“Then Again, Where Have All The Corporations Gone?”
Forty percent of the Fortune 1000 companies in 2000 no longer existed in 2010. In July 2015, in an interview on CBS news, John Chambers (retired CEO of Cisco) predicted another 40% of the Fortune 1000 in 2010 would be gone by 2020. The current evidence supports his prediction.
“The Speed of Adapting to the rapidly changing environment is the new metric for competitive success” — John Chambers
“The rate of change is accelerating and will continue to do so indefinitely.” –- Alvin Toffler, Futurist
“It is not the strongest who survive, or the most intelligent. It is the most adaptable.” –- Charles Darwin
Their failure is no mystery. The postmortem research clearly shows they failed to close the adaptability gap. The adaptability gap is the gap between an organization’s performance and the performance required for success in our turbulent, rapidly changing business environment.
Whether the organization “flourishes or flounders” depends on how quickly the leaders respond to an emerging adaptability gap.
Logarithmic vs Exponential Change
Generally, learning new management skills, or discovering new ways of thinking, feeling and behaving, is not linear, it is logarithmic. Initially, progress is rapid and then, as skills improve, further improvement requires increasingly more time. (See curve A above)
Traditionally, an organization’s culture follows a similar logarithmic curve; as successful methods of dealing with technical challenges accumulate, the organization calcifies; flexibility and versatility decline. Cultural inertia — Immunity to Change — accumulates. Strong beliefs and habits become entrenched.
This is the existential leadership challenge that must be addressed by the leaders of every organization.
Market shifting, disruptive innovations follow a very different path. Generally, progress is very slow until multiple discoveries and disparate elements coalesce. Then, all of a sudden, progress evolves rapidly, that is, exponentially! (See curve B above.)
The gap between the accelerating rate of exponential change and the traditional logarithmic rate of change of an organization’s culture is the Adaptability Gap. (See shaded area C above.)
Turbulence and Adaptive Challenges
“The greatest danger in times of turbulence is not the turbulence – It is to act with yesterday’s logic.” — Peter Drucker
Yesterday’s logic is to regard these issues as technical challenges, rather than adaptive challenges. A technical challenge is any problem that can be solved by replicating a proven process within the existing culture.
Conversely, an adaptive challenge does not yield to established methodology. Its resolution requires curiosity and creativity. Adaptive challenges are only solved by experimentation and discovery; discovering new ways of thinking, feeling and behaving which always requires a culture shift.
However, the purpose of an organization’s culture is to preserve its identity, traditions, and its institutional wisdom. Organizational cultures innately resist change; thus, the logarithmic rate of change.
The exponential rate of change in the business universe is best described as volatile, uncertain, complex and ambiguous (VUCA). VUCA is a military term that describes the combat environment. Leaders have been slow to recognize that these turbulent, combat-like conditions exist in dealing with the adaptive challenges that are disintegrating so many established business organizations.
Recognizing An Emerging Adaptability Gap
The signals that an unrecognized adaptability gap is emerging are the same symptoms of other equally serious problems. It is easy to miss these signals until it is too late if the leaders are not looking for them.
Some often-missed adaptability gap signals are:
- Challenges keep recurring in a whack-a-mole pattern.
- Intractable problems do not yield to established practices and procedures.
- Strategic initiatives are not delivering the expected results.
- Leadership teams are overwhelmed with chaos and stress twenty-four seven.
- Conflict or communication breakdowns occur frequently.
- Enthusiasm, morale and creativity are low; turnover is high.
- Either top-line or bottom-line growth is flat or declining.
- Market share is declining; new products are not gaining traction.
When these signals persist over several months, leaders need to examine their existing beliefs and behaviors to see where their policies and systems are not congruent with the realities of the business environment. This is what an adaptive challenge (and the resulting adaptability gap) looks like.
Closing the Adaptability Gap
“The organizations that survive the future will be those that are capable of changing as fast as change itself.” – Gary Hamel, Professor, London School of Business
If, as a key leader in your organization, you have not encountered any adaptive challenges (and their ensuing adaptability gaps), be alert and get prepared. Your business universe is changing so rapidly that technically driven, adaptive challenges will soon show up – possibly as a Black Swan!
Creating the extensive culture shifts required to successfully deal with emerging adaptability gaps will be the subject of many future eLetters. In general, closing an adaptability gap begins with an enthusiastically engaged work force, one where people look forward to coming to work rather than look forward to the end of the day. (Gallup reports that only 30% of employees are engaged, another 50% are non-engaged, and 20% are actively disengaged.)
Closing the adaptability gap also requires moving from an Authoritarian, Command-&-Control leadership style to a Cooperative, Collaborate & Transform leadership model. It requires a low stress, safe environment that nurtures reflection, innovation and experimentation so that new ways of solving adaptive challenges evolve. (The traditional command-and-control style smothers creativity, innovation and discovery.)
The record shows that survival favors organizations whose CEO has a long-term perspective with a focus on the customer and employee engagement rather than a CEO with a short-term perspective with a focus on quarterly earnings. The long-term view enables a company to “flow” with the emerging adaptive challenges (think: Netflix), rather than just scrambling to survive quarter by quarter (think: Blockbuster).
Most organizations need to update their approach to leadership development. The prevalence of fatal adaptability gaps is clear evidence that our current leadership development methods are not as effective as they need to be. (Over 80% of the corporate leaders surveyed by Korn Ferry believe their leadership development programs are inadequate.)
**With full apologies to Peter, Paul & Mary. The wisdom of their 1962 hit is just as true today as it was then.
Join Our Eagle Tribe:
The Beginner’s Mind E-Zine is an irreverent, irregular publication for those leaders who already know it all and, from this wisdom, have the curiosity, humility and self-confidence to have their biases and blind spots challenged.
If you have not already signed up, consider joining our Eagle Tribe. This ensures that you will receive all future issues of the Beginner’s Mind e-Zine. (You can easily unsubscribe at any time.) As a reward for joining, you will receive our e-Book, The Five Elements of a Successful Leadership Development Program.
Download a copy of this Article!
Give us you email address and we will give you instance access to a copy of this article.
Your Feedback is Important to Us!
What management issues do you have? Email your questions, comments or requests to BeginnersMind@InSearchOfEagles.com. All emails will be answered.
A Guide at Your Side:
I provide leaders with something they cannot provide for themselves. I provide a sounding board where they can safely explore the uncertainties and complexities they face. When we have only our internal conversation, we create an echo chamber and are not aware of our blind spots and biases.
I often partner with leaders – executives and business owners – to create an Essential Pause for Reflection in their turbulent, chaotic life. This reflective time for “deep work” enables 1) more thoughtful, sounder decisions, and 2) a low-stress, fulfilling life adventure.
If having a Guide at Your Side to support you as you deal with the isolation, anxiety, chaos and stress generated by the turbulent VUCA environment is something you would like to explore, I would like to get acquainted with you. CLICK HERE
We will arrange a free leadership strategy session to see if working together will help you become the leader you wish to be. So that you get the greatest benefit from our discussion, you will need to complete a brief questionnaire that tells me more about who you are, where you want to go, and what results you expect to achieve from a coaching engagement.
So if the time is right for you, CLICK HERE