Never waste a crisis: charting a course beyond COVID-19

Never waste a crisis: charting a course beyond COVID-19

Just months into 2020, Australia’s leaders have faced immense challenges. All levels of government, business and the not-for-profit sector have had to negotiate devastating bushfires and now the COVID-19 crisis. Within months, if we’re fortunate, life will become more normal. But can and should leaders return to business as usual? Now might just be the time to contemplate the expectations and capabilities required of leaders beyond COVID-19.

It was only weeks ago that Australia was ravaged by bushfires. Remember? Thousands of homes and businesses were lost. Vast swathes of bush were destroyed. Governments were promising financial support for recovery. How quickly circumstances change. And how quickly we move on.

Our current crisis

Today, the seriousness of COVID-19 and its cascading effects is starting to sink in. It will drag Australia into a recession. But not just any recession. This is uncharted territory. Most recessions are caused by a demand shock (think 9/11), a supply shock (think oil price increases) or a financial shock (think global financial crisis) [1]. COVID-19 threatens to break the economy – eroding demand, supply and finances at the same time.

Be in no doubt – we are in a major, unfolding crisis. This is when we rely most on our federal government to do their job and protect our health and welfare. First and foremost, from chaos they must bring sense, stability and order so that, collectively, we can stop the spread of the virus, keep businesses afloat and people employed.

Will this be achieved? Can we return to normal in several months? Or might this short-term “shock” evolve into a longer-term “stress” for which we are ill-prepared?

Too comfortable and cocky?

Long queues are already forming to access unemployment benefits. Well over a million people could be put out of work [2]. Some of these people will be from households with high levels of debt that will now be very difficult to service. Small business owners, the casualised workforce and the disadvantaged are most vulnerable. Personal finances could take a hit that would take years to recover from. This could translate into a sustained period of lower consumer demand which would be a handbrake on the economy.

How will businesses fare? Many have been too comfortable conducting business-as-usual, preferencing short-term results over long-term growth and sustainability. This is reflected in Australia’s poor rate of innovation commercialisation and tendency to put profits into share buy-backs rather than business-building R&D. Whether businesses have the assets and depth of talent to navigate and prosper through the crisis is yet to be seen.

Government also has its challenges. For more than a decade, little progress has been made on issues like tax reform, productivity growth, energy policy, climate change and infrastructure development. Minimal innovation has occurred. Regulators are constantly playing catch-up. Trust has continued to decline and politics is more partisan and divisive. Australia’s capacity for much-needed policy reform has been eroded.

Despite all of this, Australians have enjoyed almost 30 years of economic growth – uninterrupted even by the Asian financial crisis, the dotcom bust and the global financial crisis. Has it made us too comfortable and too cocky?

Banking Royal Commission

Hon. Kenneth Hayne delivers the Treasurer, Josh Frydenberg the report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. It revealed many shocking instances of customer exploitation, reinforcing the trend of declining trust in big business and public institutions. Government is now considered both unethical and incompetent [3].

 

Life beyond COVID-19 will be complex

Emerging from the crisis will take time, probably months. We must be clear-eyed about what life will be like beyond COVID-19. It will not be without substantial challenges.

As we move past the chaos and crisis, we will return to the complexity of a world dealing with climate change, rapid technological progress, trade wars and populist politics, and where economic disparity between the haves and have-nots may be exacerbated.

In complexity, progress is only really made through collaboration and learning. People who offer simple solutions and quick fixes are false prophets. We instinctively know this, but simplicity is alluring and comforting. It’s also intellectually lazy, ineffective and costly over the medium term.

So, while we live on an island, we cannot behave as one. Our borders might be closed to stop movement of the virus, but our minds cannot be closed. Being clear about who we are as Australians, how lucky we are, what we stand for and the role we want to play in the world matters – absolutely. Australians are great at some things, but not all things. We shouldn’t pretend otherwise.

Collaborating to survive and thrive

We can’t resolve the COVID-19 crisis alone. We need to collaborate in developing a vaccine, to maintain secure supply chains and to prevent new infections from other countries. We also want each dollar our government spends on fiscal stimulus to encourage other countries to do the same – so the economies of our neighbours and trading partners remain strong. Quite simply, we want international collaboration to respond to our dual health and economic crises.

As the COVID-19 crisis subsides, the debt we will carry will require each dollar spent to achieve maximum impact and value. As we repair lives, our economy and trust in government, each dollar must build a sustainable future, not reinforce the past. Each dollar spent by business needs to create assets and intellectual property that customers want to pay for. If we do this cleverly, investment will flow within and to Australia and prosperity will return. If not, it will flow elsewhere.

More generally, we simply won’t resolve the complex social, economic and environmental issues we care about without collaboration across the public, private and not-for-profit sectors. Nor will we build thriving businesses and secure supply chains. This can’t be left to chance. Hope is a not a strategy. It is in our national interest to foster cross-sector, cross-jurisdictional collaboration and learning.

Trump on COVID-19

Hope is not a strategy. Blame doesn’t do any good either. Calling COVID-19 the “China virus” is simply conditioning voters for blame shifting. It doesn’t solve the problem and ignores the fact that governments have been warned about a pandemic, just as they were warned about bushfires and climate change.

Enabling effective leadership

To effectively tackle complex problems takes time and skill. It takes a different calibre of leadership to navigate and collaborate in our complex, inter-connected world. We need our leaders to understand this fully and its implications for organisational capability and governance.

And as voters, we must understand it too, otherwise our expectations will constrain governments to short-term fixes masquerading as long-term solutions. We must do what we can to help governments be trustworthy again, because trust and confidence are pivotal to investment and economic prosperity.

We must hold our leaders accountable, to act with honesty and integrity in the interest of the stakeholders they serve. We should expect learning, application and effort, but be realistic and measured in our expectations of progress. Because if we allow time for real solutions to be developed, tested and scaled then benefits will emerge and be sustained. Expectations of instant gratification are a recipe for disappointment.

Never waste a crisis

A year from now, we might all have moved on. COVID-19 might seem like a bad dream. We might have returned to a comfortable (if somewhat delusional) life. Alternatively, we can build a better and stronger Australia.

There’s a saying amongst people who lead change – never waste a crisis. It can be a powerful catalyst for change. So, use this crisis to reflect. In quiet moments of isolation, think about the nation and the people we want to be. Think about the better organisation you want to build in the months ahead. How do you want to lead? Who do you want to strive and succeed with? Because that is something we can start working together on today.

 

[1] Adam Triggs and Homi Kharas (2020) G20 leaders must clear decks for triple blow to world economy, Australian Financial Review, 23 March 2020

[2] John Daley, (2020) COVID-19: The endgame, and how to get there, In: The Conversation, March 21 2020

[3] 2020 Edelman Trust Barometer for Australia

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Nicholas Fleming

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