2024-10-27 08:04:00
History is full of events that no one saw coming, or events that few saw coming but no one heard about. Forecasting can be difficult, especially when people’s focus on solving emergencies as best as possible—which are becoming increasingly frequent in a complex world—limits decision-making capabilities to the short term. This social behavior transfers to organizations, and the Covid-19 pandemic is a good example: the World Economic Forum’s 2019 Global Risks Report ranked the spread of infectious diseases tenth among the events likely to have the greatest impact on the world. However, although many epidemiologists have been warning of this scenario for years, it has not been included in the top ten most likely events in the near future.
In 2020, the epidemic came, and we were not ready yet. Economic activity that year was affected by the spread and containment of the health emergency, although many companies in strategic sectors such as technology grew significantly, while others reinvented themselves to provide items currently in high demand, such as face masks and alcohol gel), but according to data shared by the Bank of Spain’s Latin American Economic Report (2021), the gross domestic product (GDP) of Latin American and Caribbean countries fell by 7%, a larger decline than in Latin America and the Caribbean in 2021 decline in regional countries. According to the World Bank, not only was Argentina not growing, but its GDP fell by 9.9 percentage points, resulting in a negative figure for this indicator. The decline is irreversible, and small and medium-sized enterprises have been hit hard.
In the face of such painful collective experience, four years after the pandemic, it is worth asking whether businesses, the engine of the nation’s economy, are prepared to deal with a new pandemic or a profoundly disruptive scenario that represents an existential threat. That’s why we set out to examine the perceptions of senior managers in organizations across the region, to understand the beliefs that guide actions and decisions in a context of high uncertainty and ongoing change, in which new epidemics may emerge, and other highly uncertain situations.
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207 company executives from 10 Latin American countries participated in the study, with Argentina standing out with a participation rate of 40%, Mexico at 17% and Peru at 10%. Three of the six major economies in the region. The largest number of responses came from CEOs (47%), Chief Operating Officers (24%) and Human Resources Directors (18%). In the sample, 51% of respondents lead companies with between 201 and 5,000 employees.
The challenge of making better decisions
When asked how easy it is for business leaders to understand how all the variables in their company’s operating environment affect them, 72% responded that it is easy for them to understand these variables, and when we asked how prepared they are, 72% People responded that they easily understood the variables.
However, 44% of participants felt that it was not easy to understand the data published by their information systems for decision-making, and 61% felt that they did not have all the necessary information so that their company could predict events that might affect them. interference.
Believing that one is prepared and has all the pieces in place may give rise to overconfidence, which is understood as the tendency to overestimate or exaggerate one’s ability to perform a task satisfactorily in a given situation, which may result in Blind spots that limit or distort analysis Assume certain unproven assumptions and therefore make decisions, especially when it is difficult to turn the data we have into useful information or when that is not enough.
Technology: Pandora’s Box
78% of study participants said their companies understand the impact global exponential technological developments will have on them. However, only 58% of respondents expressed no doubt about the need to implement AI in any process along the value chain. 37% do not consider implementing artificial intelligence in the short term, and 16% have no opinion on the topic.
Artificial intelligence is already driving unprecedented technological change and, whether we like it or not, it has become a part of our lives. Content produced with artificial intelligence is beginning to flood online search engines and social networks, not to mention that millions of people around the world have adopted natural language models (such as ChatGPT) or image generation models (such as those provided by Midjourney) to improve personal productivity.
It is very important that business leaders are very aware of the possibility of falling into a bias known as over-optimism, which is expressed through statements such as “AI in the company won’t have much impact on us, we’ll be there all the time.” “things to do” and other beliefs are presented. “This way, we keep moving forward” or “I’m not worried because we have been at the technological forefront of this industry for 30 years. Recent history shows that there is always the possibility that new players will emerge and disrupt our industry, and if not, ask Ask taxi drivers in Buenos Aires who, after years of war with Uber, now use the app to combine it with their traditional ways of working.
Adapt to change or transform and innovate?
When study participants were asked about their difficulties adapting to change, 72% responded that their organization found it easy to adapt to a rapidly changing environment. Consistent with this, when we asked whether the way their company works would be affected if a new outbreak occurred, 46% responded that the way they work would not be affected in such a situation.
The normalization of the pandemic has proven to be a decisive factor in the recovery of companies, which in most cases try to continue doing what they know how to do, but now through teleworking, remote meetings and at face-to-face events.
Some leaders believe that “people were not prepared for the pandemic the first time, and they were ahead of the curve. “It can be done again.” “The vision is limited and does not take into account the hidden costs of adapting without preparation.
Overall well-being of teams: an open task
One of the biggest challenges organizations face is managing the well-being of their teams so that they can maintain a healthy balance between personal life and work while achieving desired results.
In this sense, when study participants were asked whether their companies took the time to think about the impact of the decisions they made, 72% said “yes.” 75% of respondents also agreed that teams’ feelings about change are socialized and managed within the company, and when asked if teams were prepared for upcoming changes, even if they didn’t know what the changes were, 58% Participants responded that their teams were ready.
But even if you’re perfectly willing to adapt to any type of change, it’s extremely difficult to prepare for something you don’t know or can’t imagine. Adapting doesn’t mean innovating or doing better. For many employees, saying “yes” to organizational change has more to do with taking care of their jobs while finding ways to stay safe than believing that change will be good for them and the organization they work for.
So are businesses ready?
Beyond any predictions about the future, it is important for companies to start building antibodies against ignorant optimism and invest time in studying scenarios so that they can be better prepared for disruptions that could harm their market position. A helpful question to think about is: What events, if they occurred, would put us in serious danger of no recovery?
Companies that continue to thrive in highly uncertain environments are those that have developed a collective growth mindset and a culture of continuous innovation that can respond with a dynamic and adaptive approach to the emergence of organizational goals. challenges. In this sense, it is important to start diversifying innovation initiatives with a strategic approach while maintaining a business that is currently functioning well.
Any company that prepares for a new pandemic abandons a reactive approach to change and starts creating it.
* CEO of Courage Strategies/couragestrategies.com
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Interview with Dr. Mariana Torres, Organizational Psychologist and Business Consultant
Editor: Thank you for joining us today, Dr. Torres. Your recent insights into the preparedness of businesses for future pandemics and disruptions are timely. Based on your research, how do you assess the readiness of Latin American companies to face potential crises like another pandemic?
Dr. Torres: Thank you for having me. It’s crucial to note that many organizations seem to have gained some awareness from the last pandemic. Our study revealed that while a significant number of executives believe they understand the variables impacting their businesses, there remains a disconnect between this perception and their actual preparedness. Although 72% of leaders feel confident about understanding these variables, 61% acknowledged that they lack sufficient information to predict future disruptions effectively.
Editor: That sounds concerning. What do you think contributes to this overconfidence among executives?
Dr. Torres: Overconfidence can stem from the belief that previous experiences provide a solid foundation for future decision-making. Business leaders may feel assured in their capabilities due to past successes, but the rapid pace of change—especially with the advent of technologies such as AI—creates new challenges. Our research shows that while 78% recognize the impact of global technological advances, nearly half aren’t fully committed to implementing AI in their operations. This gap can lead to blind spots and unexamined assumptions.
Editor: You mentioned technology like AI. Given its significance, how can businesses better integrate such innovations while preparing for unexpected crises?
Dr. Torres: Integration of AI should not be seen merely as a trend but as a necessity for future resilience. Companies need to move beyond surface-level adoption; they should strategically embed AI across their value chain. Business leaders should also be cautious about falling into the over-optimism trap, where they underestimate disruptors. Continuous learning, flexibility, and a proactive approach towards technological investment are critical.
Editor: It appears that well-being and team dynamics play a role in adapting to change, as well. How can organizations prioritize the well-being of their employees during these uncertain times?
Dr. Torres: Absolutely. The emotional and mental well-being of teams is paramount. Our research indicates that 72% of organizations are contemplating the impact their decisions have on team dynamics. It’s about creating a culture where feedback is encouraged and where leaders actively listen to their teams’ concerns. Balancing work and personal life will foster resilience and productivity. Companies that prioritize their employees’ holistic well-being will be better equipped to navigate any future crises.
Editor: Thank you, Dr. Torres, for your valuable insights. It’s clear that preparation is as much about technology and strategy as it is about people.
Dr. Torres: Thank you for having me. It’s an ongoing journey for organizations, and awareness is the first step towards building a more resilient future.
Into their operations to enhance decision-making processes. This requires a cultural shift within organizations, fostering a mindset that embraces continuous innovation and adaptation. Leaders need to invest in training their teams to maximize the potential of these technologies, ensuring that they are not just reactive but proactive in their approach to change.
Editor: What are some key steps you would recommend for companies looking to improve their preparedness for future disruptions?
Dr. Torres: First, companies must conduct thorough scenario planning to identify potential risks and their impacts. This includes not only health-related crises but also economic, environmental, and technological disruptions. Second, fostering a culture of open communication and flexibility is crucial; employees should feel safe to voice concerns and suggest innovative solutions. Lastly, establishing a framework for continuous learning and adaptation will help organizations to not just survive but thrive amidst uncertainty.
Editor: Excellent points, Dr. Torres. As the pandemic has shown us, the ability to adapt can make all the difference. In your view, what is the most significant change you’d like to see in the leadership of these companies moving forward?
Dr. Torres: I believe a fundamental shift toward a more cautious and informed leadership style is essential. Leaders must embrace humility and recognize that the landscape is constantly evolving. This means being open to new ideas and recognizing the limitations of their current knowledge. By fostering collaboration, encouraging diverse perspectives, and prioritizing well-being among teams, they can create a more resilient organizational structure that can weather any storm.
Editor: Thank you, Dr. Torres, for sharing such valuable insights today. It’s clear that preparedness and adaptability are more crucial than ever for businesses in Latin America and beyond.
Dr. Torres: Thank you for having me. I hope these discussions can inspire organizations to take proactive steps toward a more resilient future.
