One of the major problems in this corona crisis has certainly been that we - citizens and companies - initially massively underestimated the threat of the corona virus. Although the first warnings from China were already available at the beginning of January, we only began to draw serious consequences in the last two to three weeks. If we had reacted earlier, many things could have been avoided. But would such a scenario be realistic: Would we have introduced home office based on mere suspicion? Would we have allowed restrictions on our freedom of movement to be imposed on us? Would it have been considered reasonable for restaurants, shops, and restaurants to close? Would hospitals have ordered a million sets of protective clothing on suspicion? Would companies have produced goods in stock? Probably not. Apparently, we humans are bad at reacting to things that have not yet happened, even though they could happen with a certain probability.
Gloomy pessimist or positive prophet?
We only need to look at how we reacted in 2015 when Microsoft founder Bill Gates warned in a speech not about atomic bombs, but about a global pandemic as the real threat to humanity: namely not at all. Those who warn of supposedly abstract dangers are quickly accused of scaremongering or seen as pessimists. Especially in companies, such employees have a hard time. Warnings are dismissed as "abstract," warnings of impending market risks are drowned out in the boss's fervent appeals about how well positioned the company is. Even warning signs that something is going wrong in production, that safety regulations are being too loosely interpreted, that customers could be lost, are quickly halted on their way from bottom to top. The person quickly gains a reputation as a pessimist, a prophet of doom, and a brake. The corona crisis has shown us that this world perception must extend far beyond our own company. In today's global supply, production, and communication chains, events from far away can directly impact one's own company or its customers.
Take warning signs seriously
How can I, as an entrepreneur, recognize risks early enough to react faster than others? How can I create a basic vigilance throughout the entire company without declaring a crisis mode every day? How can I ensure that warning signs are taken seriously and not buried under daily optimism? How can I identify new business opportunities early and be able to quickly adjust my business model? I call this ability "Corporate Predictive Acting" as a preventive perception of existential risks and adaptive adjustment. In conversations with entrepreneurs about these questions, a fairly uniform picture emerges: They are all convinced that they have a good overview of the risks and can react quickly enough. They consider such risks as "special cases" that will eventually transition back into "normal" business life. They believe they are sufficiently equipped with emergency plans and crisis scenarios. According to most entrepreneurs, they are busy enough facing the challenges of everyday life and positioning the company for healthy growth to survive crises. Or they are fatalistic: "If an asteroid wipes out the Earth, it doesn't matter anyway."
6 steps to becoming a proactive-thinking company
Based on my leadership and management experience, here are six tips that can help companies increase their ability for "Corporate Predictive Acting" and adaptive adjustment. a. Shape the corporate culture in a way that warnings and indications of risks, developments, and existential threats do not get lost or dismissed as unimportant. Create a contact person outside the hierarchies for this purpose. Constructive suggestions are more likely to be ignored the more hierarchical the company is structured. Encourage employees to be critical towards you. Do not surround yourself only with yes-men. b. As an entrepreneur, personally clarify whether your risk awareness is pronounced enough or if you belong more to the hands-on managers who consider their professional optimism alone as constructive resilience. What type of risk-taker are you? c. Examine the risk systems in your company. Do emergency plans, crisis manuals, and multiple scenarios for quick changes in supply and production chains or your entire business model exist? Is your company flexible enough for such rapid and possibly massive adjustments? Are you thinking radically enough in case of a "shut down"? d. Conduct a crisis exercise in your company once a year. Even on cruise ships, a safety drill is standard before each trip. Create an awareness to react quickly to risks. e. Think proactively about radically different business models in case your core business collapses (crisis, legislation/bans, protests, etc.). What else can you do besides what you are doing today? What skills are gathered in your company? What else can you produce? In a completely different industry, if necessary? How radical can you change? f. Are you able to react proactively before being forced to do so - usually under significantly higher pressure? Is your company capable of reacting faster than the competition? Are you willing to do so? g. Processes that can be observed and proactively reacted to may include:
a. Political regulations/laws. b. Revolutions/civil wars/terrorism. c. Price development in commodity markets. d. Liquidity & financial situation/cost structure. e. Changes in sales/customer markets. f. Disruptions in logistics and production chains. g. Societal pressure (NGOs, zeitgeist topics). h. Labor market (skilled workers/minimum wage). i. Geological events/natural disasters. j. Extraterrestrial events. k. Epidemics/pandemics.
All of this can lead to an expanded view. Forward planning, planning into uncertainties, is not new for companies. But the ability to react faster than the competition to what may come, the ability for "Corporate Predictive Acting," should become one of the most important skills of our companies in the years ahead. This ability makes our economy and our country overall more robust.
