Decision Making In Time Of Uncertainty

Emerging trends

COVID-19 is a black swan event. Per the “Black swan event” definition:

The event is a surprise (to the observer).
The event has a major effect.
After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals.

In Chinese, this is also impressed as “危机“， which means both crisis and opportunity.

This is a test for both government and business, about its resilience, innovation and decision making. There are a few trends emerging during this pandemic time:

Acceleration of digitalization
The rise of remote work
Evolution of online education
Adoption of AI in healthcare
Increased Investment in infrastructure

No single business can thrive without the ecosystem, leaders should work together to create a better ecosystem.

Level up your decision making capability

Environment is changing every minute, not enough data and the need to make fast decisions have become the challenges of today’s leader. The digital leader needs to shift away from managing, but to focus on empowering, creating a network of decision making, rather than boardroom decision making. This makes a big difference to whether the business can walk out of COVID-19 as a greater business or struggle to survive.

This is a short time window with many constraints, consider:

Create a network of decision making, which includes: executives, subject matter experts, technology and business operation;
Break down big decisions into smaller decisions
Go faster for now and future
Innovate more than ever
Focus on customers and partners, help others to help yourself.
Track all decisions and learn from it.

Learnings from China Company’s COVID-19 Response

Opportunity amid adversity

Kuaishou, a social video platform valued at $28 billion, promoted online education offerings to compensate for school and university closures. The company and other video platforms partnered with the Ministry of Education to open a national online cloud classroom to serve students. And a major restaurant chain leveraged down-time to plan a new offering of semi-finished dishes, capturing the increased need and occasion for home cooking during the crisis.

Shared labor across industry

In response to a severe decline in revenue, more than 40 restaurants, hotels, and cinema chains optimized their staffing to free up a large share of their workforces. They then shared those employees with Hema, a “new retail” supermarket chain owned by Alibaba, which was in urgent need of labor for delivery services due to the sudden increase in online purchases. O2O players, including Ele, Meituan, and JD’s 7Fresh followed this lead by also borrowing labor from restaurants.

Acceleration of digitization to support newly formed habits

A premium Chinese travel agency, facing a collapse in its short-term business, refocused around longer-term preparations. Instead of reducing headcount, it encouraged employees to use their time to upgrade internal systems, improve skills, and design new products and services to be better prepared for the eventual recovery.

The Chinese business of a global confectionery manufacturer accelerated its existing digital transformation efforts. The company canceled offline campaigns for Valentine’s Day and other promotional activities, reinvesting resources instead into digital marketing, WeChat programs, and partnerships with O2O platforms to take advantage of new consumer behaviors during the outbreak and beyond.

Rapidly innovate around new needs

The insurance industry is notoriously conservative, but in response to the crisis, Ant Financial added free coronavirus-related coverage to its products. The action served a customer need, while promoting awareness of the company’s online offerings and improving customer loyalty. It expects a 30% increase in health insurance income in February, as compared to the previous month.

Reference:

https://hbr.org/2020/03/how-chinese-companies-have-responded-to-coronavirus
https://hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy
https://www.alibabagroup.com/en/ir/presentations/Investor_Day_2018_Hema.pdf