The ability to anticipate disruption determines whether leaders fail, survive or thrive in tumultuous times
Writing Ron Robinson
Leaders need an enhanced business model to bring their organizations together and navigate today’s fast-evolving ecosystems. There are four unfolding dynamics, in particular, that demand strategic responses. First, it involves improving operations to counter climate disasters. Second, it means strengthening financial margins to cope with disruptive political actions. Third, it compels actions to retain and develop the workforce as complex social changes reduce labor resources. And fourth, it challenges us all to devise processes for delighting customers while wrestling with constantly changing AI technology.
A living strategy that strengthens the company, updated and revised regularly, leads to a brighter future, even while organizations are challenged by these increasingly disruptive forces. It enables leaders to chart possibilities, innovate and thrive in an unpredictable economy. The approach to building such a strategy involves four components: study, design, build and adapt.
- Study Achieving resilience involves disciplined planning. It begins with the executive team becoming clear on the three growth horizons outlined in The Alchemy of Growth by Mehrdad Baghai, Stephen Coley and David White. Growth may be found by improving processes, products and services; by expanding into new markets; or by innovating products and services to disrupt markets and rapidly gain market share.
Nvidia grew across all three horizons: first improving its gaming offerings, then expanding gaming and chip services, and finally innovating AI chip development to disrupt markets and gain major market share. Cisco Systems first improved its operations before expanding its markets through business acquisitions.
Leaders who create new offerings without thoughtful consideration of these three options may experience early success, but tend to face headaches later as problems emerge. To avoid difficulties, be clear about the growth objectives being pursued, taking account of the organization’s culture and evaluating critical factors such as how the company’s board and leadership teams balance the pursuit of wealth with adherence to principles. Are the company’s principles visible to everyone? Are financials shared internally? How well is management working to enhance the wellbeing of employees? Leadership integrity contributes to organizational resilience.
Other examples of the importance of the study phase include McDonald’s, where strategy incorporated all three growth options: improving its operations, growing its market with more restaurants across an expanded geography, and building new restaurant designs. Study teams consisting of managers and crew members visited competing restaurants, counted cars in parking lots, tasted meals and recorded the time from food orders to delivery. They compared the results to their own restaurants, using the results to inform the design phase of strategy development. Another example comes from the early days of Intel when cross-functional teams of marketing, finance and engineering professionals met with clients to understand their product development plans, incorporating these findings into a two-year planning process.
Study is the foundation on which the subsequent elements of resilient strategy are built.
- Design The design component involves processing information obtained in the study stage through the lens of past, present and future events. It is important to include stakeholders – employees, management, suppliers, investors and customers – in designing solutions that resolve the problems restraining the company from becoming resilient. The structure of deliberations shifts from basic SWOT analyses to enhancing company financials and operations by resolving the constraints and roadblocks presented by the four intensifying sources of disruptions – from climate disasters to social complexity, political action and technological change.
In the design phase, McDonald’s focused on four areas: record-setting restaurant construction, improving operational efficiency across regions, driving employee development, and increasing customer satisfaction.
- Build After devoting time, energy and resources to designing innovative strategies, it is important to prevent them from gathering dust on a shelf. The build component is the stage for implementing tactics and achieving goals, involving the creation of action plans that address four key elements.
- State the strategy – the what
- List the names of participants assigned to deliver results – the who
- Record the timing for delivery – the when
- Record the status of the strategy
To drive progress, form ‘mastermind teams’ that extend beyond specific departments: for example, a customer satisfaction team might consist of staff from operations, marketing, sales and accounting. Teams assigned to each component establish regular meetings to implement action plans and update other teams. McDonald’s four teams met monthly to review action plans, coordinate with other teams and celebrate successes together.
- Adapt It is not enough to anticipate and prepare for disruptions. The key to resilience rests on adapting plans to changing conditions. When Covid-19 disrupted the operations of one insurance agency, leadership coordinated a retreat at which everyone helped design a plan for moving forward, creating a more efficient operation that included a customer newsletter, daily and weekly communications, and improved lead generation tools. Their adaptations enabled growth to continue even as social restrictions were enforced.
Survival and growth
Failure to assess, plan, execute and revise plans in response to changed circumstances is a prescription for failure in turbulent times. Survival and growth come from building a system that enables the company to continually innovate and succeed, regardless of what disruptions may occur.
Ron Robinson is a turnaround consultant and author of Practices of Resilient Companies: Overcome Disruption with Compassion, Collaboration and Knowledge (Business Expert Press)
