Go MAD or Leverage Disruptive Change

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Decoding Disruption – Getting Real About Your Future

As organisational leaders, our first instincts when chaotic, disruptive change emerges is to lock-down, cut-back, de-risk and generally do anything to protect business as usual. That is understandable when disruption is an episodic event that occurs sporadically and can be weathered until the upswing returns.

But, the disruption we are experiencing today is not episodic – it is the new norm!

Disruption is not new. In fact, it's been happening for as long as human beings have been innovative and creative. But, these times are different – disruptive change is continuous. The scope (more than digital – also social, economic and environmental), scale (global), speed (exponential) and systemic impact (everyone, everything, everywhere) is unprecedented. This extent of the reach and impact of disruption means that, for all organisations and their people, there is no hiding place. In fact, as multiple disruptors are starting to converge, organisations are faced with an active choice, leverage disruption or risk going MAD and losing out.

Weathering disruption with old mindsets, outdated capabilities, legacy business models, tired technologies, passé planning methods and sub-optimal strategic action drives organisations into a cycle of MAD (Managed Adaptive Decline).

MAD or Leverage – A Clear Choice

Managed Adaptive Decline is a condition that many organisations are already suffering. They have incrementally adapted to conditions that are not favourable to generating sustainable value and are reaching a point where they either cannot exist, or will require immense restructuring and innovation to survive.

This is typically the case for many listed companies who are caught in the ‘big listed trap’. They are owned by shareholders who demand immediate ROI at disproportionate levels to what the real market conditions can return. Hence, they are forced to squeeze their best from ‘business as usual’ that is totally unfit for disruptive change.

However, for most – especially private companies – there is an alternative; leveraging disruptive change by adopting a different approach. This isn’t hard to do if an organisation is willing to consider trying on a new mindset, developing a new skill-set and embracing strategic action to address what can appear to be an insurmountably chaotic environment containing highly complex problems.

In this environment I am not a pessimist or an optimist. I am a pragmatist who believes that humans are smart, and yes some are smarter than others, and all of us aspire to create a prosperous future for ourselves … but more so for our kids and grandkids.

This is why I am un-shakeable in the belief that we can create something positive from this chaos. We don’t have to accept MADness. We can, if we put our minds to it, use new approaches to thinking and planning, re-shape our skills and capabilities and take action to turn the tide towards taking advantage of this disruptive time and generating a sustainable future for people and our organisations.

8 Question and Indicators of Disruption Readiness to Leverage Disruption

We at Resilient Futures have spent over twenty years working on gaining insight and strategic thinking into this real and present challenge. In doing so, we have identified eight critical questions that organisational leaders must address if they are to genuinely leverage disruption. These are:

1. Are you aware of disruption and its impacts? Have you examined your organisation’s awareness of the various elements of disruption and the impacts that disruption is already having or may have in the future? Are you experiencing MAD?

2. Do you continuously monitor and align your team on the specific disruptors that are most likely to impact? How well does your organisation understand its specific disruptors and are their formal processes in place for identifying and monitoring them?

3. Is there a commitment from your key decision-makers to actively leverage disruption? Are your board, senior executive team and key decision-makers engaged, aligned and committed to taking advantage of the disruption you face?

4. Is your strategic action focused on actively leveraging disruption? Do you have a contemporary strategic planning process that is able to embrace the full extent of the disruption you face? Is this approach available to people at all key levels of the organisation to apply as part of an organisation-wide effort to leverage disruptive change?

5. Do you have the capability and resources to actively leverage disruption? Are your organisation’s capabilities and investments well-suited to making the changes required to leverage disruption?

6. Is the individual mindset and capabilities of people and your organizational culture conducive to leveraging disruption? Is there a leveraging disruption mindset embedded in your organisation? Have your people been trained in the skill-set and strategic action required to leverage disruption? Will your organisation’s culture resist any efforts to leverage disruption?

7. Have you accounted for the impact of disruption and vulnerability to disruption in your organization's value chain? Have you looked beyond your organisation and examined whether there might be vulnerabilities in your key customer base and / or supplier network that may impact you from outside your organisation?

8. Have you really considered the overall implications for your organization's medium and long-term sustainability? Have you considered the implications of disruption in relation to your organisation’s medium to long-term ability to be ready to leverage disruption and generate sustainable value on an ongoing basis?

Through answering these eight questions a ‘burning platform’ and Disruption Readiness Action Plan (DRAP) will emerge that can and must be used as a driver and incentive to either favour or force a move to be ready to leverage disruptive change.

The Leader Mindset - Four Styles from Transformational to Delusional

In many cases, leveraging disruption isn’t for everyone. Some will stick their heads in the sand, go back to the past, try harder to do what was done before or choose to ignore disruption all together. All of these leave only one choice – a MAD organisation and people. We think the preferred alternative is to look ahead, embrace reality and take responsibility for ensuring that disruption is a tailwind of opportunity rather than a headwind of risk.

Leveraging disruption also requires people who are realistic about their authentic leadership and learning style. We see FOUR predominant styles that are available to organisational leaders:

 1. Transformational learner and leader: A style that understands that in a disruptive environment being an active listener and learner around new thinking, tools and strategies is paramount to effectively dealing with and leveraging disruptive change, These people don’t disregard business as usual but, in fact, understand that they must lead organisational transformation, transition organisational talent, maintain business as usual and leverage disruption. This style also recognises that within disruptive change, holding on to conventional thinking and old ways of generating value is a much bigger risk than the potential risks that may emerge in transformation. Being a victim of chaotic change is a far greater risk than actively pursuing strategic opportunities with inherent risks that can be understood and mitigated.

2. Transactional learner and leader: A style that focuses primarily on business as usual and is wary of straying from conventional mindsets, skill-sets and strategic action. This style is highly vulnerable to driving organisations MAD through squeezing everything possible output out of business as usual before having to consider transformation. This is highly problematic as a high state of MADness can make it very difficult to transform an organisation. In many cases they have to deal with their own cognitive dissonance where they know that this approach does not work in disruptive change but are unable to or unwilling to learn and adopt new learning and behaviours to actively transform their organisation to leverage disruption.

3. Recreational learners and leaders: A style that is resigned to convention and sits back and takes what they can with the time they have. In its worst form this shows up as being asleep at the wheel, and ignoring the facts and insight of current and emerging disruptive change. These are VERY MAD leaders!

4. Delusional learners and leaders: A style that can work in two ways – be ultra-transformational and seek outcomes too far away to be believed or acceptable for those needing to effect the transformation or innovation. And those that are steeped in ignorance and denial and openly state their position on disruptive change even when the evidence is irrefutable. Both styles lose people very quickly as it is clear that the leadership narrative is out of sync with the real world.

The leadership style that is taking an organisation forward in disruptive change isn’t always up to an individual leader. Quite often, a group of leaders, say a board, choose what suits their cumulative style. We see this in many listed companies where risk-averse boards select transactional leaders that don’t upset the norms, even if they are leading the organisation into MADness. Then, without due responsibility, they ignore the material, strategic risks of disruption and claim immunity when the organisation and its people fail. This is especially the case when the corporate rules are swayed to provide cover to directors who focus on operational, fiscal governance and operational risk. This almost encourages organisations to be prone to producing stranded assets and asserting moral hazard rather than focusing on organisational transformation.

It is obvious that the only way for organisations to succeed in generating sustainable value is to enable all involved to adopt a transformational mindset that chooses to leverage disruption and at the same time manage business as usual in the most practical manner. To do that demands that the reality of disruptive change is acknowledged and the ‘burning platform’ is set free into the organisation to enable and empower people to drive transformation.

Your People – Gaining Engagement, Alignment and Commitment

Gaining engagement, alignment and commitment from key people in the organisation is a must. One department driving transformation may work as a guiding influence, but to truly transform an organisation requires a ‘community of believers’; people who understand that the security of their future is not only up to the organisation but up to them as well. They need to adopt an ‘I am Strategist’ stand whereby they are prepared and equipped to own their future work and in doing so create their own personal future work strategy to secure their future within and outside the organisation.

We’re All in this Together = For Us, Our Kids and Grandkids and Our Organisations

To be really ready to leverage disruptive change to generate sustainable value, every industry, organisation and person must see themselves as a critical part of a social-economic ecosystem and be willing to play their part and be actively involved. In doing so we must remember that in a deeply connected organisational (in a greater social, economic and environmental) ecosystem we are all in this together and only as strong as our weakest link.

Organisations and their people do not work in a vacuum. Whether they are customers or suppliers, directly or indirectly, every organisation and person has deep interdependency with others. Such interdependency requires individual and organisational investment in developing the mindset, skill-set and strategic action to understand and leverage disruptive change as an opportunity to generate sustainable value.

We are only at the beginning of our greatest challenge – deep disruptive change is the new norm and, as organisational leaders the choice between leveraging disruptive change or falling foul of its consequences into MADness is the most critical choice we can make.

Let’s hope there are enough of us to make the right decision – for us, our kids, our grandkids and our organisations.


TLDR;

• Disruptive change is the new normal!

• Disruptive change is occurring in more ways than through digital and physical technology, but via new business models, customer expectations, supply logistics, global competition, future of work and more, at an unprecedented scope (more than digital – also social, economic and environmental), scale (global), speed (exponential) and systemic impact (everyone, everything, everywhere).

• Organisations have two choices – leverage disruption or go MAD – fail through being trapped in a confusing cycle of Managed Adaptive Decline (MAD) whereby they adapt to declining market and operational conditions in a supposed well-managed manner until they die.

• The future for organisations is to:

  1. Be ready to leverage disruptive change, and

  2. Generate sustainable value

• Where to start:

 – Diagnose and understand your organisations readiness to leverage disruption and drive a Disruption Readiness Action Plan (DRAP)

- Create culture change through a new mindset, skill-set and strategic action in three key areas – board and c-suite, leaders in strategy, innovation and transformation, and critically, in your learning and development team.

- Equip your people with the ability to identify the capability they need to own their future work that is fit for purpose for the organisation and its ability to leverage disruption and generate sustainable value.

• We’re all in this together. In a highly connected world, a deeply interdependent business and organisational ecosystem that is only as strong as its weakest link, there is no hiding place. How will we be ready to leverage disruption to generate sustainable value for those that matter the most? Us? Our kids? Our grandkids? Our organisations?

Larry Quick is CEO of Resilient Futures and co-author of  Disrupted: Strategy for Exponential Change.

Larry Quick is CEO of Resilient Futures and co-author of Disrupted: Strategy for Exponential Change.

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