Asian companies and economies rebounded comparatively quickly from the Covid-19 downturn, employing lessons they learned from previous pandemics to triage their business portfolios and adapt to a chaotic new reality. Many forward-thinking U.S. companies followed closely behind. Facebook, Amazon and other large digital platforms could simply feast on the pandemic-fueled bounty for e-commerce and delivery companies, but many of the country’s top “real economy” firms, such as Walmart, also managed to accommodate the restrictions the coronavirus forced across the world, re-calibrating supply chains and adding amenities such as curbside pickup to sidestep the worst of the financial and economic fallout.
This need for this type of triage process might not feel quite as urgent as the coronavirus recedes, but the importance of constantly analyzing the business environment and paring out parts of the business that cannot adapt to a world in constant change will remain. Covid-19 simply laid bare the need for a continuous pursuit of adaptability and flexibility as new virus variants are coming, other pandemics ensue and other large scale VUCA disruptions are added on top, such as cybersecurity outages, climate change and geopolitical tensions with China. As the pandemic widens the divides between the haves (e.g. the large digital platforms) and the have-nots (e.g. most of the “real economy”), we will need a new framework to remobilize and charge ahead. To that end, we propose FLP-IT, a novel framework that flips our gaze to the future while taking into account the ever-changing variables that are reshaping our surroundings, environments, markets and lives.
The FLP-IT Framework
The FLP-IT framework sets out a series of analytical steps that will help individuals and organizations make better sense of the current environment, and then begin to turn the threats and opportunities they identify into growth going forward:
Understand the new forces, or the amplification of existing forces that create critical uncertainties and impact our lives and businesses. For example, what tech providers are positively or negatively impacted by the pandemic? Will new political administrations in the U.S. and Europe elevate or depress regulation of the digital economy and society? What will emerge from advancements in cutting-edge technologies that were unleashed by the pandemic? A fuller understanding of these new forces will help you more accurately assess how current events are transforming the settings in which firms operate and reshaping the business landscape.
As you gain a better sense for these key forces, determine the new and emerging logic developing in our societies, industries and fields. These days it is particularly cliche to hear about the “new normals” with which we need to cope, so look instead for the evolving logics that explain the evolution of your environment. Will our economies, industries and lives bounce back quickly once a vaccine is approved, or will we struggle to recapture growth and vitality? Will we be stuck to a geometry of crisis (e.g. the V-shape, W-shape, or Elongated Bathtub)? If we do roar back, how will we normalize business and society? Will we live in an era of continuous “Coronomics,” with a faster oscillation between contraction and expansion as every new virus and non-virus disruption hits? Will technocracies triumph as other countries drift toward populism and away from science?
With a sense of the logic at play in these turbulent times, visualize the new patterns and phenomena emerging from interactions between actors in your world. Who gains and who loses? Which business models will prevail? How will a decentralized supply chain change marginal revenue and costs? Will cities suffer brain drains as virtual work nomads seek new physical spaces, and will this phenomenon change spending, consumption and taxation? How will education and training change to allow workers far more flexibility to learn and earn simultaneously? And how will a hybridized workforce compete with the vibrancy of brick-and-mortar economies, mainly in the developing markets, as consumption and social interactions stagger?
Now, draw conclusions about the implications these forces, logics ( multiple plausible futures) and patterns will create for your company, community and family. For businesses, this might come in the form of a value chain impact assessment based on observations gleaned from the FLP steps in this framework. Where are the vulnerable links in the value chain, and where are the new opportunities to strengthen and diversify it? What specialized platforms might emerge, or what technologies could you develop in-house to enhance smart procurement and supply chains as the world moves toward a more systematic acceptance of open and frugal solutions?
The true value of identifying the implications of these forces, logics and patterns emerges from the development of a new portfolio of business activities, units and products that can respond to discontinuities with greater adaptability. To realize that value, though, you have to triage the existing elements of your portfolio. This might require the elimination of portfolio elements that cannot adapt to a constantly shifting “non-normal” – or at least accommodate a reality in which radical transformation will periodically occur. This frees up capital and attention that then provides oxygen for activities that are less rigidly pegged to one type of normal or one dimension (e.g. outside versus inside, digital versus physical, domestic versus international, or centralized versus dispersed). To that end, we recommend a focus on the use of digital technologies and new materials science to transform assets for utility in different market realities, such as selective lockdowns, changing health and hygiene policies, or the ebbs and flows of cross-border transactions.
Putting FLP-IT to work
The triage process is a logical destination for the entire FLP-IT framework. Indeed, we designed FLP-IT to integrate assessment, foresight and action in a way that helps individuals and businesses generate the kind of flexible growth that portfolio adaptability provides in a VUCA world – no matter how long the down cycles last or how widely the balances shift between digital and physical presence. Most portfolio triage decisions will be determined by the specific business, competitive arena or industry in question, but there are some generalizable recommendations we can make already. Each of the following recommendations offers an internal productivity investment or an opportunity for new actors to innovate and develop new solutions – and ultimately build more resilience in traditional and digital actors alike. How you apply these will vary based on who you are or, more importantly, who you want to become as you step through and emerge from the crisis:
Build healthcare surveillance into your operational model
The emerging future of work will necessitate new combinations of virtual and physical presence. “Hyperflex mode,” or the constant toggling between physical and digital, will become a key operating principle for most businesses. This will not be possible without steady vigilance for worker wellbeing and the resulting assurance of productivity.
Invest in remote facilities operations and new transaction processes between collaborators
New health and hygiene requirements will require more monitoring and command-and-control technologies for fabrication sites. Managers will need new digital/hybrid leadership techniques. And marketing and sales teams will need to craft new partnerships for event management, “edutainment,” and other solutions that foster human intimacy and help replace physical rapport-building protocols.
Increase supply chain redundancy and resilience
Working with AI-driven smart supply chain functionality providers (e.g. SAP Ariba, Coupa, Ivalua, Gep, Jaggaer or Oracle) can help companies gain intelligence on the health of their procurement processes and various vendors. This will enable faster switching and, with that, greater supply security.
Reconfigure your service or product delivery
Organizations will need to minimize human touch points and exposure to infections, putting special attention to the value proposition of new service or product delivery modalities. This plays into the emerging trend of “everything at a safe distance,” which generates new customer and employee intimacy problems for brands.
Consider new life-management solutions
Social distancing is straining relationships and finances are getting stretched by the loss of customers, jobs and furloughs. Meanwhile, the cybersecurity of both enterprise and home networks becomes more enmeshed and, potentially, less secure.. Software solutions that manage the new volatility on all these fronts will find their markets.
We will not see a single “new normal” for months if not years, and we more likely will need to adjust to a series of frequently changing “new normals” as we prepare ourselves for a world in constant transformation. Rather than hoping in vain for a return to what we once knew or giving in to the pain of what’s lost, we need to flip our gaze forward, embrace the uncertainty, and adjust our strategies and activities. The FLP-IT model does that, so we can triage our portfolios in ways that generate tangible value for the businesses and individuals we encounter each day.
About the Authors
Dr. Olaf Groth is a global strategist, author, adviser and professor focused on technology, disruption and discontinuities in the global economy. He is CEO of advisory thinktank Cambrian Futures and concept development firm Cambrian Designs, Professor for Strategy, Innovation, Economics and Futures at Hult International Business School, Professional Faculty for Strategy, Technology and Business & Public Policy at UC Berkeley’s Haas School of Business and a Global Network Member at the World Economic Forum. Olaf has held leadership roles in global enterprises and consultancies. A frequent speaker, commentator and author in media outlets he is also co-author of “Solomon’s Code: Humanity in a World of Thinking Machines,” jointly with UC Berkeley’s Dr. Mark Nitzberg and of “The AI Generation: Shaping Our Shared Global Future With Thinking Machines” (Pegasus, 2021). His forthcoming book “The Great Remobilization: Designing A Smarter World” with Dr. Mark Esposito and Dr. Terence Tse is due to be released in 2022.
Dr. Mark Esposito is a socio-economic strategist and bestselling author, researching the Fourth Industrial Revolution and Global Shifts. He works at the interface between Business, Technology and Government and co-founded Nexus FrontierTech, an Artificial Intelligence company. He is Professor of Business and Economics at Hult International Business School and equally a faculty member at Harvard Division of Continuing Education since 2011. He is an advisor to the Prime Minister Office in the UAE and a Policy Fellow at UCL’s Institute for Innovation and Public Purpose. He has authored/co-authored over 150 publications, 11 books, among which 2 Amazon bestsellers: Understanding how the Future Unfolds (2017) and The AI Republic (2019). His next book “The Great Remobilization: Designing A Smarter World” with Dr. Olaf Groth and Dr. Terence Tse, will be published in 2022 by MIT University Press.
Dr. Terence Tse is a professor at ESCP Business School and a co-founder and executive director of Nexus FrontierTech, an AI company. He has worked with more than thirty corporate clients and intergovernmental organizations in advisory and training capacities. In addition to being a sought after global speaker., he has written over 110 published articles and three other books including the latest Amazon best seller, The AI Republic: Building the Nexus Between Humans and Intelligent Automation. His next book “The Great Remobilization: Designing A Smarter World” with Dr. Olaf Groth and Dr. Mark Esposito will explore the post pandemic designs as we prepare for the great reset.