Sam Ridesic, Partner and Managing Director at Boston Consulting Group contests that in the new economy of testing new business models, rapidly evolving technology, higher transparency, greater innovation, demographic shortages, higher speed, and shorter product lifecycles, what’s needed is a more dynamic approach to strategy, one with an adaptive advantage – the ability to achieve superior outcomes in a turbulent environment by continuously reshaping the business through a process of managed evolution.
Adaptive advantage involves not only different ways of operating but different ways of thinking about strategy.
The first step is to be aware of the challenges and opportunities of an unpredictable environment. Leaders can begin this journey by asking their management teams these questions:
How rapidly and fundamentally is the basis of advantage changing in our industry?
How effectively are we tracking and adapting to these changes?
What is the cost of not adapting to change?
What is the best way for us to adapt, given our situation and environment?
What’s stopping us from embracinlg and deploying an adaptive advantage?
To balance what’s possible with current capabilities, most companies do a gap analysis, beginning with the senior team. They consider whether the leadership group has the right composition for growing this strategy, how (and how well) the leaders interact, and leaders’ level of openness and passion for the business.
To effectively create and maintain adaptive advantage, leaders must embrace the mindset represented by four elements of adaptive leadership.
- Navigating the Business Environment. Adaptive leaders must embrace uncertainty and adopt new approaches to chart a course amid turbulent conditions.
- Leading with Empathy. Adaptive leaders create a shared sense of purpose, and manage through reputation and influence rather than role authority.
- Learning through Self-Correction. Adaptive leaders encourage – indeed, insist on – experimentation to abandon past success models. Of course, some experiments will fail, but that is how adaptive organizations learn.
- Creating Win-Win Solutions. Adaptive leaders focus on sustainable success for both the company and its external network of stakeholders.
The way companies adapt their strategies defines the winners and losers.
How Successful Strategies Win
The purpose of strategic planning is not to make plans.
It’s to change the way we think and act.
And the speed of leader behavior change becomes the pace car for strategy execution.
There are three key areas of focus that constantly turbo-charge this organizational change race.
- Embracing Public Vulnerability. Successful strategy execution requires a rigorous confrontation of reality. But this can be less than effective if leaders don’t go first in being brutally honest about the behaviors that they must personally change. When leaders go first by identifying their personal behaviors that are inconsistent with the new strategy, they send two critical messages. First, they set the precedent for others to be vulnerable and acknowledge the importance of embracing the discomfort associated with being accountable for dropping old behaviors and adopting new ones. Also, they send the signal that is safe to talk about other company weaknesses. It encourages managers and employees to make key suggestions to change behaviors, practices, rituals, habits, and routines for executing the new strategy.
- Letting Go. Letting go is hard to do, but it’s core to successful change. Letting go means stopping the actions, behaviors, and roles that provided us with a current sense of value, achievement, and recognition. It also means letting go of what you’re very good at so you can develop new skills vital to the future strategy. Willingness to move away from what you do best in the business of yesterday to risk doing what you don’t know is critical to the business of the future.
- Build Trust to Gain Speed. New strategies and the need to move quickly will expose behavior changes that have been ignored in the past but are now critical to success. It’s important to establish new behavioral standards necessary for executing strategy. These are the top eight behavioral standards:
- Assume positive intent, and trust our experts.
- In the face of ambiguity, provide clarity for ourselves and our people.
- Balance the need to make fact-based decisions with the urgency to act before we have complete information.
- Own the whole of the business before your piece.
- Have open, honest, candid, and direct conversations that are tough on issues and respectful of people.
- Decisions made in the room must be publicly supported outside it. If decisions need to be reconsidered, the team does it together.
- Rapidly share learnings that are uncovered in success or failure.
- Support and encourage telling the truth about execution as a regular practice.
Brad Haudan and Don Maclean, Managing Directors at Root, contest:
Strategic change is a process, but all too often, it’s managed as a series of independent events led by functions.
It’s not the process itself but how it’s executed that differentiates the winners from the losers.
They force collaboration and shared meaning across functional boundaries while maintaining functional ownership and accountability. Winning organizations allocate “practice” time when functional leaders collaborate to form a clear picture of the desired future state and strategy that everyone sees in the same way. Then, when “audibles” are called in the midst of the transformation, they’re executed with a common mental model in mind.
They invest in capability-building at all levels, starting with the top leaders.
Employees often model their leaders’ behaviors, and for an organization to effectively change, leadership behaviors must change first. Winning organizations clearly define and track the observable behavioral shifts that are required by leaders if the organization is to achieve its desired future state.
The winning organizations enroll a broad group of leaders in the change. This next level of leaders often brings truth statements, barriers and, most important, new solutions to the executive team.
The point is that, without crafting a process for managing the change you’ve planned, you’re making your game much more difficult to win.