In 2018, we published an article, Excelling in a VUCA Environment Requires a Learning Mindset, exploring how corporate leaders excel in a dynamic business environment, which we characterized using an acronym developed by the U.S. Army in the mid-1990s—VUCA. VUCA stands for Volatile, Uncertain, Complex, and Ambiguous and was coined by the Army to describe the global operational environment after the Cold War. In that article, we presented five strategies for success: shaping organizational culture around mission and values, leveraging technology, aligning organizational structures, establishing a learning organization and developing leaders.
After the Covid-19 global pandemic hit in early 2020, we wanted to learn more about how these strategies were employed during one of the greatest disruptions in a century; you might call it “VUCA on steroids.” We wanted to know what it was like for executives and their organizations when Covid hit. Were they able to maintain their corporate culture, and if so, how did they do it? What strategies, which we identified in our earlier study, were successful, and how did they put these strategies into action? What will the “next normal” look like for their organizations?
To answer these questions, we interviewed six CEOs/presidents from a variety of industries (two of whom, as indicated by the asterisk, participated in our 2018 study):
Joe DePinto* – President and CEO, 7-Eleven
Tony Guzzi* – Chairman, President and CEO, EMCOR Group
Ken Lamneck – President and CEO, Insight
Ameet Mallik – EVP and Head of U.S., Novartis Oncology
Antonio Pietri – President and CEO, Aspen Technology
Doug Sieg – Managing Partner, Lord, Abbett & Co. LLC
All six of the leaders with whom we spoke have participated over many years in leader development training. They have studied and applied the strategies for success we outlined in our first article, and so we looked forward to hearing how they implemented those strategies once the Covid pandemic hit. In general, all six companies have weathered the pandemic successfully, and in some cases, even grown. How did they do it?
To start with, the Covid-19 pandemic was not their first experience dealing with crisis. All had faced earlier disruptions to, and uncertainty about, their businesses caused by the Great Recession. In addition, two others faced a crisis within the past five years. AspenTechnology (AspenTech), which makes equipment for the oil and gas industry, believed the shocks of the oil crash in 2015-2016 significantly disrupted their primary industry. EMCOR, at the end of 2019, dealt with a ransomware attack that had a significant impact on their entire IT infrastructure.
In all cases, these executives realized the importance of learning from, and leveraging the lessons of, a crisis. As Insight’s Ken Lamneck put it, “they are infrequent [crises], but you’ve really got to adhere to them; it becomes a rallying cry for everybody, a situation that you can take advantage of. When things are going well, it’s hard to get everybody to rally in the same direction, whereas a crisis allows us to do that.” A crisis unfreezes the organization and can set the stage for change.
“There are three things we realized about crises,” said Lord Abbet’s Doug Sieg. “While no two crises are the same, they do have three things in common. First, they last longer than you think they’re going to last. So, you need to develop resilience. Second, they tend to hurt more than you think they will hurt. So you have to sensitize the organization to the fact that there’s going to be pain And third, all crises expose weaknesses. So, we realized we needed to communicate, and we needed to understand in real time where our weaknesses were in order to attack them.”
Culture Matters: Shape it before the crisis; reinforce it during the crisis
All the executives had anticipated the need to create a more adaptive corporate culture long before the pandemic hit and had already begun transforming their organizations to face the next crisis. They were ready for Covid-19. As Antonio Pietri of AspenTech said, “The 2015-2016 oil price crash prompted cultural transformation that was in place before Covid and allowed AspenTech to adapt quickly. I was able to get my head around what’s going to be next [with Covid], and the organization was already moving forward without me having to tell them.”
Tony Guzzi of EMCOR reinforced this point, “the things that we did to build culture over the past 10 years really paid off. The company could not have done what it did for these joint crises [ransomware attack and Covid-19] had we not done the foundational things first. I think you can only strengthen your culture during a crisis. If you’re trying to build your culture in a crisis, you’re probably going to fail because you’re not going to have people understand why they’re doing what they’re doing. It’s really tough to build trust with people who don’t trust you to begin with; that all has to be done ahead of time.”
A set of clearly articulated and shared corporate values guided everything these leaders did when the pandemic hit. Cultural values need to be in place and lived in the daily life of the organization from the beginning. Antonio Pietri reinforces this point, “Whenever I talk to any group of employees or on ‘all-employee calls, I commit myself to talk about our values.”
These leaders also emphasized the importance of maintaining the culture throughout the crisis. Basing decisions on organizational values, then reinforcing those values through clear communications is an essential tactic for maintaining the culture. Leaders leveraged technology to communicate more directly and more extensively to ensure everyone throughout the organization understood how the culture was being maintained. When new employees came on board, these leaders made sure on-boarding processes and employee training continued, even when people were working remotely. Additionally, leaders celebrated successes publicly and recognized employees who were living the values in the midst of the crisis. These actions went a long way to reinforcing the cultural values.
“Early in the pandemic,” Sieg notes, “I think our employee base really appreciated that we were celebrating and supporting the frontline workers and their heroic efforts. We also made a point to recognize our own people who were supporting these individuals in their local communities.”
At 7-Eleven, servant leadership is a core value of the corporate culture. “The focus is on supporting our stores, our franchisees, our employees, and our communities,” says CEO Joe DePinto, “and that is the overriding cultural theme we share across the globe. I think it’s a strong one. And one that certainly resonates not only with our employees, our franchisees, but our customers. We do ongoing recognition of servant leaders throughout the organization.”
The pandemic also tested the effectiveness of the on-going cultural transformation and allowed the executives to gauge the strengths and weaknesses of their strategies for leading in a VUCA environment. Sieg makes this point in describing all the challenges that emerged in 2020: “I remember telling our people that the crisis was going to expose weakness, and we saw the pandemic morph from a global health crisis to a financial crisis, then it went to a moral crisis of racial inequality. Each of these crises forced us to look at ourselves, identify our weaknesses and address the relevant issues.”
All six executives reinforced the importance of a learning culture that allows for rapid adaptation. The learning culture they established allowed them to anticipate changes in their environment, experiment, learn from experience, and share best practices across the organization. Below are examples of how they created a learning culture.
• Anticipate. “The first step is to understand the current situation, the lay of the land, and then have a hypothesis around it,” says DePinto. “For us, it was gathering information and trying to understand what exactly was going on and where the pandemic might go. What quickly became apparent was two things. First and foremost was about our franchisees’ employees, our franchisees, our corporate employees, and franchise associates; corporate associates were very concerned about their health and safety. The second was that the supply chain got disrupted very quickly, particularly with the pantry loading that was going on in grocery chains. Some of the supply that typically would have come to our stores was going to grocery stores instead.
“We developed a command center and it provided ongoing updates to an entire body of 400 to 500 of our key leaders about what was going on in real time, along with the evolution of the pandemic in different states, what it looked like, what people were dealing with, and how we could best approach supporting our organization. That kind of best practice sharing was really helpful.”
• Experiment. “We basically expect all of our individuals to be learning individuals,” says Lamneck. “We’re very big on a teachable moment. We believe that people learn most when they’re actually engaged.”
“We have awards centered around our values and behaviors, and we created a ‘fail-forward award,’” says Novartis Oncology’s Mallik. “The idea being that, when something fails, what can we learn from it? Let’s celebrate that, let’s actually celebrate the fact that something didn’t work, because someone went out and was courageous. And then, we can learn from that experience. From a company culture perspective, we try to move away from what has historically been more of a perfectionistic ‘get everything right, look good’ kind of culture. Sometimes you’re going to make some mistakes. But the question is, are we learning?”
• Learn from Experience. “After-Action Reviews (AARs) have now become a part of the culture of our company,” says Pietri. “It’s a combination of what we’ve learned positive or negative, combined with one of our values or leadership principles, to message to the organization; this is how we should do it, or this is not the way we should do this, in either case.”
“At Lord Abbett, we instituted After-Action Reviews after every significant activity that impacted the environment,” says Sieg. “The message clearly was, let’s learn, let’s learn, let’s learn.”
Lamneck adds: “The After-Action Review has become very embedded. We’ll spend a few minutes after every meeting – let’s do an AAR, because those are the kind of learnings that we take and document. And then we learn from those.”
• Share Best Practices. “We’ve done a lot through our crisis command center, which pulled together best practices that we’ve gone out and shared,” says DePinto. “Not only with folks who are on the ground in the U.S., but across the globe. Our Head of International has been very involved in that. He sits in on those calls; he takes that information, then begins to share it globally.”
Read part 2 of this series, which explores the leadership strategies our CEO participants have found most helpful in guiding their organizations through the storm.