Wednesday, October 21, 2020

What if this is the "new normal"?

 In a way, I'm kind of glad that fewer people are talking about the idea of things "getting back to normal".  The part of me that craves consistency and safety wants to go back to the way things were - more predictable, less fraught with problems and challenges like COVID.  The innovator and entrepreneur in me craves change, but in a good way - change that I create, change that makes things better.  Sooner or later we will all realize that 1) change is going to happen, 2) we can't necessarily stop it or direct it and 3) we can get better at anticipating it and making it our own.

If people stop talking about getting back to normal, then they've either resigned themselves to living in this choppy, chaotic, uncontrolled world of COVID, or they realize that a new normal is unfolding.  I'm not sure which is the right answer.  I'm concerned that rather than anticipate and start preparing to ride the new wave of change that is about to unfold, many people and businesses are hunkering down, waiting for the storm to pass, so the "new normal", whatever that is, will reveal itself and they can then respond to the new conditions.

Here's a little insight about that strategy:  it's not going to work well for you.  Waiting for the new normal to emerge, hoping that things "get back on track" after COVID ends is not a strategy.  After all, as we are constantly reminded, hope is not a strategy.  COVID is a large change agent, but in the grand scheme of things it is simply one of a number of significant change agents that is impacting how we work and how we live.

Let's consider a few of the other change agents that COVID is exacerbating or magnifying:

  • Growing inequality in jobs and income on a global basis.
  • Shift from labor to capital to knowledge
  • Rapidly changing business models (software as a service as harbinger for more "as a service" options)
  • An older generation from the Second World War and the Boomers leaving the scene as Millennials and Gen Xers take over
  • Europe becomes less relevant as China emerges
  • Oil becomes less important as other forms of energy emerge
  • Political platforms move toward populism and nationalism; international agreements and accords seem less valuable

You might argue with any of these points.  For example, you might say that political programs don't affect me or my business.  If you believe that, check with the farmers who lost soybean sales to China.

In an ever consolidating and interconnected world, everything - politics, demographics, technology, societal composition and tastes - everything has an impact.  If the Trump administration can force a management change at Tik Tok, then everything is subject to change.

If all of these significant forces are changing, then the new normal is not a consistent state of being, but a consistent state of change.  We need to start building companies, and business models, and products that are capable of withstanding - no that thrive - in more consistent change.  Any business models that are based on consistent operating conditions are going to fail.  When IBM - IBM of all companies - divides itself up to further lessen its dependence on hardware (remember the M in IBM stands for "machines") then everything is subject to change.

This is an existing firm's nightmare and every entrepreneur and innovator's dream.  Smaller, agile firms should be able to win more in the coming days, while larger, slower, more monolithic firms are going to struggle.  What to do?

  1. Start rethinking your business model.  Forget your products or services for a moment and consider your business model.  What about your business model creates blind spots or rigidity?  Change it now.  What about your business model provides flexibility and agility?  Spend more time and effort on these aspects.
  2. Once you've rethought you business model, consider your product and service offerings.  Perhaps it's time to switch from selling tangible products to offering access to products.  Perhaps its time to consider new revenue models, or to eliminate products or services that are profitable today but will be boat anchors in a year.
  3. Rethink your people and structure.  The most difficult change won't be in your products and services or your business model - those are relatively fungible.  The most difficult change will be in your org structure and the people who are making decisions.  In this shift, a lot of people will need to be reallocated to new opportunities, and that will mean a lot of resistance as people fear losing their jobs or hard-won positions.  Spend a lot of time with your people, helping them see the need for change (they see it - they want to know you see it and have a plan) and why a new structure and role is beneficial for both parties.  Silence from the top is deadly now.
There's a lot more to do, but these are some key ideas about getting ready for the new normal, which is really just getting ready to operate in much more choppy conditions.
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posted by Jeffrey Phillips at 12:30 PM


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