About a week or two into the coronavirus outbreak my mom called, concerned. She said, “Honey, you travel a lot for work, so make sure you bring a mask and hand sanitizer with you on your trips and don’t get too close to people.” I assured her it was too early to be concerned and that the probability of this turning into something of global significance was small. “Don’t worry about it, Mom,” I told her. A few weeks later, this virus is on the move, international flights have been cancelled, the Dow is down, new concentrated breakouts are occurring across the globe, and people are using the word “pandemic.” Meanwhile, my mother is taking the pleasure of justifying her motherly concern as I reflect on what it was that made me so confident this threat was nothing to be concerned about. My conclusion: human behavior.
As humans we are not always good at planning for long-term risks, especially when those risks may be unforeseeable events, challenge the current state, or change our assumptions about the future. Some financial insiders speculated about risks leading up to the Great Recession, but the industry hesitated, things were going great, profits were up, and the proposed consequences were unimaginable. How could the American mortgage industry ever be unstable? For organizations— a collective of humans—thinking strategically about these types of risks and effectively acting on them is even harder. It asks us to redirect human and fiscal resources and potentially abandon sunk costs to prepare for a disruptive event that may never happen.
Now to be clear, I don’t believe this lack of attention to strategy management and agility is intended. Building the capabilities, structure, and culture to be strategically agile is no small feat in today’s world—and is the reason 96% of market losses come from inadequate strategic audits. But with such things as the coronavirus in our midst, the time is now to begin to think about your organization’s capability to be strategically resilient. If your initial response to this warning was like mine to my mother’s caution, that’s fine. The intent of this isn’t to sow fear. But consider this: the SARS outbreak resulted in a 30% decrease in visitors from China, and a 10% fall in travelers from the rest of Asia. It took three years for the market to fully recover. The Coronavirus is moving faster and claiming more lives than SARS did. Its impacts to the U.S. travel economy based on Asian inbounds alone is estimated to be $5 billion in 2020, a loss that will negatively impact tax revenues and organizational budgets.
How prepared is your organization to address the impacts of the Coronavirus on your markets? How will you re-evaluate strategies underway that hadn’t considered these events? If you don’t have a plan, don’t worry. First, you have to plan to be spontaneous. This means approaching strategy with a spirit of curiosity and improvement, vs. steadfast commitment for commitment’s sake. We can only design strategies based on the information we have at the time, but good strategic organizations are always looking out of the corner of their eye for potential pitfalls, re-evaluating their strategic positions, and pivoting accordingly to preserve or capture as much opportunity as possible.
At the end of the day, you can’t stop the waves, but you can learn to surf. Contact us to learn more about how we think about agility in strategic planning.
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