Opinion | The covid crisis could help us create shock-proof companies3 min read . Updated: 03 Apr 2020, 12:15 AM IST
We have an opportunity to adapt our businesses in ways that shield them from sudden adversities
As the covid-19 pandemic rages across the world, finding a vaccine for it has become the holy grail. Vaccines are curious things. They do not directly cure a disease, but help us do it. They introduce a weakened virus or its proteins or toxins to our body. This helps us learn how to create antibodies against these, so that if the virus actually strikes in full strength, we can identify it and generate the same antibodies to destroy it. Thus, a vaccine trains the human body to destroy the virus, rather than attacking it itself.
Covid-19 has been a classical Black Swan event, both unpredictable and devastating in its impact. Besides the thousands of lives lost and societies dislocated, it has disrupted companies and the people who work there. Many companies have reacted admirably and rapidly, ensuring business continuity by making employees work from home, securing supply chains the best they can and somehow keeping their operations running on skeletal crews. In spite of this, experts anticipate job losses, value destruction and severe economic hardship as the global economy slides into a deep recession.
The fact is that covid-19 is not the first and last of such disruptive Black Swan events. There have been six of them in the last 70 years, and there will be more. Such disruptions can be technological (the internet), geopolitical (a US-China war?), biological (the virus) or ecological (global warming). The catastrophic events caused by global warming, I believe, will be a bigger disruption to life and business than covid-19. We have a choice to make: Go back to life and business as usual after the crisis is over, or learn from it and prepare ourselves and our companies for the “next big one". We will be well served if we consider the covid-19 event as akin to a vaccine—to build antibodies and immunize ourselves against the much bigger calamities that perhaps await us.
Nassim Nicholas Taleb, the celebrated writer of Black Swan: The Impact Of The Highly Improbable, talks of something similar: How to make a company “antifragile". Antifragile companies, as opposed to the fragile ones—which break under pressure—actually grow stronger in the face of random, disruptive events. Antifragile systems are usually distributed, ecosystem-like, decentralized and bottoms-up, tolerant of small and frequent mistakes, and build redundancies and inefficiencies into the system.
Consider what companies are doing in the face of the crisis. We are rapidly distributing work as millions of employees work from home (WFH) and are decentralizing decisionmaking to make this work. We are using technology like Zoom, Slack and Microsoft Teams extensively for collaboration, therefore creating a distributed ecosystem, rather than centralized office-work and decisionmaking. We are tolerating small mistakes and large inefficiencies as long as they allow for business continuity and the larger goal to be achieved. The gig economy, after overcoming its initial hurdles, is gearing up to keep our life and companies going. It is distributed, bottoms-up, and not necessarily the most efficient, but it is more antifragile.
If we can learn some of these lessons as this crisis gets over, we have a great chance of inoculating our businesses against future shocks. As an example, we can move to perhaps three days of work-from-office and two days of WFH; we will have our entire workforce trained for WFH, save costs on office space, and keep the roads clearer and the air cleaner. Decentralizing decisions and building a distributed ecosystem of experts and knowledge-providers, rather than all knowledge being kept close within, will act as another vaccine. Investing in automation and collaboration technologies in good times should make us antifragile in bad times. This will not turn companies completely resistant to shocks, but make them resilient enough to recover much quicker from sharp blows.
Author and thinker Peter Hinssen tells us that it is not going to be “normal", neither will there be a “new normal"; we are entering the age of the “never normal". The age of the unicorn is perhaps passé, he says. We now need phoenixes—creatures that can rise from the dead. We need to be prepared, not just lucky. As Roald Amundsen said, “Victory awaits him who has everything in order—luck, people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck."
To shape our own luck, therefore, we need to look at this crisis as a vaccine, and build immune companies.