BUSINESS UNUSUAL IN TIMES OF THE MASLOW’S LOW
HOW BCP SHOULD BE PREPARED?
AF Amru — Strategic Management Consultant at LM FEB UI
BCP necessity is beyond question since the study (Sheffi, 2005) stated that investors are more attracted to the company that covered their loose ends and brought their umbrella before the rain. Disaster, any kind, is not rain, it is a storm that blows the roof off, the umbrella has a slim chance of surviving. However, it should not be mistaken that an umbrella is still an important preparation and must be appreciated and valued accordingly. A company without any preparation has a lower probability of surviving a disaster. The idea of bringing an umbrella at all even when it is a storm that’s likely to come is still highly relevant in constructing a mindset of a crisis manager. Habit is the most important aspect of risk, crisis, chaos management, and other disciplines that rooted its concern over a precautionary, preventive, protective, responsive, and recovering concept-to-action over the unexpected event.
Habit — the behavior of the organization matters the most in differentiating the success from failure when the crisis hits the company. A company that is packed with cutting-edge Business Continuity Plan and equipped with advanced Crisis Management System still prone to fail the test of time when it comes to disaster IF the company’s culture doesn’t support the effective and efficient implementation of the prepared plan. Training and updating the plan in multiple drills should make the company well-prepared in the real-life situation rather than lingering solely on the fanciful all-is-covered document of BCP.
There are multiple standards and best practices that can be used to develop the cutting edge BCP document, the ISO 22301 (2019) and ISO 22313 (2013) are two examples of widely used guidelines to develop a company’s BCP document. However, the standardization of a BCP document has never been an issue to a company, as long as the company prepared one thoroughly it should be enough. The issue lies in the response phase within BCP stages (Mitigation, Protection, Response, Recovery). As for recovery, it is highly dependent on the company’s response in the moment of crisis. The company’s reaction is affected by the company’s preparedness, the BCP documentation plays a role in designing scenario-based how-to-react procedure, who is responsible for what and when-to-react. These functions of BCP must be utilized and the utilization of the BCP plans should be done repetitively to spark awareness and construct organizational habits. Scenarios prepared in BCP should reflect a realistic picture of the perilous period the company might face and any resolution offered should be feasible otherwise there’s no point in developing a BCP that is not actionable. Only when the BCP is ‘make sense’, the organization could accept the BCP simulation willingly.
One of the recurring premises in times of crisis that should be covered by BCP scenarios is that the economic challenges convergent into the circumstances of heightened VUCA (Volatility, Uncertainty, Complexity, Ambiguity) and this situation can be deduced into a condition of Maslow’s Low (or Maslow’s Minimum). Since the idea proposed by Abraham Maslow in 1943, Theory of Human Motivation with its Hierarchy of Needs is still stand-strong today, 77 years later. In its Hierarchy, often depicted in a pyramid-shaped diagram, Maslow’s ranked human needs from the most unnegotiable to the most advanced. Started from the lower end of Maslow’s pyramid, physiological needs such as breathing, food, water, sleep, and others, to safety that includes health, family, security, resources, and others, up to Belonging (or Love), to Esteem (self-esteem, confidence, and others), to the top of the pyramid where Self-actualization sits (creativity, acceptance, and others). The idea of a multi-level human needs corresponds significantly with socioeconomic advancement.
The premises laid as assumptions in the company’s BCP must consider the significant changes in the business environment that implies the company’s operation both directly and indirectly as a result of the crisis. Maslow’s Low premise proposed in this discussion concern about the sudden behavioral change in the company’s stakeholders, especially the customers. When a disaster or any other high implication crises significantly affect the customers’ life, the company should be able to quickly react to the incoming adversities. Disaster, both by natural causes or man-made, are instantly met with the customers’ survival instinct that heavily concerns on their survival rate. This survivorship mind reset the motivation level back from the lower end of Maslow’s pyramid where physiological, security, and safety are the most important. Whenever the customer’s motivation changes, their set of priorities follows. This can only mean a sudden change in their spending behavior that may directly (for B2C company) and indirectly (for B2B company) affect the company’s sales and operation. Thus, threatening the company’s ability to produce its services and then generate revenue afterward.
In Figure 1 — the company should be able to notify that in times of crisis the customers will sacrifice quality in exchange for quantity. This includes the paradigm shift within the customers’ spending behavior that tolerate the use of what is defined as inferior goods (to a certain minimum quality) to improve their chance of survival. For instance, canned food is more likely to be bought in this period of crises replacing the more expensive fresh ‘restaurant food’ that has shorter shelf-life as canned food has the advantage in a longer period. The company should be able to foresee this behavioral shock premise of customer’s risk-aversive tendency to explore and exercise alternative strategies in operation.
As the BCP should also cover the employee needs, the company can set up several effective scenarios to support its people through the difficulties. Applying a similar frame of reference as the customers and the employees in their struggle to build a micro-resiliency, the company can be more successful in designing the most relevant countermeasures. The company’s concern over the micro-resiliency of its people will lay a better foundation to enhance its resiliency in a mesoscopic scale (mesoresiliency).
The Maslow’s Low remains true across types of crisis and disaster. The company’s understanding of the necessity to ‘keep the engine running’ in the most pessimistic circumstances should be backed with the assumptions of basic needs-driven motivation that will not only help the company to expect the unexpected but also to maintain its operational maneuverability in the toughest of time.
LEARNING FROM THE LAST — NOT FROM THE BEST
The premises should be relevant to, at least, the previous crisis faced by the company or other similar companies within the industry. The lessons learned should not be limited to internal experience. The case studied from other company experiences should provide an efficient way to mitigate and plan any action to be taken as a response to the crisis that has never been experienced. Learning and mitigating are two elements embedded in a short closed-looped cycle that continuously evolving through feedback and adjustment made from repeating trials. Exercising the BCP on regular basis is a priority, especially if the company hasn’t experienced any ‘life-threatening’ crisis in a long time.
There is no consistent or an all-time champion when it comes to dealing with disaster. Best practices are hard to find, as it is hard to formalize a definition of being-the-best in the context of having successfully survived a crisis. Every company’s survival story is worth listening to and notetaking as long as the company is not trapped within a survivorship bias which resulting in the misperception of the variables believed to significantly determine the company’s survival are, in fact, only superficial. This ‘learning from the best’ way of thinking can mislead the policies prepared by executives to ensure the company’s future survival. Instead, the company should learn from the last — updating BCP is always an on-going process, even during a crisis (see Figure 2 below). As there are worse things than a disaster, a double-disaster is one example. A storm with thunders is worse than a storm alone; a flood in times of pandemic is worse than a flood in times without pandemic. The BCP must be able to consider disasters as a parallelable event rather than an exclusive one-at-a-time event. Therefore, updating the BCP in times of crisis is crucial in enhancing the company’s adaptability and shorten its reaction time. Surviving a crisis alone is enough to see it as a success story. At the same time, other companies might fall into an operational comma state in which they are forced to shut down its production line and hibernate most of its prospective assets.
Normalcy is the phase where people’s risk and spending behavior is stable over a considerable period. When shockwave of the crisis hits the people and the impact is significantly affect their survival rate, they’re forced to adjust their spending behavior. As the future becomes more uncertain, keeping as much resource as possible is only natural to preserve the survivability. This behavioral shock threatened the company’s future both in operational and financial aspects.
There is no reliable method in measuring how long does a crisis stand. But there is a way to identify what crisis phase is we currently facing. Explanation in Figure 2 shows the predicted customer’s behavior within each phase of the crisis. The customer’s spending behavior highly correlated to its risk behavior, whether it is risk-seeking or risk-averting. The scale of the crisis, if large enough to force changes in customer behavior, should not be underestimated based on its low likelihood. The ‘Black Swan’ disaster could halt the company’s business activities altogether in an instant. Earthquake, Tsunami, Pandemic, and War are some examples where the company should invest their attention to plan the most promising responses and tirelessly practice to encounter the situation. As the customer affected, their risk-seeking behavior will turn into risk-aversive and if the condition worsened, it can be a loss-aversive behavior that can cause a nationwide economic slowdown, if not an implosion.
CONCLUSION: THE CONTINUITY OF BCP
The most important aspect of the BCP implementation stages (colored dots in Figure 2) is the mitigation phase that continuously updated throughout the crisis. Mitigating the crisis is the number one purpose of BCP but preparation in post-crisis market re-entry is one of the BCP’s most significant unseen potential. BCP that is updated throughout the crisis should be able to observe the changes in customer’s behavior and predict the market characteristics in the post-crisis era. In doing so, the company has earned a head-start through its BCP advancement. As standard BCP provides a continuity plan by offering solutions to the scenarios where the company’s future is in peril. The advanced BCP provides the continuity over its standard BCP function, while many have mistaken the BCP as a ‘one-time parachute’, the company can enhance its use as an ‘inexhaustive wings’.
