The boat’s sprung a leak, man the pumps!

The stock market has fallen to its lowest level since 2001. At the moment, oil is priced at under $60 a barrel. This time, it’s a serious crisis with its roots in the international financial market. The pattern appears to be the same as in all recessions, drastic reductions in the price of shares combined with a strong decrease in demand. However, the underlying reasons may differ.

How do we react when all the charts show a downward spiral? How do we apply the management models that we have developed during times of prosperity? Do they still endure when the storm is rising? How do we assess our methods for managing goals, balanced objectives and budgetless management when the future looks grim? In order to manage a modern organization, we need learn and adapt holistic management models. These models incorporate forward momentum as well asbetter “control” systems that look forward rather than backward. When our belief in the future is undermined, as is the case today, it becomes increasingly difficult to apply these models. Now, it is survival at all costs.

The most common approach is that one abandons the learn and adapt models in favour of a traditional budget (command and control) management model with all the emphasis on financial targets. Is this evidence that budget management, when all is said and done, is the way to do it, that the alternative methods do not work?

We do not believe this to be the case. The last thing one needs in a situation like this are resources tied down in budgets created under different circumstances than the ones we are currently experiencing. Instead we need dynamic models that allow us to fend of threats and grab the opportunities that arise.  To quickly be able to change our heading.

An analogy

If you embark on a voyage with the aim of sailing to America to find new friends and business relations, you will probably plan your trip carefully.  Important waypoints and stretches are planned and alternate routes identified in case the wind refuses to take you where you are going. What happens if the boat springs a leak off the Shetlands? Obviously, all your energy is focused on manning the pumps and contacting the coast guard and other ships in order to ask for assistance. With any luck you will make it to the emergency harbor at Lerwick. You will be able to repair the boat, but what next?

The big question when you have overcome a crisis is how to move on. In the case of the sailor, the issue might be whether or not to continue to America, to return home or even to leave the boat in Lerwick - you have had enough. For businesses, it is about similar decisions. In most cases, the decision will be to continue ahead.

Does this mean that one has abandoned the management model with clear goals and strategies? Is the GPS receiver no longer needed to show the correct course? Should we continue pumping out water despite the fact that the boat no longer leaks? Of course not.

The state of emergency, as it turns out, did not last long, it was temporary. This does not mean that one suddenly finds oneself back in the same situation as before the crisis. Instead, one has embarked on a new, and as far as we can see, lengthy journey forward. This is the moment when we need to bring aboard management models which focus on the future and cease manning the pumps.

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