A rapid response to a world of change

As pointed out in my last thought leadership editorial, the business environment that companies have had to face over the past two years has created a need for business rescue practitioners, business turnaround professionals, and the services that they offer.

When a golfer is approaching a hole and is already on par before they reach the green, they go into damage control. This activates a standard operating procedure that helps them minimise the damage that they face. The same applies for companies. Those who are not financially distressed have to now find a way to navigate the current environment in such a way that they manage the damage that their companies experience.

I recently read a report by McKinsey which offers some advice on how to achieve this. I will discuss the first two trends in this article.  

Launch teams fast and build as you go
The report points out that companies should create teams that will tackle current strategic priorities and key challenges facing the organization. That’s job number one—everything flows from it. But leaders should also understand that mistakes will be made. Maybe these teams won’t be the right ones a month down the road, but the model is built to be flexible and to shift when that happens. Teams have to make the best decisions they can with the information that’s available. Don’t worry about perfection; the key is to stand up teams and let them course-correct quickly.

The network itself must be built to learn, using information to update actions and strategies. In a crisis of uncertainty, the network spurs experimentation, innovation, and learning simultaneously among many teams, much like a neural network in which the whole “brain” is vastly smarter than the sum of its parts. There is also spontaneous learning in the face of challenges and opportunities at the individual, team, and networkwide levels.

The report points out that the evolution begins when the senior executive team—or a kitchen cabinet of the leader’s trusted advisers —creates a central hub that directs and coordinates the response while a handful of related teams operate as the spokes. These teams bubble up the challenges so the central team can prioritize them. In the context of the COVID-19 crisis, initial teams might focus on workforce protection, supply chain risks, customer engagement, and financial stress testing.

The model makes it easy to add a team later when you identify a need, or to disband a team when it’s no longer necessary or has accomplished its goal.

The report points out that it is important to launch two groups in particular: an intelligence team, which makes sure the network has a high level of situational awareness, and a planning-ahead team, which thinks through scenarios for the recovery and beyond. Each team should be small and contain a mix of individuals with cross-functional skills, acting with a clear mandate but also within guard rails that empower it to act. The leader should make it clear to all members of the organization, including those in the parts of the business that are operating as usual, that these empowered teams get to make the calls within the authority delegated to them and do not need permission from others. (Although, teams will seek guidance from the central hub team even when they are empowered to act without approval.)

Next, pick the team leaders. These individuals often are not the “usual suspects” typically put in charge of key initiatives. They need to be a good fit for the task at hand: creative problem solvers with critical thinking skills who are resilient and battle tested. They should also be independent and open to a range of different perspectives. Best of all, they should be willing to say what needs to be said, and to make tough, even unpopular, decisions—ideally with a track record of having done so in the past.

Work with the team leaders to staff their groups, keeping in mind what skills, experiences, and perspectives are most important. Each team must represent a cross-section of critical perspectives.

The report adds that, in addition to whatever technical or functional expertise people are bringing, you are looking for problem solvers who will come up with innovative approaches and who can learn fast on the fly. Just like with team leaders, you need individuals who have critical judgment, the courage to make bold decisions, and the ability to consider trade-offs and trust the data. These team members also need to recognize when specific expertise is needed and pull those experts in as appropriate.

Crucially, each team must also include and consider voices from people on the “edges”—the front line of an organization where the battles to respond to the crisis are taking place. While they may not be senior within the hierarchy, these people are closest to the customer or constituent and are likely to bring key information to the team.

The report points out that, finally, any given team should be small enough that it can split two pizzas (according to the widely adopted Jeff Bezos/Amazon rule).1 Any larger, and nothing meaningful will get done on the timelines required in a crisis.

As soon as the teams are set up, leaders should empower them to make decisions quickly. This will work only if they each have what military leaders refer to as a “commander’s intent”—a clear goal that allows them to make decisions within a set of parameters. This improves both the speed and quality of decision making. It also allows teams to respond to the dynamic demands of the external environment and is one of the strengths of the network approach.

Get out of the way but stay connected
The report points out that after creating the initial set of teams, a leader must shift toward ensuring that multidirectional communication is taking place—not only across teams within the network but also between these teams and the rest of the organization. To do this, there should be steady coordination with the central team hub, perhaps in daily standup meetings. The central hub can check in on progress being made and find ways to support teams and make sure they are using first-order problem-solving principles.

At this point, it’s time for the leader to step into the roles of catalyst and coach. As catalysts, leaders should identify opportunities, make connections across teams, spark ideas for the teams to consider, and provide resources to fuel those efforts. As coaches, leaders should regularly engage with team leaders and members, resolving roadblocks and helping them work through challenges.

The report adds that this second step is a balancing act: as the network forms and the number of teams increases and the teams make their own connections, the leader is pushing authority down and out but also staying tightly engaged.

Leaders will be most effective in this role when they are posing questions. For example: Is the hub leader effectively leading and supporting the team? If not, help them improve or replace them. Are the voices from the edges being sought and heard? If not, embolden the edges even more. Are the teams seeking approval from a leader when they could procced without it? If so, answer their questions with a question. Help them understand you trust them to make decisions.

The report points out that the goal here is to empower teams and support them at the same time, without micromanaging. This is what great coaches do: they listen to many voices and then make tough calls, even when they have insufficient or imperfect information.

Particularly early on, leaders and their close advisers will need to focus on how budgets and people have been distributed across the network of teams, ensure that the highest priority efforts have what they need, stand down or slim teams that are no longer as relevant, and form new teams as circumstances shift.

The report adds that, even after the crisis subsides, leaders can find a dynamic way of allocating resources across the organization. For example, in the “helix” organizational model, leaders and their top teams can shift people and money across the organization, ensuring the right efforts are applied to priorities.

Phahlani Mkombo is the MD of Genesis Corporate Solutions and is a Senior Business Rescue Practitioner