Navigating the unknown can be thought of as voyaging, like Columbus or Hudson, into uncharted terrain. The explorer would do well to prepare mentally for surprises, remain agile, minimize heavy baggage, practice acuity and vigilance, and maintain good communications with home base.  The key is to develop an organizational ability to anticipate well in advance and to respond to unforeseeable exigencies in a timely and resolute fashion. Here are some of the main components underpinning that approach.

Bold Moves.  When times are unstable, the payoffs associated with strong moves - especially when rivals are paralyzed - can create significant economic opportunity.  These moves can take the form of launching disruptive technologies (e.g., Netflix), quantum shift in the business model (Uber), or eco-system transformations (Apple's iPhone).  They may call for new arrangements with governments or the sharing of industry wide risks in say banking, nuclear power, cyber security, gene therapy or offshore drilling.  Such ecosystem moves require a shift away from just a firm-focused views of strategy to an industry-wide perspective aimed at preventing systemic risks or other catastrophes that can inflict broad collateral damage.

Clarity of purpose.  In times of uncertainty, when many people are unsure or even paralyzed, effective leaders imbue their organization with a strong sense of purpose.  People must know what they are fighting for and find legitimacy in the underlying rationale.  In the fog of battle, clear principles can serve as beacons for high integrity organizations, in addition to opportunism, street smarts or scrappy hustling. When Boeing was at its peak, for example, its vision was crystal clear: build the best airplanes possible.  Managers need to know what sets their company apart, as Steve Jobs did in the 1980s when emphasizing that Apple built personal computers that start with people--in contrast to IBM's machine-first orientation.  

Adaptive Capabilities.  As the lure of new treasure propels organizations into the unknown, they better arm themselves with flexible and reconfigurable capabilities. A multi-purpose Swiss knife will be better than some sophisticated high power drill for making small holes only in titanium materials.  When the fog is thick, focus on your resources and capabilities, as opposed to only end markets and products.  Honda did this early on when emphasizing three core competences: excellence in engine design, manufacturing and power transmission.  Honda than adroitly leveraged these in cars, motorcycles, lawn mowers etc. Since core competencies take time to develop, they will be very hard to imitate or transfer, thus bestowing sustainable advantage.

Network Mindset.  Most other organizations can only achieve their goals through alliances, partnerships and horizontal network strategies. Apple created an entire ecosystem to develop its winning i-Pod, starting with digital rights management software known as FairPlay.  This got music owners and app developers on board in creating a walled garden for song buying to counter illegal downloads.  Apple further leveraged its iPod success into the iPhone and iPad and thus conquered the world.  Network models are common in nature, from lower organisms like insects and complex primates.  Business text books, however, still favor a physics mindset than a biological one. Fortunately, such common terms as organizational DNA, mutations and symbiosis are changing the metaphor.

Ambidextrous Leadership.   The more uncertainty organizations face, the less likely it is that the current strategy will succeed without major adjustments.  So, leaders must know when and how to change the plan.  Netflix did this successfully by expanding its mail-order business for DVDs to on-line streaming of videos and then developing its own content. In a sense, leaders must be both classical musicians, for the part of the script that is robust, as well as jazz performers who can improvise.  This calls for ambidextrous leadership that is quite different from General George Patton barking directions sitting atop a white horse. Humility, shared decision-making and flexibility are more crucial today than the ability to direct the troops top-down.

Organizational Vigilance.  None of the above will matter unless the organization possesses sufficient capacity to spot changes in its business.  This means surfacing anomalies, exceptions, surprises and customer complaints.  P&G did this well after launching Febreze, a spray that eliminates unpleasant odors in the home or in clothing.  Rumors started in chat rooms that Febreze might kill canaries and other birds kept in homes.  Being very sensitive about its brands, these rumors were quickly picked up, independently investigated and then successfully countered by the company.  Vigilant organizations are highly alert about changes in their environment, both external and internal.

The irony is that usually some people inside the company are aware of signals that their leaders are missing.  But they may not realize that leaders are overlooking these early warning signs.  Better communication is the main safeguard against companies getting blindsided.  Although there are no foolproof analytical methods against blind spots - a fool with a tool is still a fool - leaders need to work hard to uncover the traps and biases that hold back their organization.  This means fostering an inquisitive culture since faster learning is the only durable competitive advantage in times of upheaval and change.

 

Published on: Jun 26, 2018