The character of this recession differs from anything that managers have experienced and — despite signs of recovery — it is far from over.
Disbelief and uncertainty prevail. BDO’s Business Confidence Survey for May showed the largest monthly decline, from 103.3 to 97, since 1995. Hardly collective anticipation of a brighter tomorrow.
Even the tools of management were formulated to function in a different, more stable environment. Peter Drucker, the management expert, and his followers said nothing about what we face.
I have no doubt that there will be a future period of economic prosperity stimulated by a new leverage cycle, but before that we must journey through the phase of early recovery in which uncertainty dominates both in terms of what lies ahead and how long this phase will last.
The danger of this early recovery phase is that managers may believe that the recession is more or less over and get drawn into an inappropriate mindset — survivor mentality. For example:
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Relief: directors may relax and celebrate because they seem to have survived.
Anticipation: the tendency to become impatient with the pace of recovery and to act prematurely.
Expectation: belief that survival virtually guarantees prosperity as the viability and robustness of the current business model has been validated.
Resumption: regarding the recession as a pause after which conditions preceding the decline will re-emerge.
The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself Survival during this postdecline phase is not guaranteed by organisational robustness, nor does endurance assure a progressive future. All survivors of the recession are not reborn equal and there is a significant difference between the prospects of healthy survivors and those of damaged organisations.
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So if managers cannot rely on their experience or their tool kit, how should they address the challenges that will emerge as the economy exits recession?
George Bernard Shaw’s insight into the nature of the individuals who facilitated progress remains apposite. He said: “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”
The central problem is that the individuals who are deeply embedded in organisations are reasonable and are unlikely to embrace transformative change. They tend to resist strongly proposals to abandon things to which they are attached emotionally or changes that affect their economic interests negatively.
New people joining organisations at a senior level are in the best position to introduce radical thinking as their perspective and dispassion enables them to question entrenched concepts.
But the recruitment of disruptive individuals (Shaw’s unreasonable people) is frequently avoided and anyone within an organisation who exhibited a tendency to non-conformity was probably ejected previously as an unnecessary disruptive influence, not a team player, a loose cannon etc.
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So radical change usually becomes possible only when the presiding reactionary authority is replaced by a new regime.
The new “unreasonable” individuals will seem to be incompatible recruits who evaluate what is feasible or desirable without concern for tradition or past success by applying intellectual horsepower undeterred by complexity.
They use superior communication skills to persuade new colleagues that, contrary to orthodoxy, significant change and the risks it creates is preferable to attempting reversion to the pre-turbulence state.
Their action begins a disruptive process that adds organisational turbulence to existing uncertainty. But by eschewing a radical approach, many organisations fail to transcend the early recovery phase either because they are insufficiently flexible or act too late and cannot survive the subsequent, now magnified, turbulence.
Both the government and private sector organisations should create the space for the disruptive individuals who will question any complacent survivor mentality and who are adept at implanting change. Our progress and prosperity depend on it.