‘Black swan’ events–events that are unexpected and have a major effect on society– rapidly change the ecosystem and render static strategic plans obsolete. Our globalised planet, with its many varieties of destabilising factors, is breeding ‘black swans’. With Russia’s unprovoked invasion of Ukraine and the rapid ripple effects on energy and supply chains, there is a renewed awareness of the need for a planning approach appropriate to the VUCA age. For any workforce leader, the level of disruptive events is only going to increase. It’s time for a dynamic approach to planning.
A static strategic plan is evaluated at best once or twice a year, and is not designed to adapt with rapidly evolving dynamics. Many companies still use Soviet-Era planning time frames of five to ten years. Salesforce is a well known outlier–their V2MOM (Vision, Values, Methods, Obstacles, and Measures) approach to planning starts at the top and then cascades down to every VP, Director, and individual contributor. V2MOMs are updated regularly and are internally transparent. The V2MOM process creates strategic alignment, in which leaders have the agency to run their departments while maintaining alignment with the organisation’s core strategy. And every individual knows how they fit into the organisation’s goals. The V2MOM Process cultivates a culture of agency and ownership throughout the organisation. Individuals will know what they are committed to, and it is easy to learn what other leaders are prioritising simply by referencing their V2MOM documents. The result is a clear approach to strategy and a culture that is effective at driving it forward.
The V2MOM enables me to clarify what I’m doing, and then communicate it clearly to the entire company. It boils down to these five questions, which create a framework for alignment and leadership:
- Vision — what do you want to achieve?
- Values — what’s important to you?
- Methods — how do you get it?
- Obstacles — what is preventing you from being successful?
- Measures — how do you know you have it?
Strategic Plans to Strategic Pipelines
In the last decade, corporate innovation theory has taught that organisations need to be ambidextrous – delivering on their core business while also innovating at the edges, preferably in an offsite lab with good views and kombucha on tap. The ambidextrous model was important in the early 2000s to introduce ‘legacy’ companies to innovation and as a prelude to our current era when continuous innovation is required.
Innovation can no longer be contrasted to the core business–innovation is the core business. Rather than a strategic plan governing the core business on one side and an innovation pipeline on the other, leaders need a coherent strategic portfolio that includes both. If innovation is seen as separate from core business, organisations will miss the opportunity for incremental innovation, while pitting the new against the old and likely missing systems interactions. For example, digital photography changed not only the camera business, but also opened up whole new businesses based on sharing images.
Organisations need innovations, whether they are new business models, processes, or exploratory solutions to go through maturation and de-risking processes. A Strategic innovation pipeline–a refined process of continuously maturing strategies–is needed whether you are an executive looking broadly at market and technology evolution, an individual contributor incorporating new business tools or a marketer moving onto new channels. Managing a dynamic portfolio of strategies rather than a fixed set of solutions requires a new mindset and new competencies–in short, a new culture.
What is Culture?
Culture is not engagement. It’s not happy hours and perks. “Culture” is how we do things in the space we create for ourselves. Deriving from agriculture, which requires “culturing,” the term means active attention. To culture is to maintain conditions for life. Simply put, it is how we do things around here.
Culture defines how employees act in stressful situations, how they respond to pressure and carry themselves when challenges are presented. Culture manifests in how they treat partners, clients, and each other. Company culture defines how growth-oriented, how purposeful, how creative, and how strategic people are. In a transparent world, internal culture is the external brand. How customers are treated, from sales to support, the narratives and tropes marketing produces, the level of rigour applied to quality control, all of these are a result of an organisation’s internal culture and all will be reflected in the external brand.
The Culture of Strategic Innovation Pipelines
What kind of culture can hold the complexities of continuous innovation? A culture in which individuals have the permission to be creative, the capacity to turn creativity into innovation, and a pipeline process that turns that innovation into value creation. In other words, growth-oriented, purpose-driven teams with a passion for identifying new opportunities to deliver value. Cultures like this do not develop accidentally. Companies spend a great deal of time and money crafting, designing, and telling the story of their brand in the marketplace. Few invest anything near the same amount of resources in developing, entraining, and elevating the internal culture. Culture has been treated as illusive and unknowable.
Companies who have taken a strategic approach to creating culture are legends in the literature. Our favourites are the cultural turn around and subsequent company turnaround brought about by the current CEO of Microsoft. Satya Nadella made changes large and small at Microsoft; fundamentally he reoriented the culture from one he described as the company’s traditional “know-it-all” approach to a “learn-it-all” curiosity. Nadella has been able to turn a stagnating company into one that is once again leading, and the company’s market capitalisation has nearly increased from roughly $300 billion at Nadella’s ascension, to about $2.5 trillion today.
DUAL CULTURE-STRATEGY METHODOLOGY
“Culture eats strategy for breakfast.” This phrase implies that the culture of a company is responsible for its success, regardless of how effective its strategy may be. If it were coined today, it might go something like “culture and strategy love having breakfast together.” A great strategy, what we plan to do, without effective culture, how we will do it, won’t work, but an effective culture without a clear strategy is equally useless.
We are in the middle of a tectonic shift. Employees are changing. What worked to keep employees satisfied twenty years ago doesn’t work now. They are seeking a greater sense of belonging and purpose, and it is now more than ever that culture is a part of everyday corporate lingo. Their expectations for what makes a company a great place to work are increasing. They want more than paid holidays and sick time. In response, the workplace is evolving too. Companies are facing greater resignation than ever before and are beginning to acknowledge that the most effective culture and strategy drive each other.
Today companies benefit from learnings in behavior economics, neuroscience, memetic research, social marketing, adult education, and human performance movement – we know how to incentivize the kind of behavior change required to change culture. So why don’t more organisations do it? To effectively change behaviour, you have to change mindsets. Behaviours can be entrained in an education program, but mindsets are challenging. We do not change our minds based on data. People really only change their mindset inside the context of a relationship. This means if you want to change your employees’ mindsets, you have to have a relationship with them, and that means you have to care and strategically invest in culture. If you need to deliver innovation and performance, you need mindsets of growth and ownership. In order to cultivate a mindset of growth and ownership, people need to be held in a culture of safety, accountability and care.
From Black Swans to Care
The level of change and disruption has reached a level where it is imperative to develop systems and psyches with the capacity to continuously adapt. In order to deliver the continuous innovation required by our times, organisations will need to move from strategic planning to building a strategic innovation pipeline that holds a portfolio of initiatives at different stages: incubation through integration and sunset. In order to deliver in a dynamic environment, people require a culture and the ideal conditions for growth, purpose-driven and rooted in care. If you are ready to make a strategic investment in a culture that can drive a strategy of continuous innovation, or if you already are and have a success story to share, I would love to hear from you.