Assumptions for “The Next Normal”
I’ve been thoughtful about the assumptions we make -- which is quite ironic, since one of the characteristics of an assumption is it’s something we’ve stopped thinking about consciously. Yet when the world goes topsy turvy -- either because of industry disruption or a crisis like the pandemic we’re now managing-- our assumptions get exposed.
As the world hints at emerging from economic paralysis, we as leaders have the opportunity to consider the assumptions that have become visible to us. We can determine if (a) they are still valid, and hide them once again in the ocean of our thinking, or (b) we want to challenge and replace them with new assumptions.
What if, before we’re deep into the next phase of this crazy year, we run a mental inventory of the assumptions that have been recently challenged? You are likely to find them in almost every corner of your enterprise. Consider for example:
The fundamental dynamics of the markets you serve: I’m no expert, but I can imagine that few in the Oil & Gas industry had models in which prices slide below zero. What’s your equivalent?
Your planning cycle: The very definition of short, medium and long term has been upended. As @andrewlikierman suggested in his recent webinar about making difficult judgements, it is time not only to revisit objectives but also “graded timescales,” where the period of some certainty may now be this week versus this month.
Your budgeting process, or even if you need a budget. Likierman posed the “radical idea” (his words) of scrapping your yearly budget in favor of a rolling forecast. To be fair, @richardwatkins of @delospartners have for years been blowing leaders’ minds with a no-annual-budget nirvana at the summit of Integrated Business Leadership. Check it out.
What’s essential: ZBB (Zero Based Budgeting) has encouraged countless companies to annually scrap spending assumptions based on previous budgets. But have teams in the past really stripped down spend to the essential, as they are now doing? Which routines, processes, checkpoints, events, projects had you assumed were essential, but now seem a lower priority?
Who’s essential: Continuing that thought … Have we before really understood which roles are essential -- or have we confused “essential” with “senior,” inferring that it’s the top of the structure that gets things done?
The definition of success: Is it always about growth? Is it always about finishing a project on time, on budget? Are successful leaders the ones that have a ready solution to every problem? Or are there new performance metrics that focus on depth, purpose, agility, connection? Check out The Future Laboratory’s work on the post-growth society to see if “new metrics of progress” better capture your new assumptions.
Where work gets done: Lots of people have written on this topic. What can we assume about workplaces of the future? For the homes of the future?
Pay for Performance: In a year where results in multiple sectors are going to fall far short of bonus award targets … where executives are foregoing pay … and where government loans schemes require that funds are applied to keeping rank-and-file workers employed ... what’s the future of pay for performance? For decades the prevailing assumptions underpinning variable compensation models are that people are motivated by money, and that individual and enterprise performance improves with pay-for-performance programs. Will we continue to have the bandwidth to manage the policies and processes dedicated to executing this idea -- let alone the cash to fund them? What could a world without short term, performance-based incentives look like? (@laurentcardon and I started this debate a few months back …)
Where else have your assumptions -- your invisible thinking patterns --- been exposed?
Just as we can change our thinking, we can change our assumptions when we’re aware of them. Taking a bit of reflective time to question and perhaps change assumptions may well help us lead ahead of the wave, and with a greater clarity, now and into “the next normal.”
*Although there are some other uses of the term the Next Normal, the management consultancy McKinsey uses it extensively, including in their The Next Normal series exploring the future of specific industries. I was recently reminded of the term in an email from London Business School Dean Francois Ortalo-Magné. This evocative expression forecasts multiple futures in a way that “the New Normal” simply does not.
