Don’t Panic – Lessons from Another Milennium
DON’T PANIC. Those words taken from the Douglas Adams’ book Hitchhikers Guide to the Galaxy were referred to as the most sagely words for humanity by Arthur C. Clarke. Maybe it’s time for all of us to reacquaint ourselves with (or read) this book.
Over the past week I have seen the best and worst responses to the situation we find ourselves in. On LinkedIn, I see “business leaders” justifying their work from home policies around a nonsensical deferral graph that kindergarten students would be embarrassed to produce. I have witnessed decisions being made, not on evidence, but because Directors thought the Government was acting too slowly and they wanted to show leadership. I have also seen levelheaded responses to risk mitigation where businesses have gamed potential outcomes and developed risk mitigation strategies on each scenario. I have also been around some experienced hands, who have advised they have seen this all before and it is about responding to the critical situations your business finds itself in.
There is little doubt that things will never be how they were just a few months ago. But is that such a problem? If you are under the age of 40 you would have never really experienced a major economic shock – but is that really cause for panic? The answers are definitely no and no.
You can mitigate some risks and pay substantial money to risk consultants but there are some risks you simply have no control over. As the experienced hands have said it is all about the response. Businesses will need to relearn the art of dexterity, rather than having rules-based structures and operations - we should once again turn to commercial acumen and risk taking. This is going to cause issues in large organisations. Those that correctly respond to the changed conditions and encourage and reward taking risks will survive and even thrive.
While big companies are one thing, the Government requires some major structural changes. Not only are their operations almost entirely based on rules they make the rules for everyone else. Over the last 20 years, when the Government was confronted with a problem, they just made another rule or regulation to try and fix it. The result is an economy and society overburdened with rules and regulations. The historical stockpile of rules and regulations may in fact make recovery a harder proposition as it limits discretion and dexterity when circumstances change.
Governments would be well served by removing superfluous and counterproductive rules. I operate in the property development sector and planning laws and rules are diabolical. They are in most countries, but New South Wales is possibly the global leader in making unwieldy planning laws. The rules are based on the commodification of sectional interests (and despite what you read property developers are generally not the beneficiaries). In the NSW Environmental Planning and Assessment Act, the Minister for Planning has discretion to call in and approve projects. Over more than a decade, most Planning Ministers have reverted to rules and not used the powers granted to them under the Act. Relying on rules has led to an unprecedented backlog of projects (in the billions of dollars and potentially employing thousands of people) on the desks of well-meaning people who are the custodians of the rules in Council or State Government. If this happens in good times what is going to occur in the tougher times? Governments will need to re-examine their modus operandi.
Ministers will have to start to show leadership not in rule making but rule removal. In the planning example, the Minister should use the powers vested in him to stimulate investment quickly. A kick start will not require a disproportionate amount of money in a recovery package – taking money from taxpayers to give back to taxpayers to get over a panic driven crisis. It is simply about responding to a situation, taking responsibility and making decisions that you think are correct. Government and business people are not going to get everything right but chances are they will get more things right than wrong – and that should be the foundation principle of any successful economy, business or government. Taking risks not mitigating risks through rules should become the new mantra – back yourself and don’t panic.