Critical Thinking. Analytical Models. Descriptive examples
This paper represents an updated version of the one published on the 15th of April 2020. To download the document, please visit the homepage.
As SARS-COV-2 spreads throughout the world, businesses are gearing up to adapt. More than ever, we need to become skilled in creative problem-solving.
To try and do our bit to help, we have created a compact, practical, business survival toolkit which provides analytical tools to structure your thinking/planning and examples of organisations that have successfully adapted to rapidly changing external conditions, so that you can future-proof your business in the challenging weeks and months ahead.
We propose to you three main analytical models, that will help you navigate through the current challenging situations. To better understand these models, we selected for you several examples that illustrate how businesses can become resilient, innovative, and adaptive.
1. Ask the Right Questions and Adapt for Resilience
In contrast to single-loop learning (which is often used for predictable and stable environments), which asks people how to do things right, double-loop learning asks what the right things are. Double-Loop Learning is associated with a far more fundamental question, which invites us to reconsider our basic assumptions and think beyond acting within simple patterns.
Picture source: https://doublelooplearning.co.uk/about/
TIPS: Single-loop learning stands for optimisation and efficiency, while double-loop learning stands for adaptation and resilience.
Read more: Argyris C., ‘Teaching Smart People to Learn’, Harvard Business Review, May – June 1991
2. Identify Your Core Competencies
To become resilient, it is important to understand your core competencies.
Core competencies are those things that you do for your customers better than your competitors. Knowing these allows you to ask yourselves how they could be transferred into new, more distant marketplaces. It is time to adapt, not optimise.
Core competencies have three primary characteristics:
“First, a core competence provides access to a wide variety of markets […] Second, a core competence should make a significant contribution to the perceived customer benefits of the product… Finally, core competence should be difficult for competitors to imitate.” Prahalad, C. K. & Hamel, G., 'The Core Competence of the Corporation', Harvard Business Review, May-June 1990
TIPS: Consider asking and involving your employees, customers, suppliers, etc. in identifying your core competencies.
Read more: Prahalad, C. K. & Hamel, G., 'The Core Competence of the Corporation', Harvard Business Review, May-June, 1990
3. Use Associative Thinking
Whilst managers are good at using a better understanding of their core competencies to identify opportunities that are cognitively close to their business, managers need to learn to recognise similar underlying patterns in distant markets and make the cognitive leap.
What core competencies do you have that are transferable to other markets?
For example, FujiFilm applied the Ansoff Matrix to leverage their photographic film knowledge to enter new medical and telecom devices markets.
Picture source: https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/
TIPS: check out the response from the defence and automotive industries in producing medical equipment for healthcare systems.
Gavetti, G., ‘The New Psychology of Strategic Leadership’, Harvard Business Review, July-August 2011
HBR Video on The Explainer: Core Competence [link: https://hbr.org/video/5146717725001/the-explainer-core-competence]
4. Make sense of where you are and identify suitable practice
The Cynefin Framework
It provides a framework for defining the nature of the problem, adding new dimensions for sense-making other than the usual tendency to simplify, standardize and create best practices. In a crisis, adopting a simple approach may push the business into a chaotic space, where recovery is very expensive.
TIPS: check out Dave Snowden’s video for how to use the framework.
Read more: Cynefin St David’s Day 2019 articles on Cognitive Edge blog [picture source]
Becoming resilient beyond COVID-19 [examples]
- Banca Transilvania has leveraged its powerful brand in a nationwide campaign meant to encourage customers to buy from local producers. The campaign #CumparaDeLangaTine/ #BuyFromProducersNearby in which bank employees talk about their favorite products and local shops promotes local businesses from bakers and flower shops to producers of handmade Christmas decorations.
- Entrepreneurs with experience in the IT sector and multinational companies and returned migrants have created online and physical food hubs helping local producers – from vegetable farmers to craft beer producers – to sell their products online and deliver them directly to customers’ doors. Online and physical markets such as Legume Verzi, Made in Cluj, and Sat pentru Oraș reunite local producers from the surroundings of the two of the largest Romanian cities – Bucharest and Cluj-Napoca.
- Romanian start-up from the MedTech sector XVision which uses AI algorithms to analyse lung X-rays offered its services pro bono to help speed up the diagnostic processes that assist radiologists in detecting medical afflictions created by the new coronavirus.
- Fitbit has found new uses for its technology in the context of a decline of wearables by partnering with Stanford Innovation Lab to explore data points provide by its devices in order to help researchers detect and trace the spread of COVID-19.
- The model of Kurzarbeit– promoted by business associations and companies in Germany has been adopted in Romania and other European countries consisting of a state-funded program that helps companies retain employees who can work reduced programs while part of their salary (up to 80%) is covered by state-funded schemes if certain conditions are met and companies benefiting from this program have seen their returns diminished during the coronavirus pandemic.
- Farmec Cluj has leveraged its core competence in Over The Counter (OTC) pharmaceuticals and FMCG healthcare products to launch hand sanitizer brands, supplying first-line health care workers and other public servants. Aware that this crisis presents an opportunity to familiarise customers with their products and embed new brands to grab market share. Cosmetic Plant and Dacia Plant have also launched new hand sanitizer brands.
- Taparo, a Romanian group specialized in producing furniture, has adapted several production lines and has become a leader in the production of surgical face masks, answering to the national need of basic medical equipment.
- In a time when airports and the aeronautic industry have registered financial losses, AirportLabs, an IT start-up (company) from Cluj-Napoca, has increased its revenues by digitalizing various European airports and make more efficient the existing processes and procedures.
- Understanding their core competencies and using associative thinking, pharmaceutical and biotechnology companies like Pfizer, BioNTech and Moderna, have used their capacities and cutting-edge knowledge in treating other maladies for developing in a record-time highly efficient vaccines against Covid-19.
- VentilaTM project is connecting medical professionals and academics using 3D technologies provided by a start-up based in Timisoara to produce ventilators. Can somebody use this experience, beyond the COVID-19 crisis, to create value and enter new markets?
Early Learning from Corona situation
- The end of Retail? After huge growth in online shopping will we go back to the traditional shops? Retailers will find innovative ways to leverage their core competencies or wither and die.
- Property value. Do we need to be in the office, the gym, or the mall physically? Gyms & trainers using online platforms to offer interactive classes and provide new services such as nutrition and well-being services e.g. 7 Card opened an online video hub for fitness and leisure activities. Companies like Emag are looking at office space more carefully, as remote working is having a positive impact on productivity for them. How many physical spaces will be replaced by Zoom, Skype, WhatsApp, Signal, Hangouts, etc.? See how 8x8.vc are defining this crisis as an opportunity to create demand.
- Try new things. Viziere.ro is a national platform aggregating competencies and resources for the production and distribution of face shields. Similarly, the University of Hull is working with a local moulding company to produce essential face shields to protect medical staff. Can any of those involved use this experience, beyond the COVID-19 crisis, to create value and enter new markets?
- Technology enables the associative leap. Giants like Apple and Google developing apps to trace the spread of infection, as a means of establishing credibility in new medical markets. Streaming is turbo-charging the convergence of tech & globalisation around media channels like TV.
Communicate with customers
- Use online platforms in order to connect customers to better leverage the existing use of core competencies. Eg. online baking courses delivered by bakery shops, wine tasting courses, online cooking shows delivered by restaurants, online tours and materials promoting holiday destinations. Hatfield House Bar in Belfast started delivering draught beer directly to their customers’ front door, as have producers of bio/organic food.
- Explore new types of products to keep your customers loyal. e.g. vouchers, membership cards, etc.
- Ask Customers to help you identify core competencies and where associative product and market opportunities could be leveraged.
- The commitment shown during the crisis represents an opportunity to reach beyond price if you can connect your brand(s) to customers' intrinsic needs, beyond any transactional value.
- Give. If you are able to help customers in a time of need it is likely to be unusual and may be transformational. Many will not forget….
How we can help you?
In this recession survival kit, we have shown how the use of 4 analytical models together can inform your decision making and enable you to thrive.
Transilvania Executive Education encourages and enables interconnected thinking and nurtures responsible leadership. We help companies and businesses to employ models of critical and analytical thinking and apply them locally in order to become more resilient and adaptive in the face of complex challenges.
TEE team [Andrew Taylor, Andreea Vornicu, Bianca Opris, Ovidiu Oltean]
Useful websites to continue the research:
Hull University Business School Special Webinar Series on COVID19 impact