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From chaos to complexity – decision-making in a challenging business environment. Part 2.

Posted by Ben Whittacker-Cook on 29/04/2020 12:44:18 PM

The first of this decision-making two-parter from Dan Thurston, Icehouse coach and business advisor, introduced the Cynefin framework, a useful tool in fraught circumstances. If you haven’t yet contained the chaos caused by the lockdown, check out part one, where you’ll find proactive actions to take.

COVID strategy Icehouse

So, how to transition through the coming period of complexity to get into good shape.

| What makes a situation “complex”?

The framework defines a complex situation as one in which the effects of your decisions, events or actions can’t be reliably predicted. Instead, these situations are dynamic, changing due to an interconnected web of external influences that you can’t control.

As New Zealand moves from Level 4 to Level 3 and then on to 2, those influences include the effect on the infection curve, the Government’s moves in response to movement in either direction, the reactions of local and global economies, and the cascading responses of organisations and the public at large.

We don’t know what we don’t know about these influences. Accurate forecasting is impossible, so effective planning is in turn more challenging than usual.

In a complex situation there’s no right answer, at least not until events play out to reveal it. So while you can speculate endlessly about the effects of any actions your company takes, the only way to gain any certainty around cause and effect is to take action and pay close attention to the results. Naturally such decisions come with risks. Here’s how to minimise them:

| 1 Get to grips with the fundamentals

Cash situation and budgeting – remaining solvent is critical. Avoid assumptions and get clear on your current cash position, unavoidable expenditure (after you’ve cut everything non-essential), and reliable income over the short term. If your working capital is in a tenuous state, don’t panic; take steps – right now! – to preserve it. Check out this article for excellent ideas but, if you’re anxious about your financial outlook, leverage the Government’s Covid-19 advisory funding to gain expert advice.

Market situation – you need to recognise both the threats and the opportunities posed by Level 3/Level 2 restrictions. This requires a brutally objective assessment:

  • What is it that you sell, and what will demand look like over the coming weeks and months?
  • Who do you sell it to, and what will their wants and needs look like over this period?
  • How do you deliver it, and how will that be affected by restrictions?

You won’t have all the answers because this is an unpredictable period, minimise assumptions by staying abreast of industry and category trends and, where appropriate, validating theories with real customer feedback.

Team situation – nothing is as important right now as ensuring the safety and wellbeing of your staff. Analyse the risks they face in performing their work in Level 3 and 2 conditions, and make sure you have policies and procedures in place that are clearly communicated and understood. (Don’t forget to consider their emotional needs.) With all that in mind, what are your operational capabilities, and how does that affect your ability to perform at a viable level?

| 2 Galvanise around a thematic goal

Use what you learned from the fundamentals to isolate the issue – yes, only one – that’s most critical to successfully navigate this cycle. Perhaps it’s increasing cash reserves to ensure solvency, or pivoting production or delivery to match your operational constraints.

Whatever it is, quantify a successful outcome in a measurable form – for example, 3 months’ working capital in the current account or 70% satisfaction in beta testing of a new product iteration.

Communicate to your entire team that this goal is the company’s primary focus until it has been achieved, and post continuous updates to the metric in a prominent place. The thematic goal doesn’t lessen the need to maintain your usual operational objectives, but it does help your people align their activities, where possible, to support the overall effort. (You can find a worksheet on developing thematic goals here.)

| 3 Plan with agility

Whatever your thematic goal, complex situations – being inherently unpredictable – provide the ideal conditions to get creative about how to achieve it.

Generate ideas through brainstorms or design sprints. Empower your team to explore options, experiment with tactics and rapidly prototype and test tools, techniques or products.

Just as important as being creative is being observant – make experiments as small, quick and low-risk as possible, and then monitor their effectiveness. Fail fast, adjust quickly, and repeat. And because most people fear failure, respond positively to missteps. Each one brings you closer to a successful solution.

| BUT: don’t lose sight of the big picture

Notwithstanding the economic anxieties created by the lockdown, the pandemic is above all a human tragedy. With the virus well contained at this point some of your employees, customers and vendors will be untouched by the disease. But others may have loved ones who’ve been affected, or be anxious for their own or their family’s safety. Alongside all actions you take, remember to pay attention to the emotional state of those around you — and also make sure you attend to your own.

If you’re struggling and looking for assistance, The Icehouse would like to help. Check out our dedicated resource for businesses  impacted by COVID-19. It’s full of useful information and resources, support and offerings, funding opportunities and partnership and coaching details.

For more business ownership and leadership advice and the latest discussion around COVID-19, check out more of our blogs.

Topics: Business Coaching, Leadership, Business Strategy & Planning, Sales, Growth, Coronavirus, Dan Thurston

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