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Leading in turbulent times webinar series: Rethinking corporate bureaucracy

We don’t know what scenario is currently playing out, but firms need to be agile, discovery-driven and adopt a problem-solving mentality.

This webinar with Howard Yu, IMD LEGO Professor of Management and Innovation and Salvatore Cantale, Professor of Finance, appeared live on Monday 6th April at 11am CET.

How can we think through the future without being able to hold on to one particular paradigm? How can your team react in a more holistic way? The professors explored these questions as they considered, from different vantage points, the series of eruptions that are leading us to an unrecognisable world.

The economic damage is, and is going to be, very serious. However, it’s impossible to see exactly how. “Forecasts are the international hobbies of economists and sometimes do not work as well as we think,” said Professor Cantale.

For this reason, Professor Cantale moves “sideways” and “puts together a sort of matrix; scenarios rather than forecasts.”

He presents three potential scenarios. The first is eradication of the virus, either completely or slowly. With complete eradication, enough people get it for complete immunity, meaning we will wake up in a few weeks and now will seem a thing of the past. With slow eradication, we would live out a nightmarish situation of long-term health suffering.

The second scenario set forth is persistence: we learn to live with this disease. Making comparisons to the way smallpox entered Africa, he says we would end up adapting and living with the consequences. Some would have immunity, some would not.

Finally, he presents a third scenario of recurring epidemics. After the first shock, things are under control. But then a second wave takes hold; maybe a mutation, maybe the same virus again. It would likely recur in some pockets of the world more than others. A listener poll during this webinar revealed that most listeners thought this scenario was the most probable.

The possible financial implications on the finance sector (banks) and real economy (companies and households), were then explored, as relating to each scenario.

“If this is just a bad parenthesis (i.e. scenario one), then this is the opportunity of a lifetime, in terms of investment in the stock market,” said Professor Cantale. If we are in the third scenario however, “This is the end of ‘business as usual’.”

A second poll saw listeners rate their companies on how well they had been responding to the outbreak. They measured them on areas such as employee support, scenario planning, stress-testing finance under different scenarios, creating a core crisis team, making Stock Keeping Unit (SKU)-level estimates and engaging with regulators.

So, how can companies be expected to move ahead if we don’t know what scenario is playing out? “It will require a new way of thinking about problem solving and team organisation.” said Professor Yu. “We are moving into a new area where we don’t even know what we don’t know. And that demands a different type of decision-making process and organizational structure.”

Firms need to be agile, discovery-driven and adopt an iterative problem-solving mentality. Creativity needs to take centerstage when thinking up new options. Then they need to look cross-sector at what others are doing, look at your own past in terms of values and purpose, and finally commit to one course of action and mobilise resources in that direction.

When in doubt, companies should re-establish their values. “Everything around you will change but your moral values needn’t,” said Professor Yu.

Radical it may be, but democratizing decision making is highly advisable, as a time-saving measure. “We have no time to waste. Allow sharing of information in real time, using technology as much as possible. COVID-19 has been an impetus to this,” Professor Yu said. “We’ve been forced to be transparent and it’s just too time-consuming right now to get absorbed in writing minutes and sending long emails.”

Finally, accept that it’s tiring and it’s confusing, but soldier on and build something today that fits tomorrow.

To view all webinars, please visit our Leading in Turbulent Times page here.

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