Humans are the only machines that can make the impossible possible in any given circumstance.
Crisis management is both a practical and tactical way of carrying on business activities through applying diversity in business. Basically, crisis management is about being prepared to face the challenges in the future. However, the case is different while managing the situation strategically during the current pandemic. Earlier, most organisations around the world were generally practicing crisis avoidance but were ignoring tactical ways of doing the right things related to crisis management.
Crisis Management (CM) is the process of systematic management and evading the Crisis Ignorance (CI) and Crisis Avoidance (CA). Talking about CI, it can be described as a situation of skeptical perceptions while most would think and feel the circumstances as a passing phase and it would settle down as other situations experienced earlier. Crisis Avoidance (CA), meanwhile, is opposite of CI. However, both of these approaches ultimately have an impact on demand and supply curves of the economy. Both CA and CI are not the proper methods of bringing the equilibrium through systematic approaches. Moreover, CM was not practically as well as tactically applied and this is the main reason how an economy shrinks. CM is a systematic preparedness approach to bring the balanced equilibrium within the demand and supply curves which stagnantly contributes to the economy and lives of the people.
On the other hand, business organisations were not prepared to tackle with the Covid-19 situation. The shutting down of factories and business organisations due to the lockdown created havoc, forming an economic and social crisis. This is one of the major lessons learnt during the Covid -19 pandemic.
How to overcome the post COVID-19 organisational crisis?
The organisational economy cycle, either proceeds towards Organisational Economy Life Cycle (OELC) or organisational life span (OELS) (Rajbhandari, 2020). Organisational Life Span (OLS) is the negative growth of an organisation which ultimately leads an organisation to termination. Organisational life cycle moves through different stages such as, introduction, growth, maturity, decline and recovery stages. In fact, if CM practices are not systematically approached, organisations that are in the maturity stages are likely to encounter OLS. Nevertheless, CM, if practiced with management strategic tactics, even organisations heading towards the declining stages can revive and move towards the recovery stages and then further to growth and maturity consecutively.
Basically, when we are still within the framework of CM strategies to enhance and enrich the OELC, it is evident that CM is applied and approached through strategic management. It is always essential if not important to have strategic options. Strategic options are the key to a healthy organisational economy. This includes maintaining psychology, sociology and physiology (PSP) factors within the organisational lives (Rajbhandari, 2015, 2016). Although PSP can be seen in a broader term, they are much needed factors in any organisation for enriching the organisational lives.
While integrating CM and PSP practices, we are already strategically planning towards enhancing the organisational economy through human (social), knowledge/intelligence/feelings (psychology) and technologies/financial resources (physiology). Although all these factors within organisations are essential to running the organisational activities, it is also necessary how we strategically apply these factors at the right place, in the right position, at the right time and with the right human resources.
Another strategical movement within the up-liftment of organisational economy life cycle is through Adequacy Strategic Option (ASO), which means, an organisation must have the strategic knowledge not to implement CA or CI approaches. This further means that unnecessary deployment of excessive human resource for small tasks must be retrenched which goes similar with other resources such as finance, technologies, so on and so forth.
However, PSP is not mutually exclusive, but it is indeed very important to note that people in the top management levels must be intellectually tactical to implement the Adequacy Strategic Options (ASOs) in-line with PSP within the organisational environment. As ASOs are heavily sensitive parameters, right strategy implemented at the wrong time can backfire. ASOs are sensitive due to various factors involved within the organisational environment. The word ‘adequacy’ itself signifies the retrenchment principles, which therefore can directly put an impact (positive/negative) on human, quality, process, finances so on and so forth.
Any external disturbances such as the current situation can impact organisational lives. However, sustaining is an urgent task for entrepreneurship development. It may not be correct to predict the institutional sustainability through the lens of management theories. But the management theories can lead an organisation to work systematically even during a crisis. One such strategy derived from modern theories is ‘diversity management’ which creates a pathway to develop various undertakings from one organisational platform. Basically, organisations are rich in resources such as intelligence, technologies, cultures, among others. Taking ASO approach of strategy building can foster an organisation post-pandemic. Although, many businesspersons hesitate to take different routes for business development, it is essential to diversify the business production although keeping the resources of an organisation intact. In connection to this, the diversity management is a healthy strategic option to introduce new and innovative products to the market.
The diversity management option is feasible, while applying the Pruning Diversity Strategy (PDS). PDS expands OELC and restrains it from going towards OELS. Although, mostly strong organisations apply PDS during the maturity stage of an organisational life cycle, PDS can also be applied during the decline and recovery stages. It can never be late for an organisation to recover its losses. Moreover, the intellectual maintenance of PSP parameters could help organisations to gain strength during the times of crisis and uncertainty followed by the decline in business and recovery stages of organisational life cycle.
PDS can be an essential strategy for entrepreneurs to demonstrate their leadership skillfully by retrenching excessive outflows of resources and investing in diversified production to gain momentum of innovation. The retrenchment here does not signify to retrench the human resources but to diversify these resources to different production lines with an additional input of financial resources which is also retrenched from the other sources. Moreover, the retrenchment to PDS is not about axing finances or jobs. PDS is a tactic of reinvesting and up-cycling the production rather than recycling the production process.
This strategy enables the diversity of business and organsational production lines, which in the later stages can yield benefit to the entrepreneur, employees and the consumers’ society as a whole that further enhances the national economy. While it takes a few years to reach the maturity stage of OELC, it can also provide experiences, knowledge, skills and innovation to organisations by creating a brand image by gaining the trust and confidence of consumers. However, there are still questions that how and which resource to prune to diversify the business?
This would be very simple to answer, because, the first would be the finance. Here the key focus should be on applying PDS by diversifying human resources to different tasks, jobs, duties etc. This will offer the top management in an organisation a basic idea about human capital skills. Humans are the only machines that can make the impossible possible in any given circumstance. Financial retrenchment is the next level strategy needed to overcome the crisis while the organisational difficulties are already retrenched by the human capital skills and intelligence.
Therefore, in conclusion, crisis cannot be overcome by knowledge alone, but it does need managerial skills by becoming both practical and tactical and having the clairvoyant vision towards innovation in terms of doing things differently and diversifying products and services.
(Dr Rajbhandari is a professor/researcher at the CENTRUM- PUCP at Lima, Peru.)