Never let a serious crisis go to waste

March 30, 2020

In an interview with the Wall Street Journal on November 19,2008, Rahm Emanuel was quoted as saying; “You never want a serious crisis to go to waste.  And what I mean by that [is] it’s an opportunity to do things that you think you could not before.”

He was referring to the crisis that was to become known as the “Great Recession” that gripped much of the world, hitting hardest from 2007-2008.  It was a period when millions of people lost their homes to foreclosure, nearly countless businesses declared bankruptcy; many being household names such as General Motors and Chrysler – along with a great number of financial institutions.

As mortgage backed securities began to cascade into failure, the sense of urgency began to build with the Federal Reserve steadily reducing rates starting in September of 2007 to stave-off a recession.  But the trigger event for the Great Recession was the bankruptcy of Lehman Brothers in September of 2008.

This sent a shockwave through the world’s financial system of such magnitude that its depth, breadth, and speed found the world’s financiers and governments on their back-foot, scrambling to catch-up and hoping to get ahead of it.  The response was sometimes coordinated, but too often disjointed.

A true crisis; indeed transformational.

For your consideration: for something, or someone, or some event to be transformational, it needs to possess truly destructive power.  Not that the destructive power has to be used, only that it is possessed and can be wielded or let loose with impunity; operating beyond any control, with the only countermeasure available being to react until such time as a new equilibrium is established.

Certainly, there will be Monday Morning Quarterbacks who will pass their judgement with the benefit of 20/20 hindsight using information not fully known at the time to demonstrate how wise they are.  But mostly these events leading up to the crisis and what follows afterwards will closely follow the Dunning-Kruger effect with lessons from Mt. Stupid – not knowing what we didn’t know; the “unknown, unknowns” to which the United States Secretary of Defense, Donald Rumsfeld once referred.

We have lived through three transformational events in the past 20 years; the terrorist attacks on September 11, 2001, the Great Recession, and now the COVID-19 pandemic.

Two common characteristics of a transformational crisis are that they; 1) come unexpectedly and 2) have far greater impact and reach than people first believe.

The most obvious, known, and permanent transformations after 9/11 were in the security functions for air-travel (with which we are all too familiar) and intelligence gathering (where our knowledge is murky at best); and after the Great Recession were in finance with the passing of Dodd-Frank into law.

But what permanent changes will there be after COVID-19?  And will they be for the better or for worse?

Operational Excellence and Continuous Improvement (OpEx/CI) Programs;  Since this is the field which gets most of my attention, I am going to start here.  This is not to say that it has the most weight and will be the most impacted by COVID-19, because it certainly is not.

Already I am hearing of OpEx/CI programs falling to the axe as companies scramble to cut costs as economic activity comes to nearly a complete halt.  But if the objectives of the OpEx/CI efforts were to cut costs, why are the programs being axed?  It’s because cutting costs is tactical and not strategic; and your program was never considered a necessity to deliver the company’s vision.

Countermeasure:  If your program was cut back or eliminated, it’s because you were not working on what is important – do better.  You needed to find out what the vision of the company is and prioritize your efforts so that you are an accelerant to achieving that corporate vision.

This does not mean the skillsets you have are irrelevant (although you should always seek to hone those skills) or that you have to learn a new skillset.  What it does mean is that you change the prioritization of your efforts so they look further downfield rather than at your toes.

And since the company vision changes from time to time, make sure you periodically level-set so that you maintain alignment.  This means you need to get face to face with the C-Suite so you can understand that vision of the future in absolute terms.  And if you can’t get that meeting, then you are doomed before you start.

If your OpEx/CI program is still intact, you need to get on the C-Suite’s calendar right away to make sure you are working on what is important to them at this present moment.

Doing Business;  Innovation will be tried and tested most and fastest in business rather than in the public sector.  I believe the single biggest change will be in the way businesses collaborate across the value-chain.  And these changes will not be because of some fear of disease; but that we discovered, as a result of our having to cope with the restrictions over a period of time, that the beliefs and prejudices we had and the barriers we put in our way were largely fictitious.

More Telephony;  We discovered the power of telephony as an accelerant for doing business.  A power the tech firms such as Google, Facebook, Apple, and Cisco (to name but a few) already knew and had become operational norms.

Sure, there were some challenges to address; like making sure everyone has the materials necessary for the meeting and people revisit and amplify their meeting / conference call etiquette and preparation.  But most of these challenges exist/existed when we met the old way.  Maybe this event has forced us to run better meetings.

One thing that is of a concern is “Big Brother”.  It might actually be easier for employers to monitor employee activity than when they are at the office.  So, if you suddenly find yourself working remotely and not used to it, just keep that in mind.  There was also a report of a manager having their employees log into a Zoom session only so the manager can watch them and make sure the employees were working.  Don’t be that person.

More Remote Working;  Why do we have to go to a place of work when our work doesn’t have to be performed there (especially those who report to multiple locations)?  Why not work from home if it makes sense (and we have the appropriate self-discipline).  Of course, if you don’t have the self-discipline and need structure (be honest with yourself), then working from home is not for you.

Less Travel;  Related to “more remote working”, in Lean Six Sigma (I don’t separate the two), one of the “8-Wastes” is “Transportation”.  Transportation adds no value and is only a cost that is paid by someone (either ourselves or our customers).  In our normal routine, transportation takes the form of our daily commute.  But there are also those times when our transportation is more dramatic (and costly).  It involves airfare, hotels, food and lodging, and so on.  While we are in transport, we are adding no value.

I remember one time we had a client meeting that took half a day.  There were three from my company and several from the client company.  The travel cost for our 4h engagement $7,500 plus our non-value-add time of getting there and back – plus their costs for travel and non-value  add activity.  It could have been accomplished telephonically.  That means the meeting could have happened far sooner (it’s easier to coordinate 4hrs than 3days).  And it could have happened at far less cost.

If you believe, as I do, that “time is the enemy of the 21^st Century company”, then you will look for ways and opportunities to leverage telephony as a vehicle to accelerate your business.

Healthcare;  With the ability to conduct “virtual office visits” for consultations and diagnosis, there is the opportunity to leverage telephony into more efficient and effective delivery of healthcare.  No longer will a patient have to go to a doctor’s office and wait in a waiting room (with other sick people) to be evaluated for most things people go to the doctor’s office.

Education;  The COVID-19 crisis has challenged education at its core.  The conventional wisdom from education departments, teachers, and their unions all claim that the outcomes of home/remote education will be of poorer quality.  However, they quickly abandoned these ideals when faced with there being no choice – either teach remotely or we will shutdown the school and pay will be cut/eliminated.

Grade School;  The results have been mixed from my observations.  Caught off-guard, the schools are largely making their plans while executing them.  I don’t fault them for this because the pandemic is a once in 100yr occurrence (the last being the Spanish Flu in 1918).  And it would be rather silly for them to spend a lot of time and money preparing (unless they just prepared a plan, and not purchased the apparatus to support the plan until needed).

Other than the obvious challenges of getting everything operational quickly, the real challenge was making sure each student had a device, and internet access.  Can you imagine a family with three or four children (or more) fighting over computer time?  Or students in less fortunate school districts or who cannot (for whatever reason) have access to internet?

Then there are the challenges associated with parental supervision and support.  Many parents are finding they now have to struggle to manage work and remote schooling.  And worse, having to take a more active role in the student’s education.  I mean, it’s been 40yrs since I took trigonometry and I couldn’t tell you a sine or cosine from a tangent.

The good news is that teachers will (hopefully) be more appreciated after the crisis has passed.

Universities;  For years, I have heard the debate from institutes of higher learning that delivered their education telephonically versus traditionally – and how the traditional way of education was (supposedly) far superior.  But at the same time, more and more traditional institutions were making their courses available on-line.  There was definitely an issue that was unsettled.

And just like that, hundreds of universities across the country closed their campuses and decided that teaching telephonically was going to be how the course was taught the rest of the semester.  Does that mean the universities are acknowledging that teaching telephonically delivers the same quality outcome as teaching in-person?  Or does it mean they are willing to accept an outcome of lesser quality?  The answer to that question will be transformational for higher education.

I wonder; Will the students get a refund of any sort for tuition, fees, and unused room and board?  Will the students still have to fulfill their lease obligations on apartments they might have rented (hopefully there is a “Force Majeure” clause in their lease).

But the biggest risk I see is that Professors will discover they can deliver their lectures from a beach in the Caribbean and the TA’s can deliver the labs and grade the papers.

Regulations;  There have been hundreds of Regulations that have been set aside.

Some include; the FDA has delegated responsibility to the States for tests developed by labs within their borders; the DOT waiving hours of service restrictions for truck drivers delivering emergency relief; allowing licensed healthcare professionals to work in other States where they are not licensed; easing restrictions on online courses for colleges and universities (see above);  allowing restaurants and bars to sell all forms of alcohol “to-go” (NY); waiving the in-person requirement for court reporters (PA); allowing alcohol and groceries to be transported in the same delivery truck (TX); and the list goes on and on – growing every day.

Of particular note are the jails and prisons with respect to non-violent prisoners; people being held because they cannot make bail, parole violators, and convicts serving their sentences are being released.

It makes a person wonder; if these rules can be discarded (which is what has happened), why should they be reinstated later?  Do they really serve the public?  Does the cost and burden really justify their benefit?  Is there, in fact, a benefit that is realized at all?  These questions should be answered before the rules and regulations are reinstated.

A person might argue that these regulations and oversights serve the public good, effective, and are necessary.  So, the Boeing 737 MAX 8 and the FAA, Bernie Madoff and the SEC, and so many others were flukes, then?

Start with no regulations.  But if you are going to have regulations, either make better regulations or regulate better.

Social Distancing;  We are being told to stay 6’(2m) away from one another and to not be in groups (varying from 2 in a group to 10 depending upon where).  Human beings are social beings.  These restrictions will not be permanent because they will be ignored (even rebelled against if enforced for very long).  This means that gyms, restaurants, pubs, and biergartens will be open soon enough.  Maybe we will want some more distance between ourselves and others at the gym.

But I wouldn’t hold my breath for more room between the seats in aircraft.

Shopping Amazon;  What can you say?  If you can’t go to the stores and shop and you need something, you are going to shop online.  And the first place most people are going to go to shop is Amazon.  The only real risk to shopping online at Amazon is that Amazon has put the brakes on warehousing and fulfillment for all but “essential items”.  This will make purchasing more challenging for customers and fulfillment more challenging for vendors.  Perhaps this is an opportunity for others to wedge themselves in to fill the void.  The only question is; “Are there any others?”

Air Travel;  The airline industry, and the industries related to it (such as manufacturers), are going to have a slow and challenging recovery.  The slowness will not be for fear of the virus, that will subside rather quickly.  After all, viruses are not like terrorists.

The first challenge is that it’s going to take a while to bring back a rebalanced flight schedule considering equipment (and personnel) have been parked and will need reconditioning.  Will all the flights come back?  Probably not.  It’s a good opportunity (excuse) for airlines to shed themselves of money-losing flights.

And the second challenge is that business travel will not meet the pre-virus projections (maybe not even the pre-virus load) as companies realize the benefits of telephony; doing as much, faster, and at less cost.

Conclusion; The COVID-19 crisis is transformational.  It has truly destructive power that is beyond our control, we can only react.  But it also gives us the occasion to question everything; an opportunity to challenge and rethink our conventional norms and an opportunity to finally embrace technologies to greater benefit that have been available for some time.  Only a few examples are shared in this article.

The post COVID-19 world will be a different world;  don’t let this crisis go to waste.

by Joseph Paris

Paris is the Founder and Chairman of the XONITEK Group of Companies; an international management consultancy firm specializing in all disciplines related to Operational Excellence, the continuous and deliberate improvement of company performance AND the circumstances of those who work there – to pursue “Operational Excellence by Design” and not by coincidence.

He is also the Founder of the Operational Excellence Society, with hundreds of members and several Chapters located around the world, as well as the Owner of the Operational Excellence Group on Linked-In, with over 60,000 members. Connect with him on LinkedIn or find out more about him.