If there were any doubts that COVID 19 would impact the economy for a long time to come, then the second wave sweeping Europe must put them to rest. Leaving aside the health issues, the IMF already estimates global production losses at over $28 trillion and banks that we have spoken to are now stress-testing their finances for a third and fourth wave. The scale of the COVID crisis spurred us to write Transformation Sprint, a book on how companies and policy makers can use agile methods to bring about significant change very quickly.
How significant must that change be? The IMF says the long term impacts will be felt through the loss of childhood education, pared back investment by enterprises, and increased poverty levels as well as lost production. At the same time, consultants at McKinsey, referencing a 96 country study, say that some of these losses could be made good by closing the gender gap in society and providing more opportunity to women. The same could be said of minorities.
That, of course, is easier said than done. Compressed opportunity will be part of the fabric of our near term futures and equality could potentially be another one of COVID’s victims. However, what we can do is learn quickly how to change for the better.
Downsizing may not be the answer
The changes we need have to take place at the micro-level, near to the grassroots, though policy makers can do a lot to create a new environment for change. Current investments made by enterprises are governed by a tradition that has no place in the pandemic. You see it all around of course, job losses. It is a relic of the tussle between labour and capital going back through the 20th century. Periodically conditions made the economy favourable to labour or to capital and either side took advantage. The legacy is that cutting jobs is the first port of call for many leaders in a crisis. We call it headcount reduction, workforce compression or downsizing. It all adds up to the same phenomenon. A temporary advantage for capital and jobs have to go.
The counter argument is that those people are your relationship and intellectual capital. Companies squander both, not just in crises but routinely. Given the scale of the crisis and the need to think ahead to waves three and four, it is at least prudent to take stock of assets such as people and to put their preservation on an equal footing with the more obvious priority of preserving cash. That argument won’t be won here, of course. But those of us who are observers of enterprise behaviour can see another way.
Envisioning a different kind of future
A beacon of hope in that new environment is the ability to envision a different kind of future. What might it consist of?
- The vaccine way out will not be as conclusive as politicians hope and even with a safer physical space to operate in, people are mentally exhausted and the majority do not want to return to the fray of commuting, traveling and needles meetings. Remote work of some form is here to stay, which also means finding ways to make it productive, because right now people are suffering presenteeism.
- What is really needed are multiple opportunities to speak truth to power. Most organisations suffer from dysfunctionality, much of it stemming from tangled infrastructure (core platforms); most are attempting some kind of transformation and failing; and very few are trying to envision a different world. The first phase of a Transformation Sprint is to gather perspectives from as many different people as possible to identify the major dysfunctions. We recommend any and every organisation should do that right now. All of your transformations and change programs depend on speaking truthfully and breaking through the filters that keep senior management in the dark.
- The output of a transformation sprint is what we call a Lighthouse project. Of course there are several steps in between but let’s concentrate on the beginning and end for now and leave the story for another day.
A lighthouse project is a short-term, time-boxed initiative that addresses a structural problem a company faces. In fact there are four other elements. It uses new ways to work (agile), is defined in a way that produces value early and regularly, and it can act as a learning mechanism to help teach teams and executives what the transformation pragmatically needs to do and how.
In that sense, it serves as a model — or a “lighthouse” — for other similar projects within the broader digital transformation initiative. They are not MVPs because nobody is trying to prove the revenue value of an innovation. They are not pilots because nobody is trying to limit their cost to trial a new idea.
An example will help to understand them better. Suppose you are in the wealth and investment business. The chances are much of your basic market understanding and product portfolio is based on assumptions about what men want to invest in.
There’s a very good reason for this. In many countries, these industries grew up at a time when the main breadwinner with investable income was the man. It may seem anachronistic to say this still has impact but it does. Studies have shown that many women feel the investment industry neglects their lifestyle priorities and their investment preferences.
That research suggests women has a strong preference for lifestyle continuity over aggressive growth Reflect on that for a moment and consider its implications. Post-COVID people need continuity and security in a world made suddenly more uncertain.
What if the investment industry were to broaden its perspective to include the other half of the population? What if it could attract investors whose priority was social continuity or reasoned change in economic activity that made work-from-home more social, creative and productive?
You can see, in this situation, that digital innovation itself would not help. The problem is multifaceted. Such multifaceted challenges are not uncommon as we gravitate towards a more digital world. The product innovation needs to embrace relationship innovations as well as new ways to sell and different customer success factors.
We are beginning to see female-only investment sites appear online (Ellevest.com) to address these issues. Ellevest could be seen as a Lighthouse for the industry as a whole, though its aim, as yet, is not to change the funds industry.
In our work we have proposed analogous initiatives inside investment houses, using the web and micromarketing through Instagram to make very specific lifestyle continuity propositions to women and then form community around female investment preferences.
The Lighthouse becomes effective when it addresses a structural or strategic challenge but it also needs to take advantage of new ways to work and to move beyond sales, to relationships and experiences.
A lighthouse project fulfils four criteria:
- It has a structural impact. It helps address a critical structural problem in a small steps way.
- It has the capacity to show value early on. No waiting around for a transformation program to deliver (or not)
- It embraces new ways to work that are agile, transparent, multidisciplinary and adaptive.
- It is a learning environment that helps teach everyone but particularly leadership about the right steps to take not just in the lighthouse but from there on.
The benefit of a lighthouse project is that it is not a transformation program in any traditional sense. It does not need a huge budget, nor a complex governance system. It is a way to learn about what is needed and to grow the skills to identify and take the right next steps. It is low risk and productive.
Summary and conclusion
Right now society needs multiple lighthouse projects that stem from all of us being able to talk truth to power. Policy makers and leaders are not facing the future from a healthy power base. They lead organisations that already did not function well before COVID 19. They already needed to change. Now they need to change in sync with societal change. This is too important to leave to leadership that was already struggling. We need to gather perspectives, spell out the AS-IS state of our organisations; and set up the many lighthouse projects that will allow us to quickly learn the right thing)s) to do next.
Find out more about our book Transformation Sprint here.