BY DAVID S. DUNCAN, RYAN MCPHERSON AND ALASDAIR TROTTER
How to Build a Future-Proof Business Amid Constant Change
Constant change, continuous disruption and increased global competition require businesses to make rapid decisions and quickly develop new products, services and business models. Recent examples of significant global events — the COVID-19 pandemic, geopolitical tensions, cybersecurity threats, catastrophic weather and even ships blocking major trade routes — highlight the urgency with which businesses must prepare to navigate future disruptions.
This accelerating pace of change calls for leaders to build organizational resilience in order to ensure the long-term viability of their organizations. They can do so by developing a clear strategy, investing in technology and fostering a change-ready culture to lead through disruption and remain relevant in the face of a changing market.
The execution of business activities in each of these domains falls along a spectrum from “reposition” to
“re-imagine.” Repositioning requires optimizing the core business in the existing environment, while re-imagining entails creating a wholly new vision for how the business might succeed in an uncertain future environment.
In other words, repositioning is about playing the current game at the highest possible level; re-imagining
means creating an entirely new game with an entirely new set of rules.
Future-Proofing Your Business
Organizations build resilience by balancing their repositioning and re-imagining activities. However, each company’s definition of balance is unique and may require temporary emphasis toward one end of the spectrum. In order
to determine the appropriate balance, leaders should consider the underlying pace of change in their markets.
For organizations facing stagnation, re-imagining may be of critical importance, whereas for organizations facing rapid growth, a focus on repositioning may drive outsize returns. Resilient organizations will stay laser-focused on both as this combination of the two helps them to tackle core and new growth simultaneously to allow for sensible resourcing and focus.
Resilience comes from an organization’s ability to adapt its strategy, technology and culture for today’s reality while also positioning the business to succeed in an uncertain future.
What is organizational resilience?
To ensure this balance, organizations must strengthen the enterprise capabilities that establish priorities (e.g., the amount of repositioning and re-imagining we need) and manage resource allocation (e.g., how do we allocate capital across both sets of activities?). Repositioning and re-imagining at an enterprise level both require a certain amount of innovation. Most organizations likely already have organizational innovation systems.
Creating a Strategy for Today and Tomorrow
At its core, enterprise strategy is about answering the questions of where the business should play (i.e., where
to go-to-market) and how the business can win (e.g., strategic positioning, services, products, etc.). Setting that
strategy — and answering the big questions — is the first component of a resilient organization. Strategy establishes the necessary foundation for the other elements — technology and culture — to succeed and sustain long term.
Of the two extremes of the spectrum, repositioning is more common and usually requires less creativity and
fewer resources to achieve. Typical activities that emerge as part of repositioning the strategy include pricing, marketing, balancing resources or slightly tweaking the go-to-market strategy for existing products based on competitive intelligence and what the business understands today about its customers.
The focus of repositioning is typically on short-term (12-18 months) goals. Repositioning is also primarily tactical, and as a result, most organizations have well-established processes for strategic planning, by which they make
daily, weekly and monthly decisions about how to operate the business. They likely already have governance and technology infrastructures in place to support ongoing efforts to reposition.
The majority of businesses excel at repositioning their strategies, but this competence comes with a risk of overwhelming their ability to re-imagine their strategies. These business leaders focus exclusively on the game they’ve been playing and winning, assuming the status quo will remain intact. The risk is that they may extrapolate existing models into the future, and in periods of significant change, that can be catastrophic for businesses that
lose sight of customers’ shifting needs.
Repositioning the Strategy
At the other end of the spectrum, re-imagining the future of their business requires leaders to revisit the most fundamental elements of their strategies. This can be difficult to achieve because conventional strategic planning processes are not set up to force leaders to think through some of the more basic questions about their identity, purpose and customers. Rather, leaders assume those questions are already answered and focus on fine-tuning
the more tactical aspects of their businesses.
Organizations re-imagine their strategies effectively when they think about what customer needs will be in an uncertain future environment and work backward to determine how the organization must evolve to meet those needs. This “clean sheet” thinking allows businesses to move beyond where they are today to transform to meet
the challenges of the future.
Re-Imagining the Strategy
Organizations re-imagine their strategies effectively when they think about what customer needs will be in an unknown future environment and work backward to determine how
the organization must evolve
to meet those needs.”
When re-imagining their strategies, companies should reevaluate their role in the market ecosystem or even reconsider what the ecosystem might look like and where they expect to find new sources of growth.
If the proposed changes are substantial enough, they may go so far as to rewrite their mission or purpose statements to better suit their evolving business models.
The irony is that the better a business is at repositioning, the less urgency they will feel to re-imagine their strategies. By the time they do decide to re-imagine, that push may very well be dictated by significant industry disruption. In many cases, transformation
at this stage may be too late to ensure viability in the long term.
The key to building a resilient strategy is to balance the business’s priorities to focus on simultaneously optimizing the core (reposition) and innovating for an unknown future (re-imagine). To manage these twin challenges, leaders should maintain momentum across both initiatives and allocate capital based on organizational data and their educated presumptions about where their future growth will come from.
Resilience in Strategy
Barriers to Re-Imagining Strategy
There are a number of barriers businesses must contend with as they reposition and
re-imagine their strategies in tandem.
The unwritten rules, beliefs and behaviors of an organization determine how things get done. If traits that prioritize the status quo are incentivized, the business may struggle to find the right balance between repositioning and re-imagining.
When businesses are good at repositioning their strategies,
it can make it harder for them to re-imagine the future; operational inertia, founded on years of legacy thinking, makes change more difficult.
Strong, consistent leadership is necessary for the development and execution of any organizational strategy. When there is a great deal of turnover at the top, it can be difficult to build momentum and maintain focus across the organization.
Incentive structures that disproportionately support short-
and long-term thinking can send the wrong message to
leaders about what the priorities are for the business.
A lack of leadership imagination can make it difficult to align on a common vision of the future. For many organizations, leaders lack the skills necessary to support future-focused re-imagining.
Lack of Imagination
To ensure buy-in for strategic change throughout the organization, leaders must create a compelling narrative
of the future. Without this vision and communication at
all levels, alignment is difficult to achieve.
Determine the right mix of repositioning and re-imagining activities to meet the unique needs of your organization and industry.
Key Actions for Executive Leaders
Align your leadership team to the urgency for change
and a distinct vision of the future of the business.
Appropriately allocate resources to both workstreams
based on strategic priorities.
Understand your organization’s current technology debts in the context of its overarching financial performance to determine whether additional investments can or should be made.
Crosswalk your digital strategy with the organization’s larger
strategic vision to ensure alignment and synergies.
Scrutinize your organization’s current technology footprint to identify systems
that can be optimized and those that need to be retired, replaced or upgraded.
Key Actions for Executive Leaders
When technology upgrades are undertaken in a vacuum, without consideration of strategy and culture, businesses
run the risk of failing to sustain their transformations over
the long term.
Any changes to a tech stack, by definition, bring increased security risk. Modernization to the cloud, especially, requires the deployment of focused countermeasures to mitigate security threats.
Business leaders may default to using old or outmoded technology long after it has ceased to be effective
because they have invested large amounts of resources
(time, money and effort) in it previously.
Sunk Cost Fallacy
The challenge for leaders lies in focusing their technology investments to deliver a clear ROI. The appropriate balance
of debt will be different for each organization.
If employees and leaders are entrenched in doing their work via old systems or processes, it can be difficult to reposition or re-imagine the technology infrastructure sufficiently.
Innovative and future-forward thinking can be inhibited when employees and leaders feel tied to established processes that do not meet today’s realities or tomorrow’s challenges.
Leaders may encounter a number
of challenges when repositioning
or re-imagining their businesses’
Barriers to Re-Imagining Technology
Resilience can be enabled by technology when businesses ensure that their investments are appropriately
focused to drive return on investment (ROI) in the short and long terms. It is critical for leaders to understand
the right balance of technology debt in their organization to achieve optimal outcomes. Depending on the
strategy, they must allocate adequate resources to priority focus areas.
Resilience in Technology
Resilience can be enabled by technology when businesses ensure that their investments
are appropriately focused to drive ROI in the short and long terms.”
Just as repositioning the technology infrastructure dealt with optimization, re-imagining centers around modernization. For most businesses, that will mean transitioning to the cloud and leveraging software as
a service (SaaS) to take their business operations to the next level.
Re-Imagining the Technology Infrastructure
For leaders, the repositioning stage is all about optimization — doing what they have always done but finding ways to do it even more effectively. Leaders should look at the systems they already have in place to ensure they are running effectively and that the business is deriving maximum value from their use. This work does not necessarily require new technology installation. More commonly, it will involve a focus on system rationalization and consolidation, the narrowing of the technology footprint, cybersecurity, intelligent automation and risk mitigation.
Repositioning the Technology Infrastructure
There is no doubt that technology is a vital component of any organization’s transformation strategy. To be resilient in the face of disruption, organizations require a cadre of tools that improve productivity and enable leaders to make timely, well-informed decisions.
Building a Connected Technology Infrastructure
Beyond that, leaders who re-imagine their technology stacks are looking for ways to sync up their systems to the enterprise strategy. When that happens, data flows more freely, productivity increases and innovation is unlocked. To achieve this, leaders must focus on breaking down siloes across the organization so that the technology infrastructure is connected, strategic and effective. This may include activities like identifying new vendors, heavier risk management, aligning processes or otherwise fundamentally rethinking the role of technology in the future of the business.
Help employees embrace change and push past resistance by intentionally
integrating change management principles at all levels of the organization.
Create a plan for ensuring a diverse and appropriate talent pool
for both today’s realities as well as tomorrow’s challenges.
Invest in the creation and/or maintenance of enterprise innovation
systems that support creative thinking and organizational growth.
Key Actions for Executive Leaders
If employees or leaders are resistant to or ill-equipped
to handle change, they can derail even significant forward progress. Integration of change management and
leadership principles across the organization can help
to mitigate these concerns.
The work of building a resilient organization is fundamentally a leadership challenge. Without a team of effective leaders with the right skills who are aligned on the urgency and importance of change, the project stands little chance of long-term success.
An organization’s culture is created by its people. Yet, resilient organizations empower their employees to embrace and drive change by incentivizing the right behaviors and discouraging those that don’t support the future vision of the organization.
Beliefs and Behaviors
It is critical to ensure that employees and the organization itself are measured against the strategic priorities of the business. As goals change, so should these metrics.
Hiring the right people or developing the right workforce skills and competencies to manage repositioning and
re- imagining work, and the change that goes along with
it, can be difficult for most organizations.
Without systems in place to encourage ideation, promote psychological safety and formalize innovation, businesses can struggle to find viable solutions to the challenges of repositioning and re-imagining at the same time.
Organizations must sidestep an
array of potential pitfalls in their
quests to foster resilient cultures.
Barriers to Fostering a Transformative Culture
A resilient culture is one in which employees understand their role in transformation and are proactively
engaged in the process. Again, a balance must be achieved between optimizing culture and shaping a
new one from the ground up.
Resilience in Culture
When businesses re-imagine their cultures, they must base their actions on an informed hypothesis of what the future
will be to drive innovation
At the same time, leaders need to be cognizant
of incentivizing behaviors that illustrate strategic
risk-taking and a willingness to disrupt historical
norms. As the culture and the organization at large is being re-imagined, an acceptance of failure will be key. The organization’s mantra should be “fail fast and fail often, but keep moving forward,” a distinct departure from stabler times.
It is important to ensure role clarity across both
the reposition and re-imagine initiatives. In most organizations, the bulk of the workforce will be responsible for repositioning, but only a specific set of individuals will focus on re-imagining the organization. And even fewer, likely only a select group of senior leaders, will be asked to straddle both projects.
When businesses re-imagine their cultures, they must base their actions on an informed hypothesis
of what the future will be to drive innovation and growth.
One of the major hurdles to re-imagining a culture is reconstructing the workforce to win with competitive advantages in the future. Just because a business has high-performing employees in today’s environment
does not mean that the organization is equipped to thrive in an unknown future. Re-imagining what
high-quality talent will look like going forward is imperative in order to hire and retain a strong team.
Re-Imagining the Culture
Repositioning organizational culture is all about addressing and solving for known gaps in the operating model,
talent strategy, and beliefs and behaviors of employees. As it relates to talent, this might entail optimizing the workforce, improving efficiency or productivity, defining role clarity, retaining the best performers, creating a
diverse and inclusive environment, and developing a market-competitive total rewards package. As it relates
to beliefs and behaviors, leaders will focus on incentivizing those behaviors that are delivering results today.
This will likely be anchored to employees’ legacy understandings of their jobs.
Activities at this stage often reflect the preferences of the organization in that they are risk-averse,
profit-oriented and based on a centralized decision-making structure that promotes business continuity
and operational excellence over transformation.
Repositioning the Culture
The role of people and culture in enterprise transformation cannot be overstated. These initiatives are founded in strategy and enabled by technology, but culture — the product of an organization’s operating model, talent strategy, and beliefs and behaviors — is what drives and sustains the results. To achieve that end, organizations must not only change their systems and environments, but the individual behaviors and beliefs of employees and leaders, too.
Fostering an Adaptable Culture
There will be far more brittle organizations in 10 years than there are today. As organizations continue to automate and become ever more dependent on technology, they may become less resilient. While new technologies and automated processes deliver improved efficiencies and cost savings, they also have the potential to calcify management structures while increasing operational inertia and the pace of change exponentially.
How can leaders get ahead of this trend? The future lies in automation, but resilient organizations will figure out
how to synchronize that reality with the human touches required to stay on course. This means developing balance between repositioning and re-imagining and also across the domains of strategy, technology and culture. When businesses reach that point of equilibrium, they will be well positioned to navigate disruption, maintain resilience and ultimately secure their own longevity.
The Future of Resilient Organizations
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A Model for Organizational Resilience
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