. But this is a smart company: By authorizing local teams to shut down operations, they quickly disseminated the information so that others could act quickly (we often call this "shared awareness").
This basic idea - a strategy of "distributed control and centralized coordination" - is the answer to all your HR, leadership and business problems. Often the "control framework" is different, but as the military knows, we only win wars when those on the front lines are well trained, experienced, coordinated and supported by ammunition, reserves and data.
Think about this in the context of your own HR transformation. Are your business partners skilled, competent and highly coordinated?
Take a look at the results of our COVID-19 Pulse Survey. Most of the problems are related to coordination and access to high-quality data.
When it comes to societies, we see this happening in real time. The US Federal Government was created to "coordinate and support" the United States, not to fight them and pick favorites (which is kind of where we are now).
2/ Resillience requires high-quality, real-time data.
The second lesson we learned is that real, detailed, real-time data is really important. We cannot respond to a fire, an accident or a virus without knowing where it is, how fast it is spreading and what is true.
We have a federal government that is obfuscating the facts about the virus in the public domain. So we feel in a state of uncertainty and we cannot take precautions.
This is not how you do business in a company. For "coordinated attack and response" to happen, you need accurate, real-time data.
I spoke to a couple of People Analytics professionals last week and they told me that they immediately uploaded virus infection data, travel data, employee location data and other HR data into real-time dashboards. This gives them, as the military says, tremendous collective awareness.
For example, these companies instantly know which of their employees are in areas where the virus is spreading, who will be the first to be affected when it starts to slow down, and where there are travel restrictions or bans.
On a personal level, they know who works at home, who lives alone, which employees have high-risk conditions. Thus, they can adapt their schedules to their employees as needed.
They poll their employees and managers daily, producing up-to-date dashboards and dozens of reports on what the company can do to keep people safe and able to work at home.
This kind of infrastructure is essential for resilience. You can't know what you can't see. The journey to build a good people analytics infrastructure has been a long one, but we're almost there. If you haven't invested in this infrastructure yet, please do so now.
By the way, the US Army has been studying elasticity for years. They are now intensely focused on providing accurate information, guidance and rules for all military personnel and contractors to follow , so communication about COVID-19 cases is good and all contractors are involved.
Politically, this raises many complex issues. Do left-wing think tanks and right-wing ones interpret unemployment data differently? They certainly do. It's a noisy, crowded and complex problem, but without a Federal "reality circle" it's hard to take action and stand up.
3/ Resilience requires caring leaders.
The third thing you see in resilient and resilient organizations is the presence of leaders that people want to follow. As Colin Powell said, you know you are a good leader when people want to follow you.
In times of crisis, people worry. We have just completed our weekly pulse survey on the crisis and it shows that the number one issue on the minds of workers today is their financial security. Health is close behind, but mostly they are worried about their families. If your CEO or the people at the top of your company can't empathize with this, your organization can't successfully adapt.
(I call chief executive officers "Empathy Chairs.")
A good example here is the California wildfires for which PG&E was blamed. I have no idea if PG&E actually caused those fires last year, but the big question on people's minds is: "Does PG&E care?" I think PG&E is a highly responsible company that may have gotten off track and neglected to look at its infrastructure. Today the company is doing the right thing, but in the past it has paid a huge price for appearing sloppy.
Just a few weeks ago, an Amazon employee claimed they were in danger from a virus at a distribution center. It took a while for the company to respond, but they are now working hard to ensure safe working conditions. Once again, it's a story of empathy.
Boeing has just changed CEO for the same reason. I'm sure Dennis Muilenburg is a great leader, but his "lack of empathy" for the problem got in the way.
If you want to build resilience with resilience, you have to build it on a foundation of truth. That means leaders who listen, care and take action.
Companies like Unilever, Salesforce, Wegman's, Novartis, Nextdoor, IBM and many more understand this. Their entire business model is based on empathy. That's why their CEOs don't leave it to words.
No matter what your business is, if you don't pay special attention to "empathy" you are likely to fall behind. Showing empathy for your customers, your communities, your employees and their families will do you a lot of good. Yes, it's a more "emotional" approach to leadership(Jamil Zaki discusses this in detail in Harvard Business Review), but it's a priority in a time of crisis.
By the way, you can't create empathy out of thin air. But you can build it over time.
As Warren Buffet once said, you only know who is swimming naked when the tide goes out. The same is true here. "Attentive" companies take action faster than others.
Meanwhile, the US military has conducted research and developed a comprehensive program to promote resilience, much of it based on listening. If you want to know more, read Marty Seligman's article.
4/ Resilience thrives in communities, not just in organizations.
The last lesson about resilience is something we learned from the military. The most resilient, cohesive and high-performing companies are made up of people who know, like and support each other.
In the military, there is "duty"; no one is "left behind" and "your teammates are your responsibility." The US Army trains every soldier to "look out for his brothers in arms". How many of us have a "comrade in arms" at work?
Unfortunately, for decades, management philosophy has ignored this need. Remember the workplace benchmarking and the "up or out" approach or the "peter principle" management model, which created a sense of competition in the workplace, pitting people against each other. Right now we need a new sense of "unity".
In this world of elasticity and adaptability to crisis, we need to get to know each other, speak up, discuss issues and create a family-like sense of belonging. I realize that companies are not families (after all, we are laying people off), but companies can adapt faster when there is a sense of collective culture.
A few years ago I met with Ikea's management team to discuss the concept of corporate citizenship. They told me that at Ikea all decisions are made collectively. If a store manager wanted to try something new, it went to a committee and the committee got feedback from all the stores in their network. I thought, "That's pretty weird and slow."
And their reaction was: "Yes, it seems slow, but it brings us together. Once we make the decision, we move quickly and implement it." What they were trying to tell me was this: "shared culture" and "community responsibility" are more important than speed alone. It requires people to know each other and believe in the mission.
When I visit companies (hundreds of companies every year), I always observe how people behave. Are they kind to each other? Are they friendly? Do they talk or do they wait for the boss to speak first? Do they respect each other?
Predictably, in the highest performing companies there is always a sense of "we know each other" and "we know how to work together". This social bond, this set of relationships and sense of belonging is vital. This is not something that can be built in a week, but if you have done it over time, you will reap the rewards now.
Let me end with one last thought. This is a topic I will be covering much more in the coming months.
We humans are incredibly resilient and flexible individuals. It's institutions that undermine that.
I believe that when I walk down the street and see homeless people or people with disabilities, or when I talk to friends who have been laid off or who are having problems at home, I hear stories of courage, fortitude and determination. People who have accidents or who get sick, they survive, they learn to adapt and they thrive. It is in our DNA.
But when we are in groups, when we are in a hierarchy and there are rules and structures to follow, we often lose this ability to adapt.
Our goal in building resilience and resilience (both in our companies and in society) is to release this sense of elasticity in each of us. Give people enough money, healthcare and security so that we can adapt and thrive.
In the case of your company, this means creating an "employee experience" that meets all five levels of Maslow's Hierarchy (from health and safety to financial security to career and fulfillment).
As far as society is concerned, it means "people first, economy second". It means policies that focus on individuals, not just companies and bureaucracies.
I think the pandemic is going to be hard for all of us, but once we create a sense of security, trust in information, and empathy from our leaders, the economy will be a monster. This is what we need to do in our companies, and this is a new "muscle" that we all need to strengthen.
I will be discussing this topic more in the coming months and I look forward to your feedback.