Back in 1999 IBM’s Stephen Haeckel introduced the concept of the adaptive enterprise. At the heart of such an organisation is the ability to sense what’s happening in the environment, and being suitably flexible to respond to the conditions you face.
It marks a shift from the ‘make and sell’ culture that predominated for much of the industrial era (and probably still dominates in many organisations today). Such ‘make and sell’ organisations focus on efficiency and mass production, utilising repeatable process and clearly defined job descriptions. Efficiency is key and profit comes largely from economies of scale.
A nice analogy to use to conceptualise the divide is between the behaviours of a bus and a taxi. Buses are typical make and sell. They attempt to understand the journeys undertaken by their passengers, traffic patterns and so on. They then use this intelligence to construct a route map, schedule buses that travel that route at the prescribed times. Bus drivers aren’t judged on passenger satisfaction but rather on the efficiency with which they can complete their route. It’s an approach that has very little flexibility built into it and it has no way of changing to meet shifts in customer demand. This is what they offer, we offer it at these times, take it or leave it.
Taxis are a different kettle of fish. There’s no real plan involved in running a taxi. Instead they respond purely to the demands of the market and attempt to complete the demands of the passenger as efficiently as possible. Not only is each journey customised to respond to live conditions, but sharing apps such as Uber have enabled the taxi network to easily modify supply in response to demand in very short timescales.
A culture of innovation
It’s a capability I believe is crucial to any modern organisation and was one of the three core components focused on in our book Building a Culture of Innovation. This desire for adaptability was reinforced in the recent Global Human Capital Trends 2017 report from Deloitte, which revealed that 94% of executives believed agility to be crucial to the success of their organisation.
I certainly wouldn’t want to underestimate the leadership challenges involved in implementing a culture of adaptability, and it’s certainly a lot easier to say than to do. In my years of helping organisations through such changes I’ve encountered a number of especially difficult challenges:
- Unintended consequences from launching a Minimum Viable Product (MVP) – having an experimental culture is key to being adaptable, and so long as things remain experimental (ie small) then it’s fairly straightforward. When it comes to scale up your best ideas however, often the debate has to turn to possible integration with legacy systems, which is a much tougher proposition – integrating is likely to be costly and not deliver significant extra value versus maintaining a standalone solution increases the complexity of the infrastructure and creates a longer term burden. What’s more, the greater the number of MVPs you have, the greater the challenge and whilst the answer may not be easy, it’s vital as leaders we face into these longer term sustainability challenges.
- Appetite for risk – it’s tempting to think of this as a constant, but in reality it tends to fluctuate quite considerably, especially as you look to scale projects up. After all, the point of the MVP is to allow experimentation with informed and appropriate risk attached, but there may be some completely non-negotiable risks and controls which will drive the decision making e.g. protection of data, ensuring security of payments. Things change as you build on those early results. As the leader, it’s important to have a clear idea of just where the limits are in terms of risk, and to ensure these are communicated clearly to your team.
- Efficient decision making – it probably goes without saying that if you want to respond swiftly to the circumstances you find yourself in, it pays to have the kind of decision making processes that allow for this. This is often a huge challenge in larger organisations with many tiers of management and governance. I wouldn’t say that these layers are always bad, but I’ve seen too many organisations where the extra layers fail to add anything, and it becomes the process that makes the decision rather than the people – so who really does takes accountability for decisions. As the innovation leader, ensure you have effective and efficient decision making practices which can operate at pace.
- Serving two masters – the classic innovator’s’ dilemma is one I’m sure you’re all familiar with, and it’s tempting to think because it’s so familiar that it’s no longer something organisations struggle with, yet that couldn’t be further from the truth. It remains devilishly hard to get results today whilst also inventing for tomorrow, particularly where there is an operational service delivery function which needs the rigour and stability of standardised processes, disciplines and timeframes – in fact change is a major disruption to effectiveness, efficiency, customer service and control. One approach that I’m personally supportive of is John Kotter’s dual operating system. It enables the organisation to still do ‘business as usual’, but to wrap it in an innovative layer that allows experimentation without losing sight of their core objective.
- Being sure and true – when you hear about pivots and so on, it’s easy for your people to think that you’re constantly chopping and changing your strategy. That isn’t the case at all. It’s more the case of being confident and consistent in what you want to achieve, but flexible in how you achieve it, ensuring you clearly communicate this to your people. This helps to build your credibility as a leader, and gives your team the framework within which they can operate freely.
Being adaptable is certainly not easy and brings with it many leadership and organisational challenges, but I do believe it’s crucially important that you face them head on and to ensure your organisations have the agility they need to thrive in our VUCA world.