Innovative adaptiveness

How do organisations respond to an unpredictable future?

Given how traditional organisations are structured, a better subtitle would be, ‘how do leaders respond to an unpredictable future?’. Widespread practice is to see this as a leadership challenge. Fix the leaders and then they simply issue the appropriate departmental edicts.

This is quite a burden for a small group of individuals to oversee. But let us start from where we are rather than what might be a more effective approach.

Leaders have a variety of options:

1. They can create a library of crisis management plans to address the most likely disruptions coming their way.

2. They can ignore the future beyond the current reporting period as this determines their remuneration.

3. They can appoint a Chief Unpredictable Officer and abdicate all related actions accordingly.

4. They can start the journey to developing an organisation that is intelligent enough to adapt to whatever happens.

Option one aligns with common practice. However, the reality is that black swans move as a team so it is unlikely that there will be a response to every combination of every anticipated disruption. And of course we must factor in the unanticipated disruptions. So if the organisations only ever had to face three disruptions, there would need to be six plans for each disruption combination. Manageable. But for ten that would require 1,023 plans. Not manageable.

Option two also aligns with common practice. “Why sacrifice my remuneration to make my successor look good”.

Option three is becoming increasingly common practice. Hence today we have CXOs where X now includes AI, Digital, Happiness, Sustainability, Diversity, Transformation and so on. The roles are unnecessary as they are already covered by the COO, CIO and CHRO. So these new roles are more leadership theatre than anything else.

Option four is the most painful, but most needed approach. However, the few noble leaders that attempt this tend to take a radical, ‘pull up the floorboards’ approach that usually does not end well. Examples include:

• GE - an industrial conglomerate that wanted to become a software platform

• Cisco – a networking hardware player that wanted to become a software and consulting business

• Ericsson – a telco infrastructure player that wanted to become a digital transformation leader.

  
  

GE – General evolution?

Cisco recovered, Ericsson partially recovered and GE dismantled itself, which one could argue is a form of radical adaptiveness. Ironically, GE was already well equipped to cope with increasing uncertainty because of the diversified nature of its business interests.

In fact GE gives us a strong clue as to how to build a business fit for an unknowable future. At its peak it was the world’s most diversified business that included plastics, financial services, aerospace, healthcare and power to name but a few.

Plan for the unknowable

So your organisation should focus less on what form the next macroenvironmental blow will take and more on building a diversified organisation. Ask yourself, where do we have single points of existential failure in the organisation. These might include:

• Revenue streams – Does it all come from one market?

• Leadership – What happens if we lose our charismatic leader?

• People – Do they all have the same backgrounds and think the same way?

• Technology – Are we at the mercy of a single vendor?

• Innovation – Are we just tinkering around our existing offerings?

Each of these is important. But the primary way forward is on how you respond to the innovation question. If your business serves the pre-EV car market, eg. you make pistons and fuel injectors, then it should be fairly obvious that your organisation is facing an existential threat. But if your response is to simply develop components for EVs, you have only marginally decreased that threat as EVs are not necessarily the future. Or they might be, but we may need orders of magnitude fewer vehicles.

“6 impossible things before breakfast”

This ‘Through the Looking Glass’ quote needs to become an organisational mantra.

Radical innovation means diversifying into areas such as:

• Bespoke suits for senior citizens

• Nanomedicine for pets

• Community driven activities, like parkrun

• Retro - analogue accessories for image consciousness Gen-Zs.

  
  

A nod to adaptiveness

Diversification is a crude form of adaptiveness. Ideally the organisation would operate like a living organism that can either grow back the lost limb or better still sense the incoming problem and taken evasive action.

In any case, the more diversified your organisation, in every sense, the more likely you will withstand the future shocks coming our way. They will hurt and they will be damaging, but at least they will not be game ending.

In this increasingly disruptive world, that is a win.