Executive Edge Newsletter - Encourage Adaptability by Leading It

Executive Edge, Vol. 3, Issue 13

Adapt to Fulfill Your Leadership Potential

Leadership is the single most important factor in the success or failure of a company or business, Brian Tracy asserts in How the Best Leaders Lead. Your ability to step forward and lead your enterprise to success in competitive markets is both essential and irreplaceable. The better you become as a leader, the better you will be in every area of your enterprise.

Leadership is more about who you are than what you do. Your ability to develop the qualities of effective leadership, the essence of what it takes to be a leader, is more important to your success as an executive than any other factor.

You become more effective day by day when you think and act on the basis of the key qualities of effective leaders throughout the ages. More than 50 qualities have been identified that are important to leadership. But there are seven qualities that seem to stand out as more important than others: vision, courage, integrity, humility, foresight, focus and cooperation.

Leaders know themselves. They know who they are and what they want. By developing complete clarity about yourself and your situation, you will think and act more efficiently and accomplish greater results in everything you do.

The best leaders are, first and foremost, managers. They make things happen. They get results. They organize people, allocate resources, implement strategies — whatever it takes to get things done.

One of the most important management qualities is flexibility. The more mental tools and skills you have to get the most and the best out of your people, the more flexible and, therefore, the more effective you can be as a manager.

The Importance of Time-Based Adaptation

"We didn't adapt fast enough" is a common enough explanation for the poor performance and disastrous leadership of many organizations. "We got it wrong" is less popular but just as relevant. People can move rapidly but in the wrong direction, Max McKeown points out in Adaptability.

The most successful adapters are curious. They understand that stability is a dangerous illusion, and they reach beyond the limits of what is to what may be, both good and bad. They reach out beyond the obvious questions to non-obvious answers and are willing to embrace unacceptable wisdom as a way of increasing the options available.

Time-based adaptation is hugely important to the art of winning. You should make it a priority to consider your own efforts over time. How can you get people ready, able and willing to adapt in the very short term? How can an individual pull in colleagues and resources in flexible ways to deal with short- or medium-term threats? And what can you start or stop doing that will put you in a better position to win in the longer term?

Everyone needs the responsibility and power to change what is necessary to win according to the game you have agreed to play. The frontline colleague needs to know when and how to bend the rules to help out a customer. The contract negotiator needs to know how to adapt the deal to what is on the table without exposing the organization to damaging agreements.

Just as important is how you adapt the wider organization in response to short-term adaptations that have succeeded or failed and how you consider longer-term changes that can take advantage of what is learned in any pattern of threats. This is what the most adaptive organizations do better that the rest. They continually notice what is happening, they actively seek to adapt ahead of the curve and also ahead of trouble, and they figure out ways to treat events not as exceptions, but as triggers to develop new, enhanced capabilities.

Recognizing that you need to adapt is a good start, but it's not enough. You may see that there is a problem, but that won't necessarily lead to a solution. Without understanding what adaptation is necessary, the wrong actions become more likely.

To be allowed to experiment and learn from those experiments is valuable. The point is not to learn to fail, but to learn what works from failure. Learning fast involves moving from knowing change is necessary to figuring out what to do differently and doing what is necessary. It is the complete movement from insight to action that is relevant to adaptability. You may not notice. You might not react. You may react too little, too late. You may under-react or even overreact.

The most effective adaptation happens when thought is given to the reasons for failure so that they can be avoided, and new lessons can be learned. The smartest, most adaptive organizations identify something worth doing and keep on learning until they get it right.

An Author Interview with Max McKeown

Max McKeown, author of Adaptability: The Art of Winning in an Age of Uncertainty, was recently interviewed by Soundview's executive editor Andrew Clancy.

Soundview: In the introduction to the book, you state that there are no perfect companies and no hero leaders. Is this part of the problem with adaptability? Are companies always looking to model themselves after someone else?

Max McKeown: Completely, and the sample group upon which they model themselves is so small. You've got Fortune or BusinessWeek or the latest bestseller telling companies that Apple is "now" and General Electric is "yesterday." Those companies became successful because they proved to be one of the best adaptations for their environment at that time. They proved to be the company that was most attractive to people who write stories about companies. You've got the celebrity angle of what's interesting to journalists and that temporary success side of business. It might have worked in that era and under those conditions, but it doesn't necessarily mean that it's going to work now, and it certainly doesn't mean it's going to work for your company in your situation with your people and your bias and history. You don't want to get stuck in the past, even with a hero company.

Soundview: You suggest in the book that all failure is failure to adapt. You state that there are three steps to discovery. The third of the steps is to find out how to free the people in a system to make the necessary adaptation. What is involved in that process?

McKeown: For perspective, let's add the other two steps: People usually struggle first to recognize that they've got to adapt and then to understand the adaptation required. The third step, which you've highlighted, is important because you need people to understand what it is that they need to do, then free them up to discover the answer, even if you don't understand it. Even if you didn't put certain situations in your plan, you need people to feel free to help you out, to contribute more than you were expecting. I think that's crucial because some of the stories of successful companies that we know so well came about not because of their hero CEOs but usually because somebody listened to some crazy person in the company who had exactly the right idea at exactly the right time. You might think of Lou Gerstner over at IBM with the astonishing turnaround he accomplished. That was a situation where two engineers felt empowered, felt the CEO was interested in the "little person's" idea, and they came up with this e-business concept that transformed the company at a critical point.

Then you have Apple where Steve Jobs is busy trying to survive with his company, and then suddenly a contractor comes to their company as an engineer with the idea for an iPod and iTunes and thinks it's going to transform the world. He's listened to and therefore is able to help the company achieve the adaptation required at exactly that point. I think it's impossible for the CEO to understand always what's necessary because he's busy doing his job. What he has to do is to make sure that people are engaged and listened to in order to provide that kind of imagination necessary to adapt successfully.

Soundview: You make the great point in the book that "Stability is a dangerous illusion." However, in an economy like the one currently gripping the globe, there will be firms that will be tempted to accept stability. How can leaders push through that desire and keep on the path to adaptability?

McKeown: I suppose the "old stability" has been replaced by the "new stagnation" in this economy. We're pleased just to be coping. We have political leaders in Europe and the United States who feel that austerity is enough. They seem to feel that we're doing well enough just to still be in the game, and humans typically want more than that. What someone has to do is to say that you may think you're doing OK, but a few percentage points either way on your profit margin or your market, and you're dead. Stability is like living on a knife edge. Second, things could be going a lot worse than you think if only you looked at what I'd describe as the adaptation logic of your company. How close is your company to being out of sync with its environment and so out of sync that you cease to be necessary? I think people need to look at a form of scenario-based planning and imaginatively consider how we move from surviving today to collapsing tomorrow. Then, more positively, how do we move from surviving to thriving to transcending the situation that we're in? We need to feed that with dreams and aspirations and, occasionally I suppose, a creative form of greed. But certainly, the creative obsession to do and make some kind of difference is crucial.

Soundview: You state that adaptability doesn't always kick in automatically. It sometimes needs to be prompted. Are there ways to expedite the process?

McKeown: The challenge, I think, for most leaders and employees is that they spend the majority of their time just trying to get through life. And they're busy, busy, busy. And the more senior you are, often the more busier you are, and you may be incredibly, maybe even absurdly, rewarded for your time, but you're still working 70-, 80-hour weeks and you're 100 percent focused on what you said you were going to do. So, you don't take the time to consider the Plan B. And then there's a second aspect that comes into play and that is that people feel that to be a strong person, a good person, there is virtue in sticking and staying the course. ... The idea that being consistent is good. The difficulty is you're going to have to change direction because otherwise, at some stage, you're going to go right off the cliff. And I think then, that the way to accomplish this is first, just accept it and constantly ask not just "What is our Plan A and how are we going to achieve it?" but what's our Plan B, and Plan C and D. ... And two, if you have sessions in which alternative futures and scenarios are painted, good and bad, you then find that the busy, action-oriented executive starts to take seriously these other possibilities rather than staying overly blinkered. It's easy to slap a guy who has got blinkers on; it's easy to surprise him. And if you take away those blinkers, he starts to take seriously stuff that hasn't happened yet, but might happen next.

What Kills Reinvention

Before you can begin to embrace and implement continuous radical change and reinvention, you and/or your business have to let go of the reinvention killers that will destine your attempts for failure, according to Jason Jennings in The Reinventors.

It's not possible to embrace change and reinvent a business until you are able to let go of the reinvention killers, which include the following:

Ego. The ability of an organization to embrace radical change and reinvention is determined by the ego of the person in charge; substantive change is never initiated from the mid-level or bottom ranks of an organization. Keeping one's ego in check requires serious introspection and answering the most intimate and revealing question anyone will ever ask themselves: "Is it all about you, or are you truly doing what you do for the interests and greater good of the organization?"

Entitlement. Few things stand in the way of radical change and reinvention as much as a sense of entitlement. Entitlement is the misguided and arrogant belief shared by so many business owners and executives that their business has a right to continue to exist and do well simply by virtue of either being in business or having been successful at some point.

Greed. When the owners or leaders of a business are self-serving and greedy, treating the company as their own personal pocketbook, there's no chance for any significant change or reinvention to occur. When they talk about change or reinvention, it's only in the interest of tweaking things enough to keep things exactly the way they are for as long as possible in order to fulfill their greed.

Short-timers. CEOs and senior leaders who are thinking about leaving a company have effectively already left. The biggest favor they can do the organization is to get out of the way and allow the business to change and grow. A shared human condition is the desire to leave an organization on an even keel, with everyone sharing fond memories. However, this desire is hardly the thing that makes risk taking, radical change and reinvention possible as it puts change on the back burner.

Risk Adverse. Some companies are averse to risk because they've actually seen so many of their peers fail. But it's irrational to be paralyzed by the fear of risk taking. Half of all new ideas fail because they don't get enough follow up as they travel from off-site strategy sessions to everyday execution on the front lines. Leaders who troubleshoot their execution process and teach all managers how to get more follow-through can cut the odds of failure in half.

Same Old, Same Old. The net effect of not challenging or changing anything until it's obviously broken is that a culture is created in which workers and managers become firefighters instead of proactive change agents. Any business that's constantly sending its managers to fix what's broken will become so preoccupied with temporarily fixing stuff in order to keep things the same that there will never be enough time for proactive reinvention.

Businesses that master the art of embracing radical change are quick to fix and change things before they're broken.

Strategic Judgment and Company Direction

Winning leaders, the ones who continually make the best judgment calls, have clear mental frameworks to guide their thinking, Noel M. Tichy and Warren G. Bennis point out in Judgment. They have stories running in their heads about how the world works and how they want things to turn out. Winning leaders' storylines specifically address three areas of questions:

1. Where are we now?

2. Where are we going? The inspirational storyline here adds to the motivation for change, but more important, it lights the beacon. It defines the goal.

3. How are we going to get there?

The storyline is never complete and is always being modified by the judgments the leader makes. However, without a solid storyline, the leader's judgments are disconnected acts that may or may not move the organization forward.

Good strategic judgment is built on the leader's capacity to intellectually frame the world of opportunity and the organization's potential as well as the leader's ability to mobilize and align key leaders to help make a smart judgment and get it executed. Like all good judgments, strategic judgments need to be a process of preparation, the call and execution. Strategic judgments alter where the organization is heading.

Building Adaptable Companies

In What Matters Now, Gary Hamel identifies adaptability as one of five paramount issues that will determine whether an organization thrives or dives in the years ahead. The others are values, innovation, passion and ideology.

As change accelerates, so must the pace of strategic renewal. Problem is, deep change is almost always crisis-driven; it's tardy, traumatic and expensive. In most organizations, there are too many things that perpetuate the past and too few that encourage proactive change. The "party of the past" is usually more powerful than the "party of the future." That's why incumbents typically lose out to upstarts who are unencumbered by the past. In a world where industry leaders can become laggards overnight, the only way to sustain success is to reinvent it. That's why adaptability matters now more than ever.

Today, the most important question for any organization is this: Are we changing as fast as the world around us? Most CEOs would have to answer "no." The only thing that can be safely predicted is that sometime soon, your organization will be challenged to change in ways for which it has no precedent. Your company will adapt or falter, rethink its core assumptions or fumble the future.

Of course, change brings both promise and peril, but the proportion facing any particular organization depends on its capacity to adapt. And therein lies the problem: our organizations were never built to be adaptable. Those early management pioneers a hundred years ago set out to build companies that were disciplined, not resilient. They understood that efficiency comes from routinizing the non-routine. Adaptability, on the other hand, requires a willingness to occasionally abandon those routines — and in most organizations, there are precious few incentives to do so.

In a world of mind-flipping change, what matters is not merely a company's competitive advantage at a point in time, but its evolutionary advantage over time. Building a truly adaptable company requires a shift in aspirations, behaviors and management systems. An adaptable company is always reinventing itself, always pioneering new markets. Building organizations that are as resilient as they are efficient may be the most fundamental business challenge of our time.

Executive Edge is a publication of Concentrated Knowledge Corporation, 500 Old Forge Lane, Suite 501, Kennett Square, PA 19348.

Rebecca S. Clement, Publisher
Sarah T. Dayton, Editor

Contents of this issue have been drawn from, or inspired by, book summaries created with the permission of the publishers by Soundview Executive Book Summaries®

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