Is your organization ready to face the “new normal”?
My family and I were living in Beijing, China early 2009 when the H1N1 virus showed its ugly face. From what I remember, we faced lots of temperature posts at airports and office buildings, measuring everyone’s body temperatures as they entered the buildings or went through security lines at the airport. My children had their temperature taken as they boarded their school buses, and as they entered the school. Every day at the same time, for a period of two weeks, a person called us asking me for the daily temperatures of every family member and myself. We made sure to provide a number between 36.5C and 37.3C for each family member, since we were told by a good friend of ours, and doctor at a nearby hospital, that temperatures in that range would not raise any red flags.
According to the CDC website (https://www.cdc.gov/flu/pandemic-resources/2009-h1n1-pandemic.html), the H1H1 virus appeared in the USA on April 2009, and in one year, over 60M people had been affected, and 12.5K had died from related causes. Globally, the H1N1 virus killed somewhere in the range of 151.7k to 575k. Most experts average the number of global deaths by the H1N1 to around 203k.
So how was that different from today’s Covid19? I am not a health expert, nor I am an economist, but my best educated guess is that we were coming out of the 2007–2009 financial recession in many western countries and there was little appetite among those governments to create any obstacles to the (slow) economic recovery that we were all hoping for. I do remember traveling internationally between Europe, Australia and the USA without any issues and few restrictions. But that was then, this is now.
Most organizations have been living through unprecedent, complex and uncertain times, suffering great unplanned financial repercussions. Unless an organization is able to sell something vital or deemed essential for health workers or the consumer, maybe selling groceries or delivering food, most organizations felt the financial pain of the sudden death of the consumer demand. As economist Paul Krugman recently said, this recession is not a normal recession — it is comparable to an induced coma, where the doctors chose to induce a coma on a patient to limit the brain damage to the patient. Our economies came to a complete halt to limit the spread of the Covid19 contagion and the related deaths. Demand didn’t disappear — it vanished overnight, as the economic activity of entire societies was paused for the good that those societies. That has created a challenge unlike any previous economic recession did.
And we are not going to talk about the righteousness (or not) of those decisions. Marshall Goldsmith, consultant and author, said that when a decision is taken, two things are certain — one, only those in power and with power can take those decisions and two, one needs to live with the consequences of that decision. The faster we stop judging the decision and accept the outcome, the sooner we will be able to come up with a strategy to successfully navigate the new waters. Learn from the past and to let go to move forward.
I hope that the previous information provided the reader with a better understanding on the context in which we are now operating. We certainly are in an unknow territory. Some of us were able to keep on working from home. For example, I was able to teach my college classes in a synchronous manner from my home office. Students were able to take their classes online. Therapists, psychologists and counselors were able to continue supporting their clients through the phone or videoconference. Some were able to continue a certain normalcy from home during the lockdown. Others were not as fortunate. It is difficult to build a house from one’s own home. It is difficult to give someone a massage, clean their teeth, cut their hair, do a manicure… without the physical presence of the customers. In my case, all of my executive trainings were cancelled until June due to the restrictions on traveling and group gatherings. Some organizations chose to postpone all their physical development activities to 2021, limiting the exposure of their employees to airports and other cities.
In some cases, organizations have been able to adapt to the lockdown conditions, delivering foods and other essentials, creating a curbside take out, moving conferences online or choosing different mediums to introduce their services. For example, Netflix, Hulu and Amazon Prime brought consumers the movies that they could not watch at the movie theaters. Those patches to their processes will hopefully help them survive until the new normalcy is understood.
So, how can we adapt to the “new normal” that everyone is talking about? What does this “new normal” looks like? That’s difficult to say. Some people believe that social distancing is here to stay. Remote work will also affect certain industries, as it is embraced by organizations that previously hesitating on the efficiency and productivity of remote work. Focusing on the health of one’s employees and customers will be focal to any business activity. We know bits on what that new environment may look like, but it is very foggy fragmented view at this time. We could also try to predict some implications to our business based on the information that we have.
And certain basic marketing attributes will not change. The rules that govern consumer behavior will most likely not change. And understanding consumer behavior is the foundation to running an organization successfully and profitably.
Before we discuss consumer behavior, let me start by saying that each industry, each market, each organization needs to have a clear understanding on what changes may be affecting its future operating environment. As I tell my students and my customers, understanding as much of the environment where one operates will provide the necessary clues for future survival and growth. Running a situational analysis must be our first step. Make sure that the situational analysis is conducted by a diverse team, to get as many perspectives as possible. Include individuals from different functions, different ages, different backgrounds (educational, financial, geographical…) and if possible, industries. At the current time, including the competition may not be a bad idea neither. Leadership needs to promote a safe team environment, where team members feel free to ask tough questions, questions decisions and information, and raise concerns. Inclusive leadership is a must for best results.
One final word on the situational analysis — in today’s VUCA world, organizations should aim to collect as much information as possible with the understanding that it will never be enough. Decisions will need to be made with insufficient information. General Colin Powell has this 40–70 rule. He argued that one should make tough decisions when decision makers have at least 40% of the needed information, to avoid shooting from the hip and making mistakes, and no more than 70% of the necessary information. If an organization waits to have more than 70% of the needed information, the opportunity has probably passed, and someone else is already ahead of that organization. In this complex environment, we are aiming to solve dilemma which do not have a clear unique solution, but requires us to balance paradoxes and polarities.
Now to consumer behavior. Let’s start with the basics. Organizations need to identify potential needs based on the best situational analysis. What does the new customer want? Yes, companies may be able to rely on a number of traditional customers and the growth and opportunities will be on identifying those non-customers that no one previously considered. A need is generated when the gap between desired state and the actual state is wide enough that it generates a message to the brain that something needs to happen, a call to action to narrow that gap and get as close as possible to the desired state. The Corona Virus has most likely disrupted that desired state as well as the actual state of consumers. For example, with almost 30 Million people filing for unemployment, the economic status of millions of people has been disrupted.
The second idea that one needs to understand about consumer behavior is fear. The current pandemic has brought fear to many of our consumers. Fear is complicated. It is started in the amygdala of the brain, our reptilian brain, and has a tendency to shut down our front cortex, our logical and factual operating brain. The amount of uncertainty, distress, anxiety and dread that the media, the rumors and our own governments have fomented pushed people to take fear-based decisions — for example, hoarding toilet paper, avoiding Chinese restaurants, buying guns and bullets, cut operational costs by furloughing employees and retreating into a saving mode. Those are irrational decisions that we take out of fear, as a way to ascertain control over our environment. It is a way of feeling in charge or showing to others that we are the masters of our own destiny, when the reality is that the complexity of the situation was such that we were not in control. Remember my previous comments — people in power will take the decisions and we have to live with the outcomes.
Understanding where our customer is within that fear spectrum is important. Fear creates a bookmark in one’s brain that is difficult to suppress. In matter of fact, psychologically speaking, research shows that one needs to undergo a more dramatic and emotional experience to be able to erase or reclassify those fear experiences.
Finally, as consumers, we are also coming out into this new environment, seeking guidance and a better understanding. We are social animals that were forced to isolate. That was dramatic. Now we are coming out and we are asked to wear masks and gloves to go grocery shopping. We are asked to stay away from other people as they may be asymptomatic carriers of the disease. We are facing a series of new expectations that are changing the culture where we operate, as if we had traveled to a new foreign culture.
For instance, I come from Spain, a culture where one’s personal space bubble, the area around us that only a few people can enter, is very small. We are constantly hugging, touching shoulders, slapping backs, giving kisses as we meet new people, eating by sharing large common plates of tapas, spending tons of family time, visiting our elders regularly, gathering into large groups to celebrate different religious events… and now we are asked to stop or change all of those practices. We are asked to live under the parameters of a different culture. That has an effect on consumers.
In summary, organizations need to ask themselves the following questions. What are the new pain points that our customers are facing? What difficulties and challenges are our customers facing that keep them from reaching a balance between the desired and the actual state? How are the new cultural shifts affecting our customers? How can our organization address that out-of-balance opportunity and help meet the customer’s needs?
As Churchill once said, “Never let a good crisis go to waste”. Understanding consumer behavior is our gate to future and long-term success.
