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Annie Duke’s Guide to Recovery

The former professional poker player and author on how leaders can learn from the COVID-19 crisis and why preparation and team diversity is key to recovery.

As the franchise industry continues to navigate the crippling fallout of the coronavirus crisis, businesses across all segments are strategizing new ways to support their teams, keep customers satisfied, help local communities and come out stronger on the other side of this crisis.

1851 Franchise spoke with former professional poker player, author and decision strategist Annie Duke about how leaders and brands can learn from the COVID-19 crisis and create a strategic plan for recovery

“This pandemic is teaching us how to make decisions not only when things are crazy, but how to utilize this new view of the world in order to make smarter decisions moving forward,” said Duke. “Overall, we think we have a lot more control than we actually do, and COVID-19 is pulling back the curtain on how much uncertainty there is in our lives and teaching us how to deal with it. In a similar way, poker teaches us how little control we have over the hand we're dealt, therefore, when we make decisions it is not about having control, it is about understanding all of the possible outcomes and making an educated play. If the cards being dealt aren’t exactly what we wanted, we have to know how to strategize for recovery.”

Making Decisions Based on Predictions

Duke notes that business owners shouldn’t necessarily waste their time worrying about rare disasters. Instead, franchisors need to be nimble. When franchisors create a flexible mindset, they can be better prepared for whatever the future holds. There are many outcomes of this crisis, and recovery is going to look different for on each one. 

One way Duke works with her clients to prepare for an array of economic outcomes is by asking them to participate in a “back-cast” or “pre-mortem,” in which they look to the future and predict what decisions either brought them to success or caused their failure. With this future-oriented preparation, franchisors are able to create a more flexible recovery strategy and make smarter business decisions, pinpointing a list of actions and signposts that they should avoid or prioritize along the way. 

“When we are in the midst of a losing streak, we are all poor decision makers,” said Duke. “Some brands respond to this loss by going on the offensive and betting big, while others go into total defense mode and shut down operations. The ideal strategy is to create a mixed approach in order to help us reach our goals and make the right decisions.”

Instead of reacting in the moment, playing out possible scenarios allows business owners to better respond to any outcome, whether it be positive or negative. Just like fire insurance ends up being a better decision if the house burns down, being mindful of the potential repercussions of COVID-19 helps business owners succeed in the long run. 

In terms of the lessons that this virus is teaching us, Duke uses the COVID-19 lockdown protocols as an example of how business owners too often avoid painful decisions until far too late. 

“In the same way that Italy waited too long to implement quarantine and cases skyrocketed, it is better to face difficult decisions earlier rather than later in order to balance out negative effects,” she said. “Look to six months from now and predict which decisions you will wish you had made faster, even if they were tough.”



Hedging Bets

Since recovery strategies cost money, many business owners may worry about regretting certain unnecessary precautions down the line. We always hope we never have to use our fire insurance, but business owners need to keep in mind why they hedged their bets in the first place instead of worrying about wasting money on various recovery preparations.  

Duke predicts that most franchisors will be fairly conservative in their recovery strategies. “Understandably, business owners will likely be influenced by a recency bias and become overly cautious with an abundance of cash reserves,” she said. “Communities tend to be the most prepared for their last big disaster. For example, the U.S. is very well prepared for weather disasters, but those strategies don’t necessarily translate to a health crisis. Now, businesses will likely be too influenced by this pandemic when preparing for the next unexpected event. Ideally, brands should find a happy medium.”

We tend to think that the way things are now is the way they’ll always be. Therefore, it is tempting for franchisors to spend when the economy is good and save when things go south, but sometimes the opposite view is more appropriate. Business owners don’t want to be in a position where they have to deal with the crisis today — they want to be prepared six months ago. The contrarian view is sometimes the key to achieving that pattern, especially in franchising where economic downturns have historically resulted in an increase of interest for the industry

Team Diversity

Duke underlines the importance of creating an environment where teams are comfortable disagreeing with the norm. Teams tend to agree with each other, which can hinder new ideas or innovative recovery strategies. There are many unintentional ways that business owners suppress differing perspectives when consulting team members on decision making. 

“If you want to get the best, most complete range of opinions on how a business could be affected, both positively and negatively in any given situation, simply email your team and ask everyone to send ideas directly to you without replying all,” said Duke. “Let them give their ideas independently. Now you can collate that information and see where people came up with the same idea, where they came up with unique ideas and which ideas overlap.” 

It can be uncomfortable for teammates to disagree and there can be a lot of soft-pedaling. Emailing teams and asking them to not reply-all allows everyone’s opinions to bloom and reinforces the value and diversity of the team. It also makes for a culture where the team is cohesive not because they automatically agree on everything but because they’re all open-minded. In team meetings, people tend to lean on agreement and concur with each other and with whoever is facilitating the meeting.

Industry experts and established teams have a tendency to reinterpret data to fit their worldview, rather than reinterpret their model to fit the data. By continually creating predictive strategies or gathering new perspectives on a monthly basis, it ensures that business owners have the tools necessary to not only create the best path to recovery, but be better prepared for the next disaster.

“While this time may seem unprecedented, COVID-19 is actually just shining a light on the uncertainty that was always there,” said Duke. “As we recover from the crisis, it will be tempting to allow this uncertainty to fall back into the shadows. Don’t get lulled into that trap — the future is always uncertain and business owners need to do the strategic planning and teamwork to position themselves for success and quick recovery when tomorrow’s unexpected events inevitably come.”