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Business News/ Opinion / Online-views/  Surviving a perfect storm
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Surviving a perfect storm

Surviving a perfect storm

Jayachandran/MintPremium

Jayachandran/Mint

No plan survives first contact with the enemy"—Carl Von Clausewitz’s aphorism —seems prophetic in current volatile times. Businesses, governments and individuals are facing uncertainties battling variables they don’t control and scenarios they cannot possibly envision. Long-term plans seem fairy tales when goal posts shift every quarter. How can leaders plan or deliver their mandates in this "fog of uncertainty".

An approach perhaps lies in learning how successful military leaders deliver in environments where “fog" is pretty much the operating system. Yet military plans need exactness because any imprecision can result in catastrophe. Successful military leaders have resolved this paradox in an interesting manner.

Jayachandran/Mint

The education frameworks of most business schools still instil an expectation of precision. Numbers are sacrosanct and an inability to meet targets reflects poorly on the leader. While this philosophy may serve well during relatively stable times, they are doomed to fail during volatile periods. When unforeseeable events half way across the world can change the business environment overnight, expecting business leaders to deliver on annually approved plans is hoping for a miracle. Different measurements are needed in turbulent times.

One way is to start defining success as furthering the general intent of stakeholders. In business, this happens to be profitability. Instead of holding business leaders accountable to absolute targets of top and bottom line, boards ought to look at ratios instead. The measurement criteria must encourage leadership to realign their resources and stay on a par with the ratios between the top and bottom line instead of demanding adherence to year-old targets as the latter is clearly unrealistic.

However, under existing paradigms, CEO’s and business heads view downgrading of absolute targets as a sign of failure and, are therefore, averse to do so until reality forces them to. This reluctance also introduces a tendency of “optimistic lying" and senior management is often not told the harsh truth.

Second, turbulent times need rapid iterations of environmental scans. Before the start of any military campaign, planning data is relatively static. Ground conditions, enemy troop strength, terrain, weather, etc., are elements that don’t change greatly. However, once operations start, operational maps are constantly updated allowing commanders to view the changing situation in near real time. This requires increased recce elements on ground and a philosophy that it is “ok" to change.

Business plans, too, are developed based on market opportunities and other environmental variables. But if these are not constantly updated and revised, then any plan based on the older version is actually worse than no plan at all. This means more frequent communication with front-line leaders with an intent to learn, not chastise. It also means allowing them a greater leeway in grabbing fleeting opportunities as and when they appear. Instead, during volatile periods many managements practise the reverse by tightening control and dampening local initiative.

Most organizations are flexible while planning and rigid during execution. However, that construct may not serve well during fluid situations. The D-Day landings in Normandy during World War II took years to plan. Millions of men, equipment, resources and hundreds of operations had to be synchronized to deliver the largest armada known to man, against estimated (but uncertain) enemy opposition. However, the allied commanders knew that once they contacted German defence, any form of close coupling of intricate plans could jeopardize the entire operation. So, they used an ingenious mixture of philosophies. Individual soldier-level drills were rehearsed repeatedly and perfected like clockwork. Subunits practised together so that various components of the invading force could work in synchronization with other units.

However, operational plans were left to dynamic front-line leaders who could group and regroup subunits and even make high-ranking changes in command. So, while subunit commanders were led on a tight leash during the invasion, they were given a freer hand once they made contact with enemy. The overall allied operational schedule went astray by months, but victory was certain.

Contrastingly, while Hitler had the best operational general in Rommel with him at Normandy, he chose to retain personal control over the strategic Panzer divisions refusing to release them to Rommel until it was too late. This stance contributed to German defeat more than anything else during the D-Day landings.

Companies, especially larger conglomerates, must realize that during volatile times, it is the front-line leaders who are best qualified to make operational changes and decisions. They need more resources at their local control while senior management needs to hold their nerve and trust the judgement of the former. It is their job to make more resources available to them and give less advice.

Finally, turbulent times are when the mettle of leadership is truly tested. Anyone can be a successful leader during good times just like any port is safe for a ship during a storm, but that is not what ships (or leaders) are made for.

Raghu Raman is an expert and a commentator on internal security

Comments are welcome at theirview@livemint.com

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Published: 11 Jan 2012, 08:51 PM IST
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