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How to Survive and Thrive in a World of Disruption

Posted by hkarner - 11. Dezember 2019

Date: 11‑12‑2019

Source: The Wall Street Journal By Irving Wladawsky‑Berger

Looking back upon my long career, it’s frankly sobering how many once powerful IT companies are no longer around or are shadows of their former selves: Digital Equipment Corp., Wang Laboratories, Sun Microsystems…the list goes on. 

The forces of disruption might have been more powerful in the fast‑changing IT industry, but no industry has been immune. In less than two decades, the global recorded‑music industry has lost over half its revenues, while the drop in newspaper advertising revenue in the U.S. has been even steeper. Retail has undergone major changes with the rise of e‑commerce, as has the telecommunications sector with the transition to mobile phones.

Why have so many companies been done in by disruptive technological and market changes? Is it that in spite of all their efforts in strategy formulation, their leaders failed to anticipate these changes and were caught by surprise?  Or is it that, as if actors in a Greek tragedy, they saw the changes coming and understood what needed to be done, but were somehow unable to make the needed strategic and cultural transformations?

“Evolutionary fitness of organizations is determined by their ability to effectively respond to environmental changes,” write Leo Tilman and Charles Jacoby in their recently published book “Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption.” 

Organizations need to be agile if they want to avoid going the way of dinosaurs, investing in the processes, cultures and capabilities that foster this “distinctive and all too rare organizational quality,” they write.

Agile software development is based on the early availability of experimental prototypes, user feedback, continuous improvements, and rapid responses to technology, market and user requirements.

But what does agility mean when applied to business, government and other institutions? The book’s authors define agility as “the organizational capacity to effectively detect, assess and respond to environmental changes in ways that are purposeful, decisive and grounded in the will to win.”

One of the central messages of the book is that agility is achievable. To help organizations do so, the authors deconstruct agility into its fundamental components: detection, assessment and response.

Detection. In today’s fast‑changing environment, every company, no matter how large and powerful, should consider itself but one asteroid away from oblivion. You never, ever want to first learn about the incoming asteroid when it’s about to hit, and then have to improvise your survival strategy in the middle of a crisis. Talented people should have spotted the incoming asteroid—the transformational technologies and market disruptions—as early as possible.

“The organizational ability to detect environmental changes that warrant a response requires a deep understanding of the competitive landscape in all its richness and complexity….Stepping back to think deeply about the nature of our environment, broadening and deepening our field of vision, and sharply questioning what we do and don’t know is often viewed as a luxury,” they write. “Adopting the agility mindset fundamentally transforms this perspective, turning a nice‑to‑have ‘luxury’ into a mission‑critical priority.”

Assessment. How can a company not only survive the forces of creative destruction, but leverage those very forces to help transform and propel itself into the future? How can you turn survival into the driving force of innovation? “Senior leaders must continually assess and explain to the whole of the organization what information is needed to shape strategy, manage risk and direct execution,” they write.

Response. The authors argue that there are two kinds of responses to organizational change. Senior leaders handle the strategic response to a major disruption by making adjustments to the overall strategy, business model and financial objectives. Empowered employees are responsible for the tactical response to changes encountered during strategy execution. This involves smart risk‑taking, innovation and on‑the‑job improvisation.  Both require a thorough understanding of the operating landscape, while leveraging the execution dexterity required to deal with each unique situation.

To be successful, all stages of the detect, assess, respond process must be enabled by three key organizational competencies:

Risk intelligence helps uncover hidden connections among seemingly unrelated risks, aggregate a variety of different risks and align the response to risk with the organization’s goals and resources.

Decisiveness positions the organization to act quickly when opportunities and challenges arise. It requires a common understanding of the actions to be taken and clear communications across the whole organization about what must be achieved and why.

Execution dexterity plays a vital role in strategy development “because our realism about the strengths and weaknesses of our capabilities and our ability to effectively deploy them is a critical aspect of shaping an effective strategy,” the authors write.

Irving Wladawsky‑Berger worked at IBM from 1970 to 2007, and has been a strategic adviser to Citigroup, HBO and Mastercard and a visiting professor at Imperial College. He’s been affiliated with MIT since 2005, and is a regular contributor to CIO Journal.

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