Change. Innovation. Transformation. Adaptability. No matter your industry these words have become the lingua franca for navigating success in an ever-changing world. Each is powerfully infused with competing portions of opportunity and threat. So potent and pivotal are they that we deeply want to believe a single best way exists to tame them. Spoiler alert: it doesn't.
The volatile, uncertain, complex, and ambiguous world that is our new normal gobbles up and spits out that halcyon view. Over many decades, well-meaning management and strategy gurus promised us that all we need do was find the ideal model, copy it, and set a steady course. And for a time that actually appeared to be true. It was a time when industries could be counted on to walk a steady line over years, when markets and world leaders largely behaved rationally, and when a 100-page plan was required to pursue a new path instead of a 140-character rant. Times have changed. So, what's a leader to do? The answer, it turns out, is simple: If you want to turn change, innovation, and transformation to your advantage, you need to embrace a diverse and fluid combination of factors. In other words, put your finger on the "blend" button and keep it there.
To understand why, consider innovation. In the not so distant past, innovation was believed to directly correlate with investment in research and development--a simple, single, quantifiable variable. Spend more on R&D, the theory went, and you'll be more innovative. Whether or not that was every true, a dozen years of observation by PwC's "Strategy&" group and others has found no statistically significant relationship between R&D spending and either financial performance or market leadership. Out of 1,000 companies covered in its most recent study, the group found that the most innovative organizations were in fact rarely the biggest spenders on R&D. The previous 11 years of this annual study conclude the same. Similar research into organizational transformation conducted by McKinsey & Company shows that many long-standing assumptions about change management are also off the mark in the current environment. What then do successful firms have in common? Strategic fluidity--that is, a flow of talent, investment, ideas, and approaches under constant reassessment and extending across the entire organization--is the approach that's winning the day.
Despite the overarching theme of fluidity, encouragingly, McKinsey finds that among the exceptional performers certain patterns stand out. The companies most adept at change, innovation, and transformation all prioritize some mix of the following key factors:
1. Effective communication.
Change today involves constant shifts in information, ideas, risks, and rewards. At companies where communication was clear, constant, and connected across all levels, the natural volatility of a dynamic environment proved less and also more manageable. McKinsey noted that one of the most powerful ways to communicate and ride the waves of change is for the organization to have a clear and shared "change story". In other words, when everyone is singing from the same basic song sheet as to what they are trying to do and why, the likelihood of success rises, even when the path for getting there continues to change. Related research further reveals that when that story is co-created, the positive effects are further amplified. If you've helped build the story, you naturally feel a greater sense of ownership.
2. Active leadership.
Prepare yourself: active leadership is about 'less' control, not more. When conditions become unpredictable or the consequences of decisions become greater, our natural tendency is to grab the reigns tighter. But the evidence is mounting that yielding control and empowering others at every level of the organization is the very thing that enables flexibility, openness, and more consistent innovation. McKinsey further pointed out that such moves helped senior leaders avoid the typical pitfalls that inhibit success, most notably the perception gap pitfall between the top and the rest of the organization about what's really going on day-to-day, and the pitfall of over-planning.
3. Continuous improvement.
Perhaps most important to success in a rapidly changing world is a cultural assumption of the temporariness of solutions and with it, culturally committing to a mindset of constantly looking for new and better ways to work and create. What's implied is that everything must remain open to change - roles, structures, measures, markets, and more. Least you think this observation smacks of chaos, McKinsey's most recent report finds that the presence of this cultural mindset actually doubles the chance of an organization's ability to sustain improvement after making a shift.
But the most important finding of all is this: No single action explains the difference between those companies that succeed and those that falter. Everywhere and always it's a mix. More, the right blend varies by organization. But when a flexible mindset of fluid bending is embraced by all and remains ongoing, more and more companies are finding not the feared chaos assumed to accompany fluidity, but the cohesiveness necessary to compete in a volatile world.