How Vigilant Firms Will Prevail When 'Coronachaos' Subsides

By George S Day and Paul Schoemaker
June 11, 2020

Vigilant firms are better prepared to absorb the shocks from “Coronachaos” and emerge stronger when the pandemic abates. Firms like Agilent, Intuit, Sysco and Amazon have the leadership orientation, economic resources, managerial talent and organizational capabilities needed to seize emerging opportunities ahead of their more vulnerable rivals.

Vigilance is a collective capability characterized by curiosity, candor and openness to diverse inputs. It is the antithesis of myopia, siloed thinking and being held captive by outdated conventional wisdom. Vigilant firms differ from their vulnerable rivals in many ways, including the open-minded posture of the leadership team and their collective investments in foresight capabilities that give them a significant head start. Their boards engage the executive team in dialogues about the future through the strategic questions they ask, their diverse perspectives and broad business experience, and the wider networks they can tap into.

Read more...

How Boards Can Help Navigate Coronachaos

Our research show that the resilience of vigilant organizations in turbulent times comes from four main strategic drivers that work together. We studied 118 international companies (detailed in our book, See Sooner – Act Faster: How Vigilant Leaders Thrive in an Era of Digital Turbulence), to measure the contribution of each driver to their vigilance advantage. We also discussed instructive case example of leaders how orchestrated these four drivers in such companies as Adobe, Mastercard, Philips and Shell.      

Leadership commitment to vigilance is demonstrated by an openness to weak signals from diverse sources, encouraging everyone to explore issues outside their functional purview, and thinking outside the box. The leadership team focuses externally and nurtures curiosity throughout the entire organization. They play the long game.

Investments in foresight are made systematically, perhaps through centralized foresight units for scanning and developing possible scenarios to understand more deeply the key uncertainties. Before finding out how these uncertainties resolve themselves, the organization proactively develops a flexible portfolio of real options so they are better to act faster as needed.

Strategy making processes are flexible and adaptive by adopting both an “outside-in” and a “future-back” approach. Thinking from the outside-in allows leaders to have deeper insights into changing circumstances and show empathy for the struggling customers, suppliers or partners. By “feeling their pain,” they can make wiser choices. Future-back thinking is about envisioning what it takes to win once the intense uncertainty subsides, and then using that future image to plant seeds now and also relieve some of the near-term pain of their people, customers and suppliers.

Coordination and accountability mechanisms in vigilant firms are properly moored in place, and information is shared readily with those who need it. By flagging and redressing uncoordinated activities and haphazard initiatives, the leadership team reduces decision-making ambiguity and creates the right conditions for continued vigilance. As soon as the warning signals about the pandemic were detected, vigilant firms created “plan ahead” teams to think about the future and evaluate promising initiatives from across the firm.

While the leadership team is addressing the immediate imperatives of firefighting and keeping the ship stable, they must also allocate some organizational attention toward thriving in an uncertain future. As Nietzsche wrote “That which does not kill us, makes us stronger,” and that should be the clarion call for vigilant organizations amid the current Coronachaos. In ordinary times, vigilance is mostly about scanning the periphery and better handling curve balls that may come your way. But in these extraordinary times, when black swans and a vicious virus pull everyone down in tandem, vigilance is also about reinvention and orchestrating greater resilience for the next time around.

This is not “resilience” in the usual sense of simply bouncing back and returning to normal. Instead, vigilant organizations ask: What should we be ready to do when we return to a “new abnormal” since the world post-COVID-19 will remain different in many ways? Individual directors in unison with the board can stimulate this kind of thinking by asking: What can we learn from the ongoing tumult and chaos? What must we do now to gain a competitive edge in the future? What are the organizational impediments to upgrading our vigilance capabilities? What strategic actions and change initiatives should we launch to put us in a stronger position for the future? Vigilant leaders create mental space to get everyone prepared for whatever is next coming over the horizon, even while fighting off alligators and tiny RNA strands of a miniscule virus in the present.

George S Day is the Geoffrey T Boisi Emeritus Professor at the Wharton School (University of Pennsylvania) and has served on 10 public and nonprofit boards of directors. Paul Schoemaker is an academic, author and entrepreneur. He served on the faculties of the University of Chicago and Wharton, in addition to having built and managed various companies in the U.S. and Europe. He served on nine boards, profit and nonprofit, and was the chair of several.