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How Disaster and Crisis Create Opportunities
for Digital Leadership to Re-Design the Future
[4 May 2020]The Oracle at Delphi
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Delighted to Reconnect…
A Unique Community
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“Whatever comes out of those gates,
if we fight togetherwe survive.”
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Our SuperpowerAs a Species is cooperation
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Did I Mention Bacon?
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We are here todayto talk about…
Opportunities
The Pandemic creates opportunities
Hypothesis
Hypothesis
We have a chance
to Create a
Better World
Hypothesis
You have the opportunity
to create competitive advantage
Rodin Museum, PHL[8 May 2017]
Observation
Today, there is extreme variation in professional productivity
Boulevardier
Equal parts whiskey, vermouth
& Campari
AK Negroni Sbagliato
equal parts Campari,
aged Vermouth Rosso, French Champagne, ice
and an orange slice
During this Crisis…
Many companies & most professionalsare operating at lowProductivity [0-25%]
Which Gives Organizations Operating at 60%+ Productivity
Extraordinary Opportunity to Lap the Competition
Jerry Rice [‘85-’04]had ”relevant speed” Was not the Fastest Guy in the NFL
But he could accelerate and decelerate faster than anyone else[which means he could “get open”]
How are you movingVis a vis the competition?
Strategy Crises Re-Shape the Competitive Landscape
Work while others were resting/lamenting … and lap the competition.
The motion/progress of corporate America toggles between 0 and 100% during a pandemic.
Condé Nast and Axios appear to be spending most of their time laying people off or applying for PPP loans,
Facebook strikes a deal with JioMart in India.
While most firms and people are operating at reduced speeds, this is the time to get busy.
Something to Talk About Crises Re-Shape the Competitive Landscape
Who is playing offense?
Who is playing defense?
Something to Talk About Who is Playing Offense?
Jeff Bezos tells shareholders he is taking
$4 billion in profits and investing
to create the earth’s
1st provably safe &
vaccinated supply chain.
Biggest New Consumer category is virus testing
Something to Talk About Who is Playing Offense?
~ 2 years from hearing:“Alexa, please cut my health care costs in half.”
Something to Talk About Who is Playing Defense?
10-30% of retailers and media companies
could disappear
Too many stores in America – 24 Square Feetof retail space for EVERY American [8 in Europe]
Hypothesis
The pandemic gives you
an opportunity to change
how you think
Observation
There will be NO
Fall TV Season
No new TV Shows for next 8 weeks
Limited Sports
No Concerts
No Cruises
No Theme Parks
No Commute
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Something to Think About
Richard Artschwage
How will you allocate your cognitive dividend?
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Perspective
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Perspective
It’s a technique to keep young pilots from allowing their ‘self-preservation’ response from taking over
when an emergency happens, giving them time to consider their best next steps.
When confronted with a crisis, fighter pilots are taught to
synchronize the watch on their wrist with the clock on the instrument panel.
Perspective
Black swan events [rare and unexpected events with severe consequences]have come and gone throughout history
This is not our 1st Crisis/Black Swan Event
Perspective
1st Case of bubonic plague in Norway [Black Death] was 1348-49;
last outbreak in 1654.
Perspective
This is not a one off
“the likelihood of novel lethal pandemics is quite high, given the current degree of globalization”
Peter Turchin specializing in cultural evolution and cliodynamics — mathematical modeling and statistical analysis
of the dynamics of historical societies
This is not a “one off”
Which makes one think…
the investments you make to deal with this virus will pay dividends on the next virus
Perspective This is not our last crisis/Black Swan Event
Resiliency is a learnable capability
Winslow Homer, School Time 1874
Hypothesis
Resiliency should become a corporate objective
Resiliency can become aCompetitive Advantage
Rodin Museum, PHL [8 May 2017]
Post-Pandemic Strategic Thinking
Companies should pay MORE attention to resilience, -
“the ability to recover from difficulties –to spring back into shape after a shock…”
Resilient systems are typically characterized by the very features - diversity and redundancy,
or slack - that efficiency seeks to destroy.”
History Has Much to Teach Us
There is a
Crisis Management
Field
History has Muchto Teach Us
Three Mile Island; Chernobyl;Y2K; Tech Boom/Tech Bust; ‘87 Crisis; Great Recession;
9/11; AIDS; Ebola; SARs
Sandy Hook Elementary Shooting;Las Vegas MGM Shooting;
Katrina; Sandy;Pompeii Volcano; Iceland Volcano;
Fukushima Earthquake
There are many examples of things
getting better after
disasters & crises
History has Much to Teach Us
Post-Plague
The Black Death left in its wake populations that were healthier
and more robust than people who existed before the plague struck.
By the late 15th century, real wages were three times higher than they were at the beginning of the 14th century, before the plague struck.
Better World
In the 1850s, the cities of New York, Paris, and London rebuilt their sewage systems in response to a century-long
global cholera pandemic that killed >1.5 million people and ushered in a new age of
urban sanitation that spread across the globe.
Better World
After the Civil War, we adopted constitutional amendments to end slavery
and enshrine the concept of equal protection under the law.
Sunset at Gettysburg National Cemetery
Better WorldIn 1900, to rid Chicago of typhoid,
engineers reversed the flow of the Chicago River, thus halting the daily contamination of Lake Michigan,
the source of the city’s drinking water.
WWII led to the GI Bill & VA mortgages Better World
In Europe, the widows’ & orphans' pension funds led to the creation of the European social safety net
Celebration of Victory in Moscow’s Red Square, Soviet Union. May 9, 1945.
Better World
Johnson & Johnson emerged from the Tylenol Scare
a stronger & more respected company
With factories and vehicles idle, nitrogen dioxide levels hit lows not seen since the early 20th century;
Vehicle traffic in Los Angeles and New York has plunged about 90% from levels in January 2020 [StreetLight Data Inc.]
Better World
Better World Crises Shine a Spotlight on Problems
whenever crisis visits a given community, the fundamental reality
of that community is laid bare.
Who has more and who has less. Where the power lies.
What people treasure and what they fear.
Disasters can open up human reserves of improvisation,
solidarity and resolve, pockets of purpose and joy
Better World
Could the Global
convulsion
Better World
put us on the path to greater equality?
caused by the
pandemic
The Austrian economic historian Walter Scheidel argues that from the stone age onwards, pandemic is one of the only four events
capable of bringing about greater equality.
War, state collapse and revolution are the other three.
Better World
In his book The Great Leveler
he showed how the Black Death in the 1300s
led to the wipeout of a third of Europe’s population
and massively reduced inequality by raising
the price of labor.
Better World
Different World
New CompaniesSome of the country’s most important companies have launched during adverse times [GE, GM, IBM, Square, WhatsApp, Slack ]
New JobsY2K created the Indian offshoring industry
It is estimated that the U.S. needs 100,000 to 300,000 virus tracers
History Teaches Us…
The Bigger the Crisis, the Greater the Potential
for Material Change
Perspective
Thomas Eakins, 'Portrait of Dr. Samuel D. Gross (The Gross Clinic)'
The Virus is Medically Material
Perspective
The virus has killed more than 1,800 Americans almost every day since April 7.
By comparison, heart disease typically kills 1,774 Americans a day, and cancer kills 1,641.
One month of virus, Seven 9/11s of casualties
U.S. has 6% of world’s population and one-third of global COVID deaths
The Virus is Medically Material
Perspective
~2% of the American population
[620,000] men in uniform died during the Civil War
~ 420,000 Americans died in World War II.
The Virus is Medically Material
Perspective
Field Hospitals In Central Park
The Virus has had Material Impact on Day-to-Day Living
Cities are shut down
The Virus has had Material Impact on Day-to-Day Living
The Virus is Theologically Material
The Virus is Educationally Material
Students at Michigan State
University, Indiana University, Purdue
University, the University of
Michigan, George Washington
University, Boston University, and Brown
University
filed a lawsuit demanding
reimbursement for tuition,
housing, & fees
because the school closed its doors and transitioned classes to remote teaching
the first-ever recession by government decree
“It’s like a hurricane hitting the ENTIRE economy.”Neel Kashkari, President of the Federal Reserve Bank of Minneapolis
The Virus is Material Economically
“We just never imagined the economy turning off.”“There is no future if we don’t have an economic system that is always
on. We didn’t realize there was an off switch,” Mr. Hackett said. “We knew it might go into a recession, more like a dimmer switch, but off?”
Ford Motor Co. Chief Executive Jim Hackett
U.S. second quarter growth expected to contract 24%Goldman Sachs
1/3 if U.S. Workforce is at risk of unemployment
The Virus is Material Economically
Perspective Material for Theme Parks
Squawk Box [6 May 2020]
Perspective Material for Theme Parks
Squawk Box [6 May 2020]
Perspective
Even the Brits are
bothered.
The Virus is Material Emotionally
Zeitgeist
High Degree of UncertaintyMultiple Public Companies
Decide Not to Offer “Guidance”
Accelerated Digital TransformationTrends are not that much different, they are just accelerating
Let’s Talk about
Uncertainty
William Heath, March of Intellect 1828
UncertaintyAbout What to Do
& Who to TrustNo Playbook / Experts Don’t Have Real Answers
Prudence and rationality mandate “following the science”, but the science is not all that clear
This is a new disease and it has not yet been fully understood
Leadership Question We Might Want to
Come Back ToNo Playbook / Experts Don’t Have Real Answers
What should leaders do / say…
When they don’t know what to do or say?
Uncertainty About What to Do & Who to Trust
Historical Segue
During the Black Death, ethical doctors
“ran away” realizing their remedies exacerbated suffering.
UncertaintyAbout What to Do
& Who to Trust
Historical Segue
Those who took their place —the so-called plague doctor
or Medico della Peste —were often
little more than paid hacks and second-rate physicians
hired by desperate municipalities.
UncertaintyAbout What to Do
& Who to Trust
“If you want to go to the grave more quickly
and lose your money, get a doctor.”
"Doctors need three qualifications:
to be able to lie and not
get caught;
to pretend to be honest;
and to
cause death without guilt.”
Jean Froissart’s Chronicles
UncertaintyAbout What to Do
& Who to Trust
Plague doctors’ duties were far more actuarial
than medical.
Most did a lot more counting than curing,
keeping track of the number of casualties and
recorded the deaths in log books.
Origin of Contagion Masks
Took the Europeans 250 years to come up with a mask
[17th-century equivalent of a hazmat suit ].
The protective garment was created by
17th-century physician Charles de l’Orme (1584-1678)the chief physician to Louis XIII.
UncertaintyAbout What to Do
& Who to Trust
Took the Europeans 250 years to come up with a mask [17th-century equivalent of a hazmat suit ].
The protective garment was created by the 17th-century physician Charles de l’Orme (1584-1678) the chief physician to Louis XIII.
a grotesque curved beak designed to hold the fragrant compounds believed to keep “plague air” at bay.
Favorite scents included camphor, floral concoctions, mint, cloves, myrrh and basically anything that smelled nice and strong.
A wooden stick completed the look, which the plague doctor used to lift the clothing and bed sheets of infected patients
to get a better look without actually making skin-to-skin contact.
UncertaintyAbout What to Do
& Who to Trust
Ancient Medicine did not have a solution
Modern medicine does not have a solution yet
Public health professionals have practices that mitigate suffering/contagion
The Cognitive Environment Confronted by a Series of Critical Ignorances
Ignorances are Exposed[Fundamental lack of understanding of how
science / medicine works; how models/analytics work]
Uncertainty about the Shape of the Recovery
Shape of the Recovery
V-shaped:steep decline in GDP followed
by rapid bounce off the bottom
L-shaped:GDP fails to return to
pre-crisis levels for years
Square Root:Growth flatlines well before
reaching previous levels
U-shaped:down, flat and up again
W-Shaped: down and up, down and upEconomists have become
part-time geometrists.
Uncertainty about the Shape of the Recovery
Shape of the Recovery
Uncertainty about the Shape of the Recovery Shape of the Recovery
“The global economy & financial markets should transition from intense near-term pain to gradual healing over the next six to 12 months.
Our base case remains a U-shaped rather than a V-shaped recovery because the restrictions on economic activity will likely be lifted only gradually
and at different speeds for different sectors and regions. PIMCO
“The current economic decline is like a steep fall from a tall mountain. Then it may be a short, level valley as businesses start to reopen.
Virus outbreaks might cause this landscape
to be transformed into a series of rolling hills.” LYNN REASER Chief Economist, Fermanian Business and Economic Institute
Uncertainty about the Shape of the Recovery Shape of the Recovery
“Long gradual Recovery – looks like the recovery is going to be slow”Neel Kashkari, President of the Minneapolis Fed
“…gradual recovery beginning in the fourth quarter”Tyson Foods Inc. CEO Noel White
“We are not going to be living in a perfect world for quite some time.”Kevin Sneader, MP McKinsey
“We’re certainly not in the ‘V’ camp. We’ve been debating what the shape is. I think it’s an elongated recovery. That’s why we’re not rushing to invest.”
Blackstone Group Inc. President Jonathan Gray
Uncertainty about the Timing of the Recovery
37% of Americans believe the country will recover in 2 or 3 months
“…after 1918 flu came the roaring 20s.”Chipotle Mexican Grill Inc. CEO Brian Niccol
The French Revolution and the Reign of Terror gave way to Paris’ jolly Incroyables and Merveilleuses
After the 1918–1919 flu pandemic, it took five or six years until people got comfortable taking trains again.
Richard Florida, professor at the University of Toronto
Uncertainty What Does the Future Look Like?
Short Term
Tomas Pueyo - The “Hammer and the Dance”national lockdown - the hammer, followed by a new phase,
which he called the dance, in which essential parts of the economy could reopen
So we have to go out very carefully, in little bits."Uh-oh. We have a problem here in southern Georgia," or
"We have a problem here in the upper Michigan peninsula," or wherever we have a problem, and then you go back into hiding.
Accelerated Digital Transformation
Digital Transformation, a “irrevocable and unstoppable” shift
in business processesfrom physical atoms to digital bits.
Twenty-five years later, digital transformation languishes
as an aspirational strategy for most firms.
Accelerated Digital Transformation
The pandemic has turned businesses, governments and consumers from cautious beta testers into eager early adopters of
robot & drone deliveries
Before the pandemic, about 3% of U.S. grocery spending happened online; will probably come to rest ~10%
Accelerated Digital Transformation Societal A ha Moment – The Great Dispersion
General Recognition that healthcare & education can transcend geography – can be delivered remotely.
Elite schools will increase enrollments
Second Tier Schools will lower prices
Best Professors will make more money
Accelerated Digital Transformation A Time Box
On March 10, Harvard University instructed students to move out of their dormitory residences by March 13, and not to return to campus.
In all, more than 2,000 MBA and doctoral students and 233 faculty would not return to campus-based classes from spring break.
Instead, they would start online classes on March 23.
Accelerated Digital Transformation
Step 1: Build a minimum viable classroom
a task force led by a senior associate dean
multiple workstreams
Crowdsourced solutions
Issues
Connectivity issues for International studentsincreased network capacity to 10 times its original size, and VPNs by 5X
increased service desk capacity
Accelerated Digital Transformation
x
Step 1: Build a minimum viable classroom
a task force led by one of our senior associate deans
multiple workstreams
Crowdsourced solutions
Accelerated Digital Transformation
x
Harvard Business School CIO Ron S. Chandler describes a “brute-force digital transformation”
that enabled a “minimum viable classroom” in just 10 days, with the potential to change the venerable institution’s
business model for years to come.
Accelerated Digital Transformation
“As Covid-19 impacts every aspect of our work and life,
we have seen two years’ worth of digital transformation
in two months.”MSFT CEO Satya Nadella
“The three-month period we are going through is going to equate to three years of consumer changes
wrapped up in one quarter.” David Gibbs, CEO Yum Brands Inc.
Accelerated Digital Transformations
Companies like YouTube have already “temporarily”
shifted to machine learning automation to moderate content.
accelerated deployment of ultra-high-speed broadband bandwidth,
5G, IoT, and near-universal internet access, as well as critical improvements to
cybersecurity and data privacy.
Predictions Some are thinking longer term
We know that in the coming decades, populations will grow to more than nine billion people by
2040, up from just over 7 billion today.
Billions of people will enter the middle class and seek lifestyles and products that require energy.
Economies will expand once again.
Exxon Mobil Corp. CEO Darren Woods
Accelerated Digital Transformation
Barclays said Covid-19 had accelerated what it calls the “retail death curve,” the shift of business to e-commerce.
Over the coming five years, 30% to 40% of still-existing physical shops
will close, the bank said.
Transformation Skills Matrix
“cultural capacity”
“technical capacity”
Transformation Skills Matrix
Identify IT staff members who possess the essential skills needed to implement digital transformation platforms in the post-Covid-19 era.
Y-axis of the matrix, on a scale of zero to 10 represent what Thomas Lynch, the chief information officer for Suffolk University in Boston,
calls the “cultural capacity” of an employee to communicate, collaborate, think critically and be creative.
Along the X-axis, also on a scale of zero to 10, identify the “technical capacity” of an individual to work competently with
discreet technologies needed in digital transformation project.
Opportunity for Reinvention
Opportunities
…to strengthen & repair relationships…lock up talent
…to show empathy…to dazzle with safety measures
…to understand “outside the building dependencies”[e.g., supply chain, telecommunication infrastructure,
education system, childcare]
…to create new partnerships
Devote Time & Resource to Thinking
About the Future
Civil Defense [now FEMA] was the agency charged with planning what
to do during World War III —a thermonuclear war that would
have killed millions.
Built bomb shelters all over the country
in the basements of public buildings, equipped with survival supplies,
Ran weekly air raid tests
Devote Time & Resource
to Personal Health
good health has become a premium luxury product
Strategy Crises
Post-Pandemic
Are Things Going to:
A.Get BetterB.Stay the Same
C.Worsen
UncertaintyAbout How Post-Pandemic Impact
on the weight & variance of Product/Service Attributes
Uncertainty What Does the Future Look Like?
“Paris will still be Paris,”
We might be wearing masks for years.
We may well be eating at restaurant tables separated by plexiglas.
We might be going into the office on staggered shifts —some of us on Mondays, Wednesdays and Fridays,
others of us on Tuesdays and Thursdays.
reliable, close-at-hand farms
Uncertainty What Does the Future Look Like?
In Taipei, temperatures seem to be taken at every building entrance —at shops, malls, apartments, schools, workplaces, and offices.
Movements are tracked by cellphones.
Uncertainty What Does the Future Look Like?
“contactless” delivery of groceries and other essentials.
“Companies will bring their strategic stockpiles closer to the U.S., maybe to Mexico.”
Sridhar Tayur, a professor at Carnegie Mellon University.
Uncertainty What Does the Future Look Like?
With newfound free time, many people are catching up on sleep and likely experiencing more REM cycles — the sleep cycles
during which vivid dreams occur.
Future of Restaurants
Uncertainty
It’s not about whether or not drinkers will continue to consume, because they will. But it’s about how, where, or what they will consume? And the early results, and what we’re seeing at the
moment, show that consumers are continuing to purchase beer.”Molson Coors Brewing Co. CEO Gavin Hattersley
