Podcast: Finding Equilibrium in Uncertain Times

podcast

Podcast: Finding Equilibrium in Uncertain Times


Protiviti Podcast Transcript Transcript

Kevin Donahue, Protiviti
Kevin

Most discussions concerning the COVID-19 global pandemic aspire to a path leading to some form of normalcy, a new normal. That pathway is often framed in terms of phases, with each phase leading to an equilibrium of sorts. In other words, the state of equilibrium will be defined differently with each phase.

This is Kevin Donahue, senior director with Protiviti, welcoming you to a new edition of Powerful Insights. No one really knows how this transition is going to work, since there’s no playbook for recovery from a pandemic that literally shuts down whole economies. Most likely, a state of equilibrium implies a different experience in which customer and consumer preferences, global supply chains, and the workplace are undeniably altered in ways requiring companies to refine their business models to remain relevant.

Protiviti has published a two-part series on finding equilibrium in uncertain times. I recently spoke to Protiviti Managing Directors Dolores Atallo and Jim DeLoach about part one in this series, Build on Your Strengths, which can be found at protiviti.com/bulletin. Dolores, based in New York, is a leader with Protiviti’s Risk and Compliance and Enterprise Risk Management groups. Jim, based in Houston, heads Protiviti’s Global Thought Leadership program and is a member of the firm’s Global Solutions leadership. Dolores, thank you for joining me today.

Dolores Atallo, Protiviti
Dolores
Good morning, Kevin. Thank you.
Kevin Donahue, Protiviti
Kevin

Jim, great to speak with you, as always.

Kathie Topel, Protiviti
Jim

Thank you, Kevin.

Kevin Donahue, Protiviti
Kevin
Let me toss the first question to you. Many pundits out there are talking about the new normal in the post-COVID-19 era, but what you and Dolores have introduced is this concept of finding equilibrium – or, I guess, states of equilibrium. What does that mean, exactly?
Jim DeLoach, Protiviti
Jim

Well, Kevin, it seems that everyone’s talking about a new normal or a next normal or whatever, and as Dolores and I formulated our thinking around the bulletins that we put out, we concluded that expecting normalcy may be too ambitious. It can imply an unrealistic state that’s close to the way of life we experienced pre-crisis. Now, while I don’t think many believe the clock is going to turn back to pre-pandemic behaviors, our thinking was that there will likely not be a single new normal. More than likely, we’ll see a phased transition.

At Protiviti, we have a view that that transition, we refer to it as "now, next, soon, and eventually". It occurred to Dolores and me that in general, businesses and their customers, employees and suppliers will be constantly evolving as we emerge out of lockdown. Therefore, as consumer and customer preferences, global supply chains, and the workplace evolve and are undeniably altered, companies will be at a position of having to refine their business model to remain relevant.

For example, consumers are not likely to gather and herd like they did prior to the pandemic – at least, not until traction with a vaccine is gained. Employees who were as productive, if not even more so, working remotely, they may not be anxious to fill up the freeway for a 75-minute one-way commute to clock in 9 to 5 at a high-rise downtown office building.

So, as the transition from the crisis and the change in the related market behaviors occur in phases, it is reasonable to presume that organizations might search for equilibrium with each successive wave of change – meaning, what we’re experiencing now and what we will experience soon, next, and eventually. This state of flux suggests that the most successful companies will be those that are the most resilient, and with that context, Dolores and I thought that the reference to finding equilibrium captured the dynamics of the challenge companies face as we emerge from lockdown.

Kevin Donahue, Protiviti
Kevin

That’s a great rundown, Jim, and as we’ve discussed, it definitely touches on me personally as well as many of those I’m working with right now. Dolores, one of the many challenges in finding these appropriate states of equilibrium is that the target continues to move. What are some of the variables involved that make this environment so difficult to predict right now?

Dolores Atallo, Protiviti
Dolores
Well, Kevin, there’s nothing that’s not moving, as Jim mentioned. The number one thing that’s not moving is the COVID-19 virus, which is an adversary that’s entirely agnostic and opportunistic, so every move that that makes as an opponent, we have to have a counterbalance move to stop it, board it, minimize it. As we’re trying to normalize society and execute business and stay afloat, finding our equilibrium, everything is changing, so it’s an ongoing voyage, but that’s why it’s so critical to be adaptable, as Jim mentioned. Every time you find a plateau, a safe harbor, something will change, and that’s the one thing that’s got to be kept in mind. When considering the current state, though, we shouldn’t panic, because if we take a step back, the current state has never been unchanging.

The current state is ephemeral, it’s fluid, it’s moving, and the people, the professionals, the businesses that have flourished in their professional lives, in their personal lives and in society have been those that can learn, and adapt and move forward, and that is why we have to look at the situation in the very same way. That’s why it’s not once and done, let’s plan, let’s execute, it’s going to be a V-shaped recovery. It’s really more, “OK, what’s on the horizon, and how can we plan?” It’s always important to consider, when you’re feeling safe and comfortable, look on to the next horizon, consider what’s coming. I think part of that will come through, considering that it’s a known unknown, and that time is a luxury and organizations must be nimble.

Kevin Donahue, Protiviti
Kevin

Thanks, Dolores. Jim, building on some of the points that Dolores just made, during this crisis, strong leadership, together with a strong culture, are vital for an organization. Why will these factors also be so vital in finding equilibrium post-COVID-19?

Jim DeLoach, Protiviti
Jim

Kevin, I think one of the most amazing things about this entire pandemic experience is how rapidly companies changed. They did that out of necessity, so restaurants offered curbside pickup to keep their top-flight chefs out working and functioning. Businesses having to lock down acquired the necessary technology to work remotely. Retail operations doubled down on digital channels.

Companies were changing out of necessity in a much quicker time frame than they would have otherwise, so changes and innovations that normally might have required a few months, if not even longer – 18 months, in one case that I’m aware of – the transition from ideation to implementation was operationalized in a matter of days, and all of this started at the top with leaders setting the line of sight for employees to focus on the desired end state with a vision that emphasizes the organization’s strengths during the lockdown.

Companies were searching for a way of finding equilibrium to meet customers and consumers, and the needs and realities their employees face and continue to operate, but more importantly, what we found during the lockdown, and what I think will be extremely important going forward, is that leaders will need to inculcate this innovative and agile thinking as part of a culture for embracing change. This is the underpinning of a resilient organization.

Companies should articulate a compelling business case for being an adaptive organization, establish realistic goals and well-defined action plans, and set accountability for results. Through words and deeds, the messaging from the top must motivate. It must enable, because wise leaders know that empowered frontline employees can make the difference between success and failure, and it all boils down to a flatter organization, fostering high-velocity, high-quality decision-making that is so critical to an innovative culture that can adapt quickly to changing realities.

Kevin Donahue, Protiviti
Kevin

Dolores, I want to turn to you and actually talk to you a little more about culture – specifically, employee engagement. What are some of the practices organizations should employ both during this crisis and once we start to emerge from it to keep employees engaged and connected?

Dolores Atallo, Protiviti
Dolores

If we think about these past – I think it’s nine weeks now – I’m sure all of us have had good and bad days, and when we think about that and we think about our colleagues in that way, I think it makes it a lot more human to think about culture. When you feel connected to your colleagues and to your organization, you’re going to perform better, but is this really about performance, or is this about really getting through this together and achieving the organization’s goals?

I think you have to build a lot of trust during a time like this, and it’s something that has to be earned. It’s really important, and we talk a lot about this at Protiviti – about being on one mission, being one organization, so people can feel engaged and connected and share the commonality of those things. We all have different things going on. Our personal lives – we’re all managing different things, so it’s really helpful to have a common mission and a common set of organizational goals.

Leadership plays an important role here on clear messaging: clear messaging about what’s going on ¬– that’s both good and bad news – as well as expectations from employees. What’s practical? What’s not practical in this current environment? I think that those are the kinds of things, going both ways, that help us to be authentic at this time that’s very, very different, and also, in playing to our strengths, we’re in a comfort zone where there’s a lot of discomfort. I think all of those things start to weave together a culture that will be more resilient as the pandemic subsides and as we go into the next phase, whatever this is going to be for back-to-work.

I think that it’s a really important foundation to build this trust, have this culture, have this connection – even enhanced communication among folks – and sometimes, if you asked me a few months ago about video calls, I’d say, “I’m not really a fan,” and now, I actually welcome them. It’s a great opportunity to connect with clients, to connect with colleagues, and share a little bit more personal relationship when we’re in self-quarantine. It’s also an opportunity to take this as a foundation, and the stronger the foundation, the more you can do with it, because we have to think differently.

We have to think differently about how to engage and be successful, so it’s a great time to encourage diverse perspectives, invite different people to the table to problem-solve. If you have built trust and you do have a strong culture, you’ll be rewarded at this time, where people really start to dig in and do the right thing.

Kevin Donahue, Protiviti
Kevin

Thanks, Dolores. That was a great rundown. Jim, I want to ask you a question that builds on something Dolores was just speaking about. In light of this pandemic, are organizations taking a renewed look at their plans for the unplanned? 

Kathie Topel, Protiviti
Jim

I guess the short answer is yes. One of the strengths that Dolores and I picked up on in issue seven of The Bulletin was that scenario planning was an essential skill and, in fact, a differentiating skill, because no one knows how this is all going to unfold. There’s just no playbook for dealing with a pandemic that literally shuts down the whole economy. There’s got to be a way of looking at alternative futures so that leaders of organizations and the infrastructure of the organization can plan out, “OK, here’s how we’re going to play, and here’s how we’re going to respond in searching for equilibrium if this scenario occurs.” That’s an essential strength.

We outline a number of ways – what we consider to be best practices – but the short and skinny is that basically, organizations should understand the critical assumptions they have going forward as we emerge out of lockdown and to the next phases that will be encountered soon, and to the ultimate “new normal” that is encountered down the road, and apply scenario analysis to identify the key variables that can render one or more of those assumptions invalid, and using that, focusing on intelligence gathering activities that can identify whether or not those key variables are changing, and if a variable changes, the impact, as it potentially could bring to pass one or more scenarios evaluated during the scenario-planning exercise.

The management team will have already done tabletop exercises to know exactly how to respond to that situation, and so that facilitates agility and resilience in what could be a very fluid and rapidly changing environment. One thing that we try to emphasize with this notion of “acting with intention” is, once you see a scenario developing, as you work out exactly what your response is, you act with intention, meaning, you foster an organizational culture that facilitates consideration of the impact of the change or the changing market realities on our critical business-model assumptions and incent management and employees to make the necessary changes and revisions to strategic, business and product plans, and so this is all about driving organizational resiliency, which is going to differentiate who wins and who loses in this new environment.

Yes, I think we saw a lot of it during the lockdown, primarily focused on “OK, how bad is our revenue decline going to be? How do we adjust to it?” That’s more of a reaction to an economic-downturn kind of thing, but now, going forward, hopefully, we’re going to see upticks and new demands for products and services, and we can go forward in the recovery, but how quickly that’s going to happen, no one knows, and so scenario analysis is an essential skill.

Kevin Donahue, Protiviti
Kevin

Thanks, Jim. Dolores, I want to turn to you to talk a little bit about third parties. Those relationships are going to be affected – and, really, third parties can affect an organization. How does an organization’s ecosystem of third parties fit in the plans and approaches in a post-COVID-19 world?

Dolores Atallo, Protiviti
Dolores

Right. An ecosystem exists all the time in business. It’s a community, and there are always moving parts. In the COVID-19 space, I can actually reference one of the hashtags they’re using to describe our world now: #wereallinthistogether. It’s even more true with your business ecosystem. Your organization will be impacted by your competitors, your suppliers, your partners in the fluid, current state and in the next iteration. That’s why it’s so important to find new opportunities, and you may even stumble across new opportunities as the business demand and the appetite for certain products and services changes.

We see, as Jim mentioned, there are winners and losers, so restaurants that are doing takeout and delivery may not be making as much money, but they may be staying afloat in the sense of equilibrium. That’s an example of thinking about your ecosystem in a different kind of way. Maybe they’ve had to change their menus. Maybe they’ve had to change other parts about their business model, but their ecosystem is functioning and supporting them to hopefully keep them afloat, and I hope we’re all supporting them.

These windows of opportunities are going to change over time, and the organizations that will be rewarded are the ones that will be taking smart risks, and maybe we can think about smart risks as things that get you where you need to go, so in some cases, it’s an 80-20 rule: Can you find supplies that meet 80% of your requirements, and can you get 80% of your things done rather than trying to be perfect all the time? Because in this pandemic, we know from our own grocery shopping that not everything is available.

What are the appropriate proxies that you can feel comfortable taking, and how can you prioritize the relationships, the products and services, that you interact with to make sure you can keep doing the things that are most important to you? This is, again, a time to be quite authentic. Then, how do you safeguard those to make sure that they’re still standing or maybe even enhanced as the pandemic moves forward? If you’re going to try something different, which you may have to do, perhaps it’s smart to pilot it to think about “Is this going to work, or not?” Because as Jim and I have discussed many times, it’s OK to fail – just fail fast. You can move on to the next option, but it’s important to try something, and it’s important to go on and use the ecosystem to help the business move forward and find the next level of equilibrium.

Kevin Donahue, Protiviti
Kevin

I thought about what you said, Dolores, around restaurants and the fact that more regulatory guidance is coming out from different jurisdictions saying that restaurants ideally should have menus online or available on an app for people to read versus having printed menus on hand. We’ve spoken previously about the advantage digitally mature organizations have in the market. How has this advantage been amplified today?

Kevin Donahue, Protiviti
Jim

One of the things that is so dramatic to me at this whole experience is that before the pandemic, I think companies were arrayed along a continuum around digital maturity. We make reference to that continuum on our website, which offers companies an opportunity, at no cost, to assess their digital maturity. We’ve made observations pre-pandemic that you got digital leaders, you got companies that are digitally advanced, you got digital followers, and you can compete successfully if you are an agile follower, so forth and so on.

Then there are companies that are digital skeptics and companies that are digital beginners. I think prior to the pandemic, many companies were looking at digital transformation, and they were either all in or they were contemplating, dabbling in specific areas. I think one of the comments that we make in The Bulletin is that in rapidly changing markets, it’s all about “Disrupt or be disrupted.” That’s a cliché that’s been around for a long time, but it is clear as a bell right now.

The pandemic has made very clear that making a compelling case that digital maturity is fundamentally about positioning the organization to compete effectively with digital leaders who have a hyperscalable business model that features a low-cost base and a lower dependency on people. If you want to compete and differentiate yourself from those who just are going to struggle to survive, you really need to enhance your digital maturity and become a player in the digital market. That could be the difference between competing to win versus just competing to survive. Dolores, you have any observations to add?

Dolores Atallo, Protiviti
Dolores

Jim, I couldn’t agree more. This level of disruption is an innovation driver as a survival skill, and the ability to see the landscape now and then see the next phase of the landscape is not only a key skill, it’s necessary to keep your equilibrium and to move to the next level. Digital maturity is going to reward organizations that do this because they’ll have the right information to be nimble, to be able to pivot and to make the best risk-informed decisions and, as you said before, act with clear intention.

Kevin Donahue, Protiviti
Kevin

I want to thank Dolores and Jim for joining me today, and thanks to all of you for tuning in. You can find Protiviti’s complimentary digital maturity self-assessment tool at protiviti.com/digital, and you can find part one in Protiviti’s bulletin series, Getting There Eventually: Finding Equilibrium in Uncertain Times (Build on Your Strengths), at Protiviti.com/Bulletin. I encourage you to subscribe to Protiviti’s Powerful Insights podcast series wherever you listen to your podcast content.

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Dolores A. Atallo , Protiviti
Dolores A. Atallo
Managing Director
+1.212.708.6323
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James DeLoach
James W. DeLoach
Managing Director
+1.713.314.4981
Linked