Action in business is rarely optional or indefinitely postponable. In past – way back in 2019 even, you may have had the luxury of much information and careful study routinely available on which to develop a solid understanding. But today? Things are changing so fast and unpredictably that once-essential understanding for decision-making often can no longer be achieved.
Lots of flying blind, which can produce some quite nasty results. Even fatal ones.
The loss of adequate understanding is being replaced by pseudo-understanding – thinking that you do understand but in fact, do not. Worse yet, few seem to realize that their understanding is limited and decreasing. They still feel that they understand enough to provide a sound basis for action.
Obviously, this is true in some cases but the majority appear to be drifting along on a growing set of mostly-untested assumptions rather than any real understanding. Many businesses today seem still to be counting (assuming) on a return to the Old Normal within the reasonably near future.
The result is a growing chasm between daily business actions and the foundational understanding needed to adequately support them.
Assumption: The Old Normal will return soon
It is becoming pretty clear that we will not be going back to “normal”, to the past, anytime soon. Maybe in a long while, but maybe never. Things keep changing at such a rapid pace that even figuring out what is going on has a short shelf life.
It gets worse. Understanding of the situation requires some degree of predictability. Today looks like this so tomorrow should look like that. With some reasonable degree of confidence. Unpredictability itself seems to be emerging as a fundamental feature of the business world.
How can you plan for action in such a dynamic, unpredictable environment?
And worse. Just when you think you have a reasonably good handle on the likely flow of events and situations in a narrow but important context, you have to deal with major uncertainties.
For example, suppose I know that my business is going to shift to online over the next months (at least) but I have no way of nailing down the extent of this shift. Will we be looking at 25% of our sales moving to online or 75%? We know the general direction (predictable) but we have no way to tell even roughly the magnitude and timing (uncertainty).
How can you manage a business under such conditions?
For many businesses, they deal with this lack of solid knowledge by assuming that a reasonably stable version of the Old Normal is on the way. They just have to manage successfully through a brief interim.
But what if this assumption is wrong?
A time of rapid, unpredictable, uncertain changes
Except for a very fortunate few, most businesses today must operate under very new and difficult conditions – rapid, unpredictable, uncertain changes. Some things are forced upon you by external factors such as lockdowns. Not shutting down, unless you are an “essential” business, is not an action option.
Can you just try to wait out the current turmoil by making as few as possible adjustments? But how long might you have to wait? What if the current turmoil is going to last a long while – perhaps longer than many businesses can survive?
It is beginning to look to me like the current situation is not going to go away any time soon. Not the “New Normal” that looks pretty much like the Old Normal but instead an extended period of unstable abnormality.
There are no rules to guide most of us as we try to cope with whatever is happening. We mostly have at best a dim and incomplete view of whatever it is that is going on out there. No rules, no real understanding.
But we still have to act every day despite this situation.
Understanding may not be possible initially
In many cases right now, you will be forced to act in the absence of any adequate understanding of the situation. Decisions must be made every day regardless of the degree of understanding. What happens, happens.
This is far from fatalism or resignation in the face of what happens. It simply says that we presently have few if any tools to deal with a business environment of this kind. So we do the best we can with whatever we have at the moment.
Suppose that situations and events are going to be fast-changing, largely unpredictable, and uncertain for an indefinite period. Doing what you have always done probably won’t work for long. Flying by the seat of your pants probably leads to disaster in too many cases.
Good news: there is at least one answer …
Act to understand
The idea behind acting to develop understanding is not new. You start in a promising direction and see what happens. You make course corrections as you go, based on learning from your prior actions. Good enough but not quite the whole story.
What about acting specifically to learn something you need to know. This of course is not new either. Piloting, trials, tests are all part of standard management practices. But suppose that your actions are designed specifically to develop an understanding of the dynamics and dimensions of a situation or trend?
This is research but directed not so much at developing facts but toward developing an actionable understanding of a complex situation. In the context of our business, including any extensions being considered, how is whatever-is-going-on at the moment likely to impact things that are critical to our success?
You might think of a set of actions that can tell you how the current context system is likely to respond. These might be small but carefully targeted. You want to learn just how this system operates through a number of low-cost, low-risk steps. Each of the action steps would be adjusted before moving ahead to reflect what you have just learned.
Umm … okay, but just how do you go about this in practice, like today?
Act in the world as it is and is becoming
Before going off on an understanding quest, it is important to, well, understand, that this is not intended to do anything but provide a context for action. You may not end up understanding much about whatever is happening out there but you want to understand just enough to act locally with some degree of confidence.
Why is whatever happening, and who might be to blame for this? Unless you have some power to fix those things, such questions are probably best left to philosophers, politicians, and prognosticators. We have businesses to run despite whatever is happening out these. Our concern is to succeed in the world as it is, whatever that may be.
The idea here is to build into actions that make sense to you a few elements that can add to your understanding the business environment. Some examples may help here:
- What are your new top sellers and why?
What’s selling best has always been a primary way to discover and understand changing customer needs. Is this product list changing appreciably? Well, maybe you are selling tons of cleaning supplies compared to a year ago. No big mystery why but you might want to ask customers what is missing that you might provide.
- Add an information component to your products
Your customers are facing the same chaotic environment that you are. Their needs are changing and maybe you can help them find out why. Then, without violating confidentiality, share what you have learned with your full customer base. Think Amazon via its reviews, except that you are the primary review source and the reviews are more aligned to solution and tips sharing. Perhaps add a blog to your website showing customers the best products or ways to use them.
- What can you move to online sales and delivery?
Look at products and services that you may be have been selling say at 5% of total sales in past. Could any of these be reconfigured in some way to increase the online sales? Many businesses still treat their online sales channel as peripheral and do not do much development. It may well be awkward or incomplete for customers.
In case I have successfully obscured the “understanding” aspect of each of these pretty common responses, let me be specific:
- In the top sellers list example, you would be trying to learn what is generating the sales increase and how customers may be using the products differently. What might they value as additions?
- Adding an information component aims at understanding and communicating the ways in which your customers are using your products. Shared information is itself a product value.
- Moving more products and volume online is a standard response to lockdowns and changing buyer habits. Instead of treating this as just another sales channel, you might be able to view this as a new business in itself. Whole Foods sells food and you can order online but the sheer volume of delivery today is amazing. My store has changed the entire interior storefront to serve delivery staging. Is food shopping becoming obsolete?
The understanding component is executed by using your current new action set as a learning vehicle. Do something but not just to see how well it works but how much you can learn while executing.
Learning and understanding doesn’t just happen
This learning component usually has to be built into the game plan and not simply treated as peripheral. You might think about assigning a dedicated resource to gathering, analyzing, and communicating this valuable (but only if you use it) information.
What you will learn is not just what customers value most but what they see as being valued additions or changes. You may be lucky enough to understand why but the why may not be as important as what is happening.
Customers may well be changing their buying habits and needs in response to the pandemic fear and lockdowns but you will probably have figured this out already. Does it really matter what is driving their changes in this case?
The understanding you most need is about the customer environment and its changes, many of which will be changing continuously. The mechanics for learning that you develop now will almost certainly remain useful indefinitely.
Real-time, hands-on market research that will be put to immediate use.
A test: Are you just acting or are you learning as well?
You probably have quite a number of action plans being implemented at this very moment. So here is the test:
Can you identify specifically how each action is being used for learning and understanding and how these two are being put to immediate use?
I can’t count the number of quite sensible initiatives that I have seen clients put into action without any learning component other than some primary business-related ones (sales increase, cost decrease, new customers, …).
Companies tend to just act – do something, anything – in response to major but poorly understood changes in their business environment. While some of this may be unavoidable in this new unstable abnormal, whatever you do should as much as possible contain an explicit learning component aimed at building your understanding of what may impact your business. The why is much less important than the what.
Anthony Walter on LinkedIn has a somewhat different take on the knowledge-action gap that you might find useful: “Bridging the Gap Between Insights and Action”
Why is it so hard to move from insights to meaningful action? In my experience, there are a multitude of reasons, some of which I will detail here (in no specific order):
– There’s no alignment between the business strategy and analytics
– The analytics team is missing critical skill sets
– There are cultural obstacles that derail the best of intentions
– There are no feedback mechanisms for understanding the impact of actions
There’s an oft-repeated saying “What gets measured, gets managed”. This is typically true, but is often to the detriment of analytics teams. In many cases, what is getting measured isn’t tightly linked to the business strategy, and so there is an unfortunate loop of measuring inconsequential activities, managing these activities, and then asking a year later: why are we measuring this again?
Capgemini’s Christopher Baird on LinkedIn gets very specific about what he calls “Test & Learn” approaches: “The Test & Learn approach to business innovation”. Although focused on innovation, this really applies much more broadly to learning through actions:
“More and more we are having discussions with businesses about a different way of approaching business challenges, from digital marketing to analytics and insight. A way of working which allows the business to inform their longer-term strategic decision making whilst seeing positive business benefits in the short-term. An approach which excites customers and empowers employees, whilst being cost-effective and flexible enough in today’s ever-changing digital world.”
“More and more we are talking to them about a Test & Learn approach. Test & Learn, simply put, is a set of practices that allows a business to try out new ideas and concepts, either with a small subset of customers or in a limited number of locations (e.g. in only a handful of stores) in order to understand the impact it has on factors such as customer experience, employee productivity and sales.”
Consultant McKinsey & Company talks about a continuously evolving “operating model” to deal with uncertainty: “When nothing is normal: Managing in extreme uncertainty”:
“Uncertainty can be measured in magnitude and duration. By both measures, the extreme uncertainty accompanying the public-health and economic damage created by the COVID-19 pandemic is unprecedented in modern memory. It should not be surprising, therefore, that organizations need a new management model to sustain operations under such conditions. The magnitude of the uncertainty organizations face in this crisis—defined partly by the frequency and extent of changes in information about it—means that this operating model must enable continuous learning and flexible responses as situations evolve. The duration of the crisis, furthermore, has already exceeded the early predictions of many analysts; business planners are now expecting to operate in crisis mode for an extended period. Leaders should therefore begin assembling the foundational elements of this operating model so that they can steer their organizations under conditions of extreme uncertainty.”