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There might be a recession coming soon; or it
might come later. Economists are notoriously bad at recognising recessions
until we’re in one – but we do know, at least, that another one will be along
eventually.
Given this certainty, what’s the best way
to deal with a looming downturn? For most people, the instinctive response is
to prepare as if for disaster: nail up the windows, batten down the hatches,
tighten belts or whatever the metaphor of choice might be for stockpiling
resources, cutting spending and reducing exposure to risk.
Our instinctual response makes sense in the
context of storing food for a long winter, or in anticipation of a famine – but
in a more complex world than our ancestors faced, some of these reflexes can be
counterproductive, particularly the instinct to stop spending. Deloitte, for
example, reports from its latest survey of European CFOs that companies that reinvested
more during the last recession, particularly those who were more advanced in
the use of ICTs, achieved higher growth rates during the recovery. They
attribute this success to thinking ahead and planning to take early advantage
of the opportunities that inevitably arrive with a recovery.
Similarly, McKinsey partners writing in the
Harvard
Business Review say that during the next recession they expect companies to
invest in, and rely increasingly on, digital tools to improve quality, simplify
operations and boost productivity.
A recession, then, is an opportunity to invest,
thoughtfully and strategically, in tools that will boost your organisation’s
resilience and agility. Some of the most valuable tools are those that are able
to improve communication, transparency and accountability across the company.
For example, depending on their needs and
culture, some organisations centralise during times of trouble – others choose
to disperse. Whichever choice they make, visibility is key: decision makers
need to know what is happening at every level in the organisation, employees
need clear direction from their managers and leaders, and teams need to
communicate clearly across the organisation. Whatever level of confusion and
mismatch we might be able to get away with in good times, we cannot afford it
when things get tight. In particular, we need to take full advantage of the
combined brains of everyone in the organisation – we need to gather and use all
the resources of knowledge, skill, talent, experience and creativity we have.
In some ways this is common sense – but
then again, we all know common sense is not all that common, particularly when
people are feeling worried or fearful. One of the most dangerously self-defeating
reactions is to start hiding or withholding information, usually in the
entirely misguided belief that giving people access to an accurate picture of
reality will cause panic or encourage defeatism.
There’s a great example of this in the
deservedly acclaimed TV series Chernobyl. In the first episode, local party
officials agree on the night of the explosion at the nuclear reactor not to tell
the local townspeople what has happened – for their own good. It was nearly two
days before the town was evacuated. Other lies, omissions and concealments
contributed greatly to human suffering in the wake of the disaster.
Tempting as it might be to tell ourselves that
concealment of information was a disease peculiar to Soviet-era Russia, we all
know it’s not. Again and again, leaders withhold or soften the truth about
problems facing their organisations –
whether out of shame, fear, belief that they can fix it on their own, outright
denial or some combination of all of these.
The truth may indeed hurt – but avoiding it
always hurts more in the end. Leading people successfully through difficult
times requires the courage to share the truth – and to seek, then accept, input
from the rest of the organisation.
Only when everyone in an organisation has
access to all the information they need can they truly apply themselves to
fixing problems, developing new ideas and creating new opportunities. Choosing
and using digital tools that facilitate information flows throughout the
organisation is essential to building the resilience that’s needed to weather
tough times.
So if you find yourself worried about the
future, put your instinctive reactions on hold. Pause; reflect; look ahead –
and then choose the actions and investments that will strengthen your organisation
rather than weakening it.
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