Natural Selection in an Age of Crisis / by Aviad Goz
or -
Who Will Be the Quick Mammals and Who Will Be the Extinct Dinosaurs after this Crisis?
In recent weeks, general managers of different companies have been discussing how to handle the current difficulties. These difficulties are not yet fully defined, but their symptoms are clear:
1. Credit shortage
2. A decrease in buyer power and demand
3. Stalling and therefore a delay in expenditures and investments
4. Downsizing that leads to more downsizing
The overall approach is defensive and isolative - survivalist. A different approach practiced by some is to ignore the situation, and another approach is to wallow in depression and pessimism.
The question of how to maintain a business in such circumstances and navigate it through rough waters is no longer a hypothetical one – rather almost existential. In the near future, we will be able to see, in hindsight, which organizations were prepared for these difficulties, were maintained correctly and managed to navigate to shore, and which organizations were not prepared, maintained incorrectly and ultimately sank or disappeared.
To better understand this situation, we can compare it to Darwin's Theory of Evolution and Natural Selection. This theory explains the development of species on Earth and their ability to prevail through different eras. Earth's history is filled with ever changing circumstances – from the changing of tides, to the Ice Age, and the extinction of various food sources. During any given scenario, certain species managed to adapt to the change. Sometimes this involved growing fins, or becoming covered in hair, or decreasing in size. With the help of mutations and genetic variations that faired better in the new circumstances, certain species were able to cope with the ongoing change and prevail. Accordingly, those species that did not produce mutations that corresponded with the changes eventually died out and disappeared from the face of history.
An example we're all familiar with is the extinction of the dinosaurs that ruled the Earth for millions of years, and the rise in strength of the mammals – which were smaller yet more sophisticated. Darwin called this process Natural Selection.
In our times constant change has become a fact of life that organizations and companies need to deal with on a regular basis.
Eras of crisis are usually caused by swift change in external conditions, a change we are not prepared for. Some examples: a change in credit conditions, increase in price for basic products, a shift in market forecasts, technological advancements, and many more. A crisis arises when there is a dramatic change. A crisis situation brings about a process of Natural Selection between the players struggling for success and the players that crash and burn.
In light of the process of Evolution and with my knowledge of the business world, I'd like to offer a guide for the “Quick and Sophisticated Mammal”. This guide can help managers and business leaders get through the crisis and survive onto a new, changed world. Surviving and striving is key in the process of Natural Selection. Of course, we can always go the dinosaur way and sail through the few lush patches of green that are still visible.
A Guide for the "Quick and Sophisticated Mammal"
1. Identifying Core Capabilities – At a time of constant, sudden and swift changes, an organization needs to go back and realize its core capabilities. These capabilities are what makes it unique and give it its own market strength. Sometimes, usually during calmer periods, these capabilities are dulled or hidden by other capabilities that developed throughout. Core capabilities can range from unique design capabilities, to excellent distribution, development ability, fine strategic planning and many more. The organization must return to those core capabilities and utilize them at their best. The basic question that needs to be asked is – What are we best at in our field?
2. Identifying Patterns of Change – During times of quick and drastic change, there is a real need to identify and understand the patterns of the change. Understanding change while it's happening is problematic. Every day, different aspects and trends contained within the change can be revealed. Times of change are certainly not times for apathy. If the company fails to recognize patterns while they are forming, and therefore is unable to perform the changes required to adapt to these changes, then it risks fading away and becoming obsolete. Sometimes, several minds need to form a team and brainstorm together in order to identify the present changes. This team will serve as the company's Alert System. The basic question that needs to be asked is – What's really going on out there?
3. Identifying Opportunities - New opportunities stem from any situation of change. These opportunities meet new needs, which were created by the change. This is not a defensive stance, but a very proactive stance that searches for needs and opportunities in the changing situation. We need to be on the look out for opportunities to branch out into new services, new products, alternative resources, perhaps even acquisitions, mergers, joining of forces, and the like. The basic question that needs to be asked is – What opportunities do we have in the present situation, that we didn't have in the previous situation?
4. Re - configuration of Core Capabilities to Create New Solutions and Products - The core capabilities need to be redefined and remolded in order to meet the needs posed by the changing situation. The idea is to look at the organization as Lego pieces (cubes). Each cube represents a core capability, or core process in the organization. Then, in a creative and non fixated manner, use those core capabilities to create new solutions. In fact, “construct an all new Lego building”. We mustn't dismiss our core capabilities, but rather use them to build solutions better suited for the situation. This process requires innovation, bravery and mobility. However, there is really no other way. The basic question that needs to be asked is - What can we accomplish with our strongest muscles?
5. Disposing of or Minimizing Secondary Capabilities - Capabilities or processes that developed in the organization prior to the change and are not part of the core capabilities, can in these trying times weigh it down or damage it. There is a need to define them and bravely either dismiss them, minimize them or pass them onto a third party. Irrelevant over emphasis on overcoming the obstacles that these may represent, can hinder the company's mobility as well as its ability to compete in the market. This isn't meant to legitimize unjustified laying off or similar steps, but rather to raise effectiveness at the core. It is necessary to the development and thrust of the ‘strongest muscles', and passing on the ‘weaker muscles' to parties that specialize in them. The basic question that needs to be asked is - What are we doing today that others could do much better? And why are we still doing it?
6. Enlisting the Key Success Factors - This is a critical time to enlist all those key factors that contribute to the success of an organization in a time of change - managers, employees, resources, service providers, processes, and such. Enlisting these can be a good way to collaborate in order to better understand the situation and prepare for it. Enlisting can be achieved through greater involvement, different motivators, compensation, or any other method which will ensure that the key factors are at their best and on board to put in a great effort for the duration of the change. Belief in the system is critical during such a time. The basic question that needs to be asked is - What are our key success factors? And how can we enlist them?
7. Relying on Realistic Resources - The dinosaurs became extinct because their food sources dwindled onto nothing. Organizations that get by on virtual, inflated or unrealistic means will experience difficulties in a much more acute manner. During times of crisis, organizations need to rely on steady, realistic resources or risk disappearing. This is a good time to regroup and re-examine resources and funds. It's important to make sure that resources that have been over distributed or unrealistically estimated be replaced by realistic, available resources. The basic question that needs to be asked is - In what areas are we relying on virtual resources, or over distributing resources?
8. Creating an Organizational Chaos as Basis for the Creation of a New Order - In order to successfully perform all the necessary preparations, the organization needs to establish a new order within. The previous order was right for a previous situation, which was calmer. The previous order needs to be broken down, even partially, and from that chaos create a new, more flexible order that can adapt to quick changes and a new reality. Principally, this change can be created in the departments that encounter the change and attempt to prepare for it, such as sales, marketing, human resources, and others. The basic question that needs to be asked is - What type of new, flexible and dynamic order will help us increase our chances of success during this trying time?
9. Maintaining Communication Regarding Internal and External Changes - Internal communication during a crisis time is crucial, just as crucial as the communication between the muscles and the heart in a time of effort and a need for oxygen. Communication regarding internal and external changes needs to take place in real time. It needs to be accurate and available. Without such communication, different parts and different people in the organization will operate according to different perceptions of reality, and could perform uncoordinated tasks that could end up clashing. In addition, without such communication, there is the risk of uncertainty, demoralization and low motivation. The basic question that needs to be asked is - What does everyone need to know in order to maximize output and work in unison?
Naturally, these are only a few guidelines out of many different possible ones. These can not only enable survival in the face of hardship, but even unimaginable growth and development.
Without a doubt, difficulty can help sharpen, stir and revive any organization that chooses to operate according to the guidelines outlined above.
Aviad Goz
November 11th, 2008
