Six business lessons relearned from the Pandemic
Why the pandemic response has many parallels to common business problems?
The COVID crisis has been managed in different ways in most states in Australia. All over the world countries have adopted very different approaches. We’re not epidemiologists or pandemic management experts, but watching the politicians and health experts at work, we have noted many variations. This made us reflect on how businesses have approached problems of a similar type. We are consultants after all, so critiquing and comparing is something we are a little addicted to.
We recognise that managing the behaviour of an entire national or state population with
a deadly virus is a unique problem. However, we do see some parallels between that problem and businesses who have had to:
Change and manage the behaviour of large customer bases
Deal with sudden increases in workload of different departments
Manage adoption of new technologies or change
Design effective business processes to manage complex outcomes
This paper is less about advising governments and more about using the issues faced by governments as a reminder to business of the options to manage business situations. We’ve boiled these ideas down to six lessons that we’ll illustrate through first the COVID response and then discuss the business equivalent. The lessons we have focused on in this paper are:
Process management and the one size does not fit all rule
Mechanisms to create scale and flexibility in the face of variable demand
Management of customer behaviour
Learning from others as an indispensable form of corporate humility
Learning fast from mistakes also known as “fail fast”
Approaches to risk management for rapid change.
In each case we will look at the COVID-19 related examples and then discuss the solutions to similar problems applied in business.
The “One Size Does Not Fit All” Rule
During the COVID-19 crisis governments have been forced to use blanket approaches to many issues. Lockdowns are perhaps the ultimate one size fits all approach as they impact everyone without the virus in an effort to isolate a small percentage who may have it. Even during relaxations of restrictions, governments have also been criticised for blanket bans on things like “all sports” when some like Golf, Cricket or Tennis have built in social distancing.
We recognise that it is quicker and less effort to apply these one-size fits all rules. In the sports example, it’s much easier to ban all sports than have to pick which are safe and which are not. It is quicker and easier to have a single rule than differentiate and the same applies in business. We have written before that organisations shouldn’t “Tar all customers with the same brush” (see Chapter 6 of Your Customer Rules, Josey Bass). However, it is pretty common that they do so because it is simpler easier to design that way and perceived to be lower risk to have a single rule. The trouble is that this can put 80 or 90% of customers through a process designed for the 10 or 20%. This creates a lot of wasted effort for customers and the business.
Many processes also become cumbersome with a one size fits all rule. Bank loan applications often look for the same burden of proof of income and expenses for all
customers though many easily meet the approval criteria. In Australia we even have contentious regulation that forces this process. It makes far more sense to put those close to the margin under greater scrutiny. If we could design the process, we’d want the burden of proof to be more intense for those likely to fail.
It is more complex to design processes that use more varied rules and processes, but the benefits can be enormous. If an organisation can find a way to narrow a process quickly to the 30% who might or will fail, that frees up 70% of the redundant checking. It also fast tracks most customers who get a better experience. We call that “leaky funnelling” the process as we try and get as many customers to fall out of the funnel early.
While we recognise that it’s easy and quick to apply blanket rules, as designers we find it is worth assessing if we can avoid the down-side of these rules. Customers and business both benefit if effort can be applied where it is required. The effort in design is repaid through application of a better process.
Scale and Flexibility
Through the COVID crisis, in Australia, each state has managed processes like testing and track and trace separately. When Victoria’s second wave “hit” in July the local track and trace capability was quickly overwhelmed and is now the subject of a parliamentary enquiry. Meanwhile many of the other states had no cases and we assume idle capability in that area. Although some sharing of resources, it appears that different systems and processes in each jurisdiction prevented more extensive sharing and pooling of resources. Four months later, the reverse scenario had flare ups in other states while Victoria’s team had no cases.
Issues of variable capacity are common in business with seasonal peaks e.g. tax year end, variable workloads across a week or unpredictable events such as storms in insurance and transport. We have written several papers on mechanisms to create flexibility. Scale can help because a larger workforce often has flexibility through a greater capacity for overtime or extended hours.
One interesting idea that came out of the crisis is where some firms shared resources in “opposite peak companies”. When Qantas let staff go, a national retailer nearby was experiencing peak volume, so quickly leveraged that pool of resources at their busy time. This is something companies are beginning to explore more widely.
Other answers have proven successful include use of:
Increase part-time staff mix to create greater flexibility in peak times
Mixed work types of different priorities such as processing teams taking calls on busy call days and then being bolstered by call takers at other times
Blending channels such as branch and call taking or email and chat
Use of work pools such as university students who can be dialled up at short notice e.g Air NZ use this to deal with sudden weather events
Outsource arrangements that let an organisation to dial into bigger labour pools with flexible arrangements both on and offshore
Cut down processes that defer work or minimise the processing during peak periods
Temporary use of additional labour that can be stood up quickly for small parts of a process e.g. a human switchboard to better screen and direct calls.
These are among the many mechanisms that business and government areas like the ATO have proven to be effective.
Managing Behaviour Change for Customers
Governments all over the world have struggled to manage the behaviours of their population and adopted quite different change strategies from the laissez fair models of Sweden to the more dictatorial style of other regimes. Australian governments have had mixed results. The federal Government’s roll out of the so called “COVID safe app”
was disappointing. Similar rollouts in other countries seeking voluntary adoption had also failed with adoption rates in the 20% range. The Australian Government also made it “optional” and got a 25% download rate when the critical mass needed to be over 60%.
Based on changes in companies that we have seen, that outcome was entirely predictable. Making a change optional without penalty or reward is something few companies would do. Software providers have tried varying strategies to force customers to update with new versions. Microsoft makes it hard not to apply new versions by forcing downloads. Many companies haven’t given customers a choice to adopt extra security features such as two factor authentication for privacy protection.
Companies have also used price levers to “nudge” behaviour. For example, utilities have offered discounted bills if certain payment mechanisms are used or if customers pay on time. Some companies now charge for staffed service through some channels to discourage their use so airlines charge more for an assisted cancellation or booking than a self-service one. Companies have worked out that changing customer behaviour is not just about “release it and they will come” but they have taken time to learn these lessons.
The Humility of Learning from Others
In Australia through COVID we have seen different tactics used in different states at different times. Other countries such as Sweden, Taiwan and South Korea have taken very different approaches with varied results. Some of the Asian nations have used technology and data to track, trace and isolate at risk citizens. These techniques appear to have worked well. New Zealand demonstrated that a rapid “tough” response also led to a rapid ability to return to “normal” with a hard in/hard out type approach. What has surprised us is that there has been so little apparent benchmarking and learning across states In Australia and even less learning from other nations.
In comparison, Corporate Australia looks to benchmark, compare and learn from others frequently. It may not always be possible to share and compare with direct competitors. Instead, companies look for lessons and best practices across industries and overseas. Since 2004 we have run such a sharing forum in Australia called the Chief Customer Officer Forum in which twice a year more than 30 customer leaders from across industries share best practices and problems.
Many of them also look offshore. One company recently shared a case of finding a U.S. regional bank which had created a unique personalised banking channel that used messaging as a contact mechanism with a personalised banker model. The Australian business lifted and shifted the processes and technology to Australia which enabled a shortened project life cycle and reduced the risk. Another company revolutionised its workflow when they found an overseas business that had re-organised its workflow system without buying new technology. The Australian business copied the ideas and design and reconfigured their existing solution. It created productivity gains and better controls and reporting and was implemented without the cost and risk of a technology overhaul. Two great examples of learning from others.
Fail fast and learn fast
In Australia, there have been some notable failures in Pandemic management. Victoria’s second wave emerged from failed hotel quarantine protocols compounded by inadequate test, track and trace which led to over three months of lockdowns. NSW experienced the Ruby Princess debacle in which a COVID impacted ship was not managed leading to many cases spreading through Australia. In both cases the politicians deferred the
learnings by initiating lengthy judicial enquiries. These attracted much publicity and were thorough but took months to convene and hold.
Companies can also bury failures or mistakes and fail to learn from them. Recent enquiries such as the banking Royal commission and reviews by regulators such as APRA have exposed cultures that bury problems. In stark contrast, many companies are adopting methodologies that encourage rapid experimentation and learning using techniques such as Agile. These methods expect some failure and therefore promote the capability to learn from it. Many start-ups use these techniques as a form of business or market research. Large companies have adopted this approach for digital and mobile technology development. The use of these and “test and learn” techniques is now widely accepted. It is helping companies change faster and avoid risky large investments.
Risk Management Techniques for Rapid Change
The Pandemic has forced governments to make rapid policy responses such as lockdowns or massive financial support mechanisms such as the ATO’s Job keeper and Seeker packages in Australia. The lockdowns have had other health impacts such as reduced cancer screening rates and a dramatic rise in mental health issues among the young and vulnerable groups. Many outside government predicted these other consequences.
The financial support mechanisms had unwanted but predictable outcomes. In some cases, individuals received more through the allowances than they previously earnt. In other cases, there was little incentive to return to work because the payments were available even once work returned. The one off test of “company eligibility” in March enabled them to continue to claim benefits for six months even after their businesses recovered. This raised profits at the tax-payer’s expense. Within days of these changes, these issues were clear, but the changes were locked in for six months.
We apply test and learn techniques on all our projects to enable rapid progress but control errors. We find structured pilots invaluable as a mechanism to avoid over engineering design. We think a well controlled and measured pilot, is a better place to refine some aspects of design. This allows a rapid change process. It has costs such as creation of effective pilot measurement and well designed staff feedback tools. We provide feedback channels for front line impacted by the change to suggest refinements. This is also an inclusive change management strategy as well as an improvement strategy. These techniques avoid failure by not aiming for perfection.
A second solution used in business for rapid or high risk change is to bring in people to perform an external risk and impact assessment. It’s hard for a project team to consider all consequences as they are often too close to the change. Having another department or specialised change assessors look at impacts is invaluable. The faster the change has been designed the greater the risk that something has been missed or not considered and the more valuable an external assessment becomes.
In this paper, we have tried to draw parallels between some of the management challenges faced by governments through the COVID crisis and related business responses. We recognise that politics and business are different and therefore governments might struggle to lift and shift these business solutions. We hope the paper has been thought provoking and would be happy to explore the ideas mentioned in further detail. For more information email us a email@example.com or call 03 9499 3550 or 0438652396.