The COVID Economy: Agile Businesses Have the Upper Hand  

Dr. Chris Worley discusses the power agile businesses and leaders have in the new economy. As the world prepares to reopen the economy, certain businesses will have a competitive advantage and come out ahead of others.

“Plans are worthless, but planning is everything.” Former President Dwight D. Eisenhower

COVID-19’s impact on the economy and our society underscores the simple wisdom of Eisenhower’s statement. And from my perspective, it also highlights the preparation advantage of organization agility. Looking ahead to a COVID economy, there may be debates about how to — but few disagreements about the importance of — becoming agile, starting now.

Agile organizations have the ability to make timely, effective, and sustained change when and where it results in a performance advantage. Agility is not “brilliant improvisation,” as one researcher put it. For sure, we need Louis Vuitton repurposing perfume and cosmetic production lines to produce large quantities of hydro-alcoholic gels and a Portland-based distillery to produce hand sanitizer. We need CEOs to create collaboratives like When the pandemic hit home in the U.S., a whole network of mask makers emerged. If the need is clear and people can act in ways that are consistent with “who we are,” amazing, targeted, and quick actions are possible. Acting quickly is a characteristic of agility, but these are not the acts of agile organizations.

Unless organizations intentionally apply the lessons learned in moving swiftly to virtual work and the painful lessons of prioritizing efficiency over effectiveness, they will head back to their offices and witness the same old behaviors and motivations.

Brilliant improvisation depends on heroics. Quick action in agile organizations depends on planning and preparation. The difference is spared lives, less cost, and, if we are honest, less stressful Costco runs. Let’s first step back and ask how and why we got into this situation. Then, let’s describe what the principles of organizational agility tell us about recovering from and preparing for the next challenge.

Prior to the pandemic, the vast majority of organizations were focused on maximizing shareholder wealth and profitability through efficiency. A devotion to shareholders over stakeholders is a devotion to income and structural inequality, considers tax breaks an opportunity to build wealth rather than building a nest egg, and views attempts for a living wage as greedy. Meanwhile, devotees of efficiency take a dim view of slack, waste, and long-term sustainability. In return, efficiency produces the appearance of doing well financially, but winds the system so tightly that a disruption in any one part triggers a systems failure. You need look no farther than the so-called TP shortage to see this tight interdependency in action (not to mention the crazy reactions).

The COVID-19 virus is surely the trigger of this crisis, but a cold, hard look in the mirror reveals how these prevailing approaches to leading and managing organizations contributed to its severity. We knew a much more serious crisis was possible. We had stockpiles of ventilators in case of an emergency. But in a clear choice of efficiency over effectiveness, the ventilators were not maintained and had to be sent out for repair while people suffered.  And that’s a shame, a real failure of leadership. The mess the virus revealed was one of our own making, and we’re the only ones who can clean it up.

Moving forward, the principles of organizational agility tell CEOs to look at things differently. Despite the rhetoric, agility is not about decision speed; it’s about being prepared to act quickly. Agile organizations devote time to thinking about what might happen in the future and ensuring that the resources are in place to respond. Preparedness can include slack resources in key functions, cash reserves, or a set of decision protocols that allow CEOs to accelerate implementation rather than having to come up with brilliant decisions under pressure. There is no doubt deciding quickly in a crisis is crucial. Germany’s decisions to move early and fast allowed them to learn when the cost of learning was low. However, deciding quickly and being able to implement quickly are not the same.

If we learned anything from the agile organizations we studied, it was that the ability to make timely and effective change means being ready to do so. If you are prepared, you can act quickly – with purpose and precision. You honor the people you lead. If you are not prepared, you are forced to act quickly – it is reactive and wasteful. Instead of managing the crisis, you throw resources at the problem and sacrifice lives and livelihoods. Just ask our front-line health care workers. The cost of agility and preparedness is a little inefficiency; the benefits of agility are success through adversity and a more whole society.

A variety of leaders have offered a post-COVID vision of a more human, compassionate, and local economy. CEOs playing a symbolic role need to make statements like that. We need the people we look up to projecting confidence in the future. It helps us get through a tough day. Pre-pandemic, many businesses thought profit and compassion couldn’t go hand-in-hand; COVID-19 has created a space for U.S. and global businesses to rethink that premise.

During these times and in the aftermath, many businesses will learn the importance of agility. Businesses that worshipped at the altar of efficiency and shareholder supremacy will hopefully be weeded out and left behind. But we should make no mistake. Unless organizations intentionally apply the lessons learned in moving swiftly to virtual work and the painful lessons of prioritizing efficiency over effectiveness, they will head back to their offices and witness the same old behaviors and motivations.

Businesses that want to succeed in the long-term are not waiting to “return to normal.” They have already started transforming the way they prepare, the way they treat people, and the way work is done. CEOs that create an environment where the discipline of agility is encouraged and practiced will have the upper hand going forward.