Regardless of the nature of your business, you are either already dealing with disruptive forces operating within your industry or are preparing your company for change and disruption. Today’s business environment is different compared to what it was decades ago where everything was predictable and you would operate your business with greater certainty. Things have changed. Businesses across all sectors have to deal with a fast-paced changing environment and the message to current and future business leaders is “Disrupt or be Disrupted”.
Increased regulatory changes, advanced technological developments, a new breed of competitors, increased volatility and uncertainty, among other factors, are all changing the way companies operate and execute their strategies.
Companies that are failing or fail to adapt to this dynamic environment are digging an early grave for themselves. Sooner or later they will join the history books as the once regarded “Too Big To Fail” corporations.
In an era of constant change, uncertainty and increasing complexity, business leaders ought to challenge accepted ways of doing things and reappraise their business models to see if they are still fit for purpose. Unfortunately, many people are reluctant to adapt and change. Fear of the unknown often causes people to resist change, and this at times, results in far-reaching consequences. What used to work, say five or ten years ago, might no longer work in the current environment.
As a result of this fast changing environment, companies have to adapt a highly disruptive approach to managing almost every aspect of their business. As Marshal Goldsmith nicely puts it – What Got You Here Won’t Get You There. This ever-changing environment requires a new style of leadership and thinking. There is need, on the part of companies, to completely abandon legacy ways of thinking and embrace disruptive solutions.
What can companies do to prepare themselves for change and disruption?
Acknowledge That Disruption is Inevitable
Although it is difficult to predict the future with greater certainty and confidence, it is critical for organizations to know and understand that they are operating in an environment that is very unpredictable. Surprises are everywhere and these can abound anytime. To make it worse, we now live and function in a globalized and very interconnected world. Just because you are located in certain jurisdiction does not mean that events in another jurisdiction or industry will not have any major implications on your business.
The forces driving disruption within one industry might not necessarily have a direct impact on your business, but rather, indirectly affect the operations and performance of your business. What cross-industry issues are likely to have an impact on your business now and in the future and at what magnitude?
Instead of focusing on the past alone, management and their teams should start looking at the future and anticipate those forces capable of transforming the company’s existence and its operating model. In other words, having sharp risk-sensing tools capable of identifying risks and opportunities. This includes asking tougher questions about issues affecting the future of the organization, and having the right capabilities to respond accordingly.
You must be able to quickly identify any sudden shifts in the business environment that are capable of rendering your company’s broader strategy less relevant than it was in the past. In today’s era of data and analytics, companies can take advantage of these new technologies and use them to help predict the future and make fact-based and confident decisions. The challenge for many companies is having that ability to rise above all the noise out there and obtain the right insights for effective future decision making.
Take social media technology as an example. It has changed and continues to change the relationship between brands and customers. Control of brands has shifted to consumers. Consumers are constantly talking to each other on various social media platforms about different brands – the good, the bad and the ugly. It is no longer a case of the marketing team pushing the company’s products and services to the consumers, but rather listening to them.
Unfortunately, many companies are still reliant on internal sources of data to make key strategic decisions. They have not yet embraced new systems to mine unstructured external sources of data and tap into consumer conversations to hear what is being discussed about their products and services. Companies need to be reminded that managing in this environment requires them to adapt to this transition, get a grip on social media and start holding profitable conversations with consumers.
Given the massive proliferation of data, focusing on the right information is therefore a must.
Challenge Current Strategic Thinking
It is one thing acknowledging that forces of disruption are inevitable, and another thing to challenge current strategic thinking. What do you do when you have identified the various forces threatening to disrupt your business? Do you sit down, relax and allow nature to take its course?
Unfortunately, in today’s hyper-competitive and complex business environment, once an organization has identified potential disruption forces, it is critical to review the organization’s strategic choices and find ways of responding to the threats or opportunities presented on the table. This might require you to review your market and product portfolios and select the best candidates for investment. Some of the questions that you might ask yourself are:
- Given the finite resources at our disposal, what are the strategic choices that we should focus on and invest in?
- Which markets, customers and segments should we invest in now to position ourselves for the future?
- Who are our important stakeholders and how do we plan to satisfy their multiple sets of demands?
- How best can we realign our value chain in order to optimize our business performance and competitive advantage?
For many companies, their market share is under pressure from intense competition by current and new competitors. In order to survive and not disappear into the thin air, these companies must adapt and transform their business models. Strategies that might have worked for them in the past are now deemed unreliable. As a result, these companies have to respond faster and differently compared to their competition.
What is key is getting everyone within the company on the same journey. For people at the bottom to shed legacy ways of thinking, the tone of message from the top must be right. Leaders have the duty to provide a clear framework and steps required to move the organization from one position to the next. They must clearly communicate the plan to everyone, from top to bottom, and ensure the response plan is aligned with the overall company strategy and easily understood organization-wide.
When there is full buy-in and accountability from the top, there is a higher probability of buy-in from the lower level employees. A command-and-control approach cannot keep pace with a dynamic business environment.
Execute the Plan More Effectively
Various research findings have concluded that most companies, irrespective of industry, are good at planning but poor at effectively executing these plans. A lot of work and resources goes into these planning processes, unfortunately, these yield unsatisfactory results.
The difference between success and failure frequently comes down to how the organization implements its strategic plan. So often, there is a misalignment between strategy and implementation, resulting in poor performance. Preparing and responding to disruption requires business leaders to craft a simple to understand, but effective strategy, that is communicated consistently across the organization.
Clear communication of strategy throughout the company is key to creating alignment. Additionally, clear communication helps establish common goals for the different business unit managers to work collectively toward. On the contrary, poor communication creates barriers to effective execution. Getting everyone to work towards the same objectives improves cohesion.
In order to make sure that you are moving in the right direction, you must design and implement KPIs that measure progress towards achieving strategic goals. This helps set expectations and help identify any problems regarding execution.
Executing the plan effectively also demands the organization to have the right talent in place to implement the strategic choices that have been made. In most cases, lack of talent in key strategic positions has been proved to inhibit business growth. It is therefore imperative for leaders to know and understand that the capabilities required for success today are quite different from those that were needed in the past.
For example, the finance function of the past had chartered accountants as the team members. Today, the function has people with diverse backgrounds. This is because, as the role of the finance function evolves from being a bean counter to a bean grower, managing the function requires very different capabilities.
The onus is therefore on the company to develop and implement an effective talent sourcing strategy that attracts and optimizes talent and resources, and ultimately improve business performance.
Now or later, every business will experience some form of disruption. Business leaders must understand that disruptions will happen, and with each disruption comes risk and opportunity.
Are you prepared for the change and ready to respond?