Leadership Agility: Navigating Uncertainty PDF

ADAPT STRATEGIC AGILITY Navigating Uncertainty with Speed and Precision Prof. Stephen Wyatt [email protected]...

ADAPT STRATEGIC AGILITY Navigating Uncertainty with Speed and Precision Prof. Stephen Wyatt [email protected] https://www.linkedin.com/in/stephen-steve-wyatt-b81521/ [email protected]  Adaptive Leadership: Navigating uncertainty with speed and precision The goal of this session is to equip you with ideas, guidelines and tools such that you can enhance the performance of your enterprises in the dynamic context of today and tomorrow (in the 4th Industrial Revolution). [email protected]  Adapt (verb) Ability to Adapt To make (something) suitable for a new use or purpose; modify. "hospitals have had to be adapted for modern medical practice" Similar: Modify, Alter, Make alterations to, Change, Adjust, Make adjustments to, Convert, Transform, Redesign. Agility enables Adaptiveness short-term enhances responses longer-term performance  The 4th Industrial Revolution WHAT WAS “The 4th Industrial Revolution is about more than just technology-driven change; it is an opportunity to help IS NOT everyone, including leaders, policy-makers and people WHAT WILL BE from all income groups and nations, to harness converging technologies in order to create an inclusive, human-centred future. The real opportunity is to look beyond technology and find ways to give the greatest number of people the ability to positively impact their families, organisations and communities.” World Economic Forum 2015 Prof. Steve Wyatt [email protected]  The $200 TRILLION Opportunity 4th Industrial Revolution: Does it matter? Winners and Losers – companies, careers, investors Enduring differences [email protected]  80 (100)% of a company’s value is driven by expectations of future earnings The past is decreasingly relevant as a “The way they made the world, for whatever reason, predictor of the future means that we only have data on the past or at best the present, but we have to take decisions for the future.” PwC CEO Survey: “Change is now truly a constant - Clayton Christensen process, not an event. Edelmen Trust Barometer: 51% believe that pace of business is too fast “We are putting a premium on speed,” said Jeff Immelt former CEO of General Electric (GE). Ginni Rometty of IBM “People ask, ‘Is there a silver bullet?’ The silver bullet, you might say, is speed, this idea of speed.” Eric Schmidt and Jonathan Rosenberg (Google) “The pace of change is accelerating,” [email protected]  Mary Barra Humble background, instilled with values of hard work, responsibility and care for employees and wider community. Started working at the company at age 18, checking panels and inspecting hoods to pay for her college tuition. She graduated from the the company’s institute, BSc in electrical engineering; then Stanford MBA in 1990. 2008, she became vice president of Global Manufacturing Engineering. 2009, vice president of Global Human Resources. 2011, executive vice president of Global Product Development. 2013, EVP Global Purchasing and Supply Chain. 2014 CEO. Big Vision: to transition into the tech space by moving forward in the automated driverless car, with acquisitions and organically. 2017 Chevy Bolt EV, beat rivals as the first electric car priced under $40,000 with a range of 200 miles. GM employs more software engineers than mechanical engineers. Big Decisions: 2015-2017, pulled out of Europe & Russia. 2018, closes five North American plants and lays off 14,000 workers. 2020 pulls out of Australia  General Motors 2023 6.2 million vehicles Founded in 1908 163,000 workers Bankrupt in 2009 Profit $19.1 bn 2016 employed 225,000 Revenue $171.8 bn 2014 revenue $156 bn General Motors Stock Price Tesla Stock Price: The world’s most valuable automotive company  TESLA 2023 Founded in 2004 1.8 million vehicles 2008 revenue $15 million 140,000 workers Building factories in China, $13.4 billion profit India and Europe Revenue $78.5bn Expanding into SUV Elon Musk Serial entrepreneur. Night-Club, Zip2, PayPal, Space-X, Tesla, Boring Co., Neurolink. ….and owner of X (Twitter) Parents divorced (aged 10). Bullied at school, even hospitalised. Hard working. Whilst running Zip2 he lived in the office and showered at a local YMCA. Notorious work-rate Committed. Personally investing, reinvesting $10 million into online banking venture of the $22 million made from sale of Zip2 $100 million into SpaceX and $70 million into Tesla of the $165 million from PayPal Bailed out Tesla with $40 million investment plus $40 million personal loan in 2008 crisis. After Tesla 2010 IPO - sold down his shares to rebalance his finances. Ranked joint-first on the Forbes list of the Most Innovative Leaders of 2019. Tenacious: longest tenured CEO of automotive company globally. Investors reward (and back) leaders who they believe will overcome the as yet unknown challenges As of September 2023, there are over 1,200 unicorn companies worldwide. Adaptive: Anchored on Purpose with Strategic Agility Mintzberg’s Critique of approaches to Strategic Planning 1. The fallacy of Prediction – the future is n unknown tio Fal liza la 2. The fallacy of Detachment – it is cy ma of Anchored on the pursuit For impossible to remove planning from Pre of purpose, translated of d doing into long-term strategy icti cyla provides the guide-rails on Fal 3. The fallacy of Formalization – process to adapt, acting dynamically as the inhibits flexibility, spontaneity, intuition unknown future unfolds and learning 15 Fallacy of Detachment “Skate to where the puck is going to be…” Coincidence MOVE IN Anticipation Timing ANTICIPATION  Dynamic Capacity: The ability of the corporation to anticipate and move in advance of market evolution To repetitively achieve positions of transient competitive advantage. Propagate insights and redeploy 2 resources across the organization in a Explore possibilities, timely manner to extend advantages. note weak signals 1 Adjust offerings and business models and develop greater insight. Anticipate to create and capture value through The measure of newly identified opportunities. the evolution of the marketspace. Dynamic Capacity is leading indicator of future Adjust the scope of activities Question existing conducted by the firm and its performance assumptions. Refine relationships with others in the the vision for how to eco-system. act in the unfolding future. Morph the portfolio of offerings and the choice of marketspaces 3 in which to compete. Leadership Paradigm: #5 Strategic Outlook: From Sustainable to Transient Competitive Advantage Sense & Make Sense: 4 KEY Mechanisms The ability to sense & Make sense of emergent signals can be a source of advantage. seeing and understanding leading indicators of trends and forces that could significantly reshape the marketspace and competitive dynamics. The key mechanisms and behaviours to foster are: Idea Fragments: everyone is smarter than anyone. The ability to harvest idea fragments globally, without cognitive or selection biases. To organize and effectively interrogate the growing database of idea fragments, with or without the support of AI (Artificial Intelligence). Systematically harvest Idea fragments. Ensure discipline in making-sense of possible futures. Experiment to Learn: Test and learn: Develop the propensity to test hypotheses, demonstrate the validity of insights and to generate more insight through rapid, low-cost experimentation. Rapid cycle experimentation and innovation. Access unique external insight: obtain independent data and insight on customers and the marketspace, generate new insights, enhance internal beliefs and points of view. Develop partnerships with unique access to insight, such as venture capital funds, incubators also develop a network of external experts. Ask... and, what else? Develop the culture and behaviour norms to expect and ask colleagues to share deeper thinking. Make it safe (or even celebrated) to share partially formed ideas rather than a culture that makes them feel vulnerable or attacked, ie adopting the habit of asking ‘... and what else?’ Probe each other’s thinking through inquiry and build on each other others ideas. Sense & Make-sense. Anticipate What Are Going To Be The Opportunities And Challenges Of The Future? Harvest Idea- Access Unique Ask…and What Experiment to Learn Fragments External Insight Else? Alcohol: “Everyone is encouraged to Media: “We do quite a lot of Construction: “There is so much Technology: “It is an advantage for jot down ideas or things they have experimentation now, particularly to changing in our sector, so we the product developers to be based noted; then once a month we share new customers and with customer invested in a sector-focused, in the markets which are evolving them – we have a virtual workshop offers. But that wouldn't have been technology venture-capital fund. most quickly. So, we have a globally that anyone can join. Everyone simply adds in their idea-fragments true a few years ago. We are We don’t run the fund, but we get dispersed network of experts rather and then we might discuss those that growing so fast, we experiment with to see all the proposals and the than having everyone co-located ” stand-out or if we see themes content, content creation formulae pitches….its a constant stream of and business models all the time” new intel for us” Entertainment: "Before the expert emerging” was the person who knew the data Entertainment: The Japan team Financial Services: ”Every couple numbers or a specific number, Media: “We have a futures team showed the powerful impact of of months we invite in a thought- "Wow, you're really smart." Now it's who spot ideas globally and they discovery about consumer through leader, from any background. We the people who are able to take all share and discuss, they spot trends experimentation as research, as we have a breakfast session with those data points and observe and activities that are very really didn’t know how to grow the them which then turns into a trends that become really valuable future-looking. Not just the next few business; the approaches from workshop where we think through and the insights of the team years, but much further out. But we Europe & US simply weren’t what might be the implications for are all expected to add to this and members. Sense-makers, they are delivering. I now do more such us, now or in the future.” we regularly discuss the ‘so what’ the new experts’” discovery experimentation globally.” implications for us” [email protected] Harvest Idea Fragments: More Dots, Better Dots Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while….And the reason they were able to do that was that they've had more experiences or they have thought more about their experiences than other people... Unfortunately, that's too rare a commodity. A lot of people in our industry haven't had very diverse experiences. So, they don't have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem. Steve Jobs  External Insight MH: We're seeing the rise of open strategy because there's an understanding that there's more knowledge at the edge of the companies than the centre. [When you are] involving them more directly, they know what's going on much more than you do in the centre. HM: The only way you can sense what's going on out there is if the population within your company looks like the population beyond your company. That's now a business risk if everyone is similar inside the company because they're not in touch with what society looks like. That may make them happier and make it a lot easier to do business because people, broadly speaking, think the same way, but it means that the chances of being blindsided are increased. RP: Fight to get external input, inspiration and ideas. Develop the habit of attending external events virtually or in person and collecting examples of great service. What made it great? Think beyond that final-stage interaction you had and try and imagine backwards into their organisation and all the steps it took to get that final delivery right. What can you learn and challenge your organisation on? How will you go about challenging the status quo effectively? Experiment To Learn – not just to test Rapid Experimentation: Test and learn: Develop the propensity to test hypotheses, demonstrate the validity of insights and to generate more insight through rapid, low-cost experimentation. Rapid cycle experimentation and innovation “Coordinated experimentation is critical to our success; the overall project is split into different parts with focused experiments in different countries; this is faster, as we run the experiments in parallel with one another and harder for competitors to monitor. We then combine all the findings into the product/channel/pack/promotion launch that we want to pilot. We have the scale and the reach, so we design and realize in market experiments that make a significant difference to the performance of our organization. We are investing significantly at getting better at this. We think carefully ‘What could we learn from this, where will we get the most learning?’” [email protected]  Seize & Replicate: 3 Key Mechanisms Adjust offerings and business models to create and capture new value. Propagate insights and redeploy resources across the organization in a timely manner. Move people - Move people between teams and locations in order to apply knowledge and experience quickly, whilst also deepening insight and learning. - Fire-Bucket-Brigade & Flying-Doctor models both enable flexible role adjustment as capacity required changes or colleagues are drawn into alternative teams and activities or to address problems or capacity constraints. - Fluid teams that can be quickly formed, drawing resources from across the organisation. Each individual member knowing how teams operate in ‘this’ corporation so collectively to be productive as quickly as possible. Clusters not regions - Cluster markets & customers with similar dynamics together, to deepen insight and accelerate knowledge dissemination. - Disseminate insight between markets with similar demand or competitive dynamics. Apply insights from experience in any one market in order to seek to influence the evolution of other markets. - Reduce (or entirely remove) regional headquarters: Go straight from Global to Local. Shape the future - Deliberate actions to influence the evolution of the market, “The best way to predict the future is to create it.” Winner-takes-all approach to dominate the on-going evolution of the marketspace. Move to platform to platform-based competition. - Engage regulators and competitors to enhance evolution of industry structure, whilst benefiting the customer. - Establish eco-system alliances to enhance the overall value proposition for customers and / or create platform-to-platform competition. Seize & Replicate: Examples Move People Clusters not Regions Shape the Future Agriculture: “Transformation has connected Semiconductor: “We have the opportunity in Alcohol: “Supply chain.. We have the some markets to move from demand-fulfillment flying doctors based in Vietnam because Local to Global and removed Regional. Now look to 19 ‘territory clusters’, whereas we used to to demand-creation market; this has happened they are cheap to be located there. We have five people based in Vietnam not have 4 regions. Resources are defined and in many developed markets but in younger reporting to the region. Reporting to the managed as either ‘in-territory’ or ‘above- markets this is a change that we help to global. One manager needs a flying territory’.” influence; which is to our advantage over more doctor. He goes directly to global, says, "I local focused players who may not have the FMCG: “We now operate with 11 clusters of need two flying doctors.”…the region is resources and eco-system partnerships to not involved.” countries and territories. The product mix compete so effectively in a ‘demand creation’ thought to be most relevant for the countries Finance: “We end up moving resources, market.” within any one cluster is determined by global people around and assigning them to and cluster leadership. The cluster also provides Financial: “We are very active in trying to projects. We are doing a lot of this, influence the evolution of the industry in guidance for brand activation, investment and actually. This is what we end up doing. different markets, working with the regulators. channel management. The country management We say, ”X, you know more about this Very often, we would be one of a very small than anybody. Put three people together team is responsible for actual selection of the product mix, activation and operations.” number of industry experts on particular and figure out what we're going to go and issues.” do in ‘country Y’.” Seize & Replicate: Spotlight Move People Clusters not Regions Capability to Seize & Replicate Shape the Future Example: “For Radler the idea was coming from another developing market in Eastern Europe, and the innovation manager asks "What is the business model there, what kind of consumer?" what is the relevance here?” R. is mainly for soft drink drinkers who'd like to have an alcohol experience, so you don’t target beer drinkers for the launch. We are there [similar market characteristics], determining the price positioning is very important. After that, we say Wow, why not." and start. In many markets we would not have the skill or scale to be innovative, but with these global innovation platforms we can see there are opportunities and we can launch then without too much risk or investment and we don’t have to confront the political road-blocks.”  Reposition & Reconfigure: 3 Key Mechanisms Adjust the scope of activities conducted by the firm and its relationships with others in the eco-system. The key mechanisms and behaviours to foster are: Define new marketspaces - Establish unique definition for the space to compete in, unconstrained by existing definitions of industries and sectors. Focus on a set of needs of the target customers. - Continuously explore adjacencies, adjust the offering and refine the business model. Act incrementally rather than with dramatic step-changes. - Probe new opportunities. Create options. Determine the value of creating an option for future expansion, or the cost of withdrawal. Harvest existing positions that become less relevant. Glide, don’t jump - Determine the portfolio (business lines, offerings, geographies, customer segments) required for the vision of the future. - Develop expertise at identifying, negotiating, acquiring and integrating new acquisitions as well as birthing new businesses from existing business units. - Develop expertise at preparing businesses for exit. Retain and recycle key talent, from legacy businesses. Harvest businesses before exit, maximise strategic advantageous. Choiceful duplication - Intentional choices to increase adaptability through maintaining alternative options (products, services, market presence and capabilities) whilst recognising the cost penalties e.g. of excess capacity. - Design supply chains with a degree of redundancy (e.g. dual or triple sources of components) in order to be robust under the influence of volatility in logistics context (e.g. exchange rates, logistics delays, etc.). - Increase flexibility in human resources by maintaining capabilities in-house whilst also seeking external support. Maintain relationships with key talent that rotates through the firm, so that they can return if needed in the future. Reconfigure & Reposition: Examples Define new Choiceful Duplication Glide Don’t Jump Marketspaces Media: We are expanding into new business Alcohol: The organisation structure matters Agriculture: Maintains two go-to-market areas. We bought the businesses of MX and less than in the understanding; we have models; the traditional pharmaceutical now LF. You could argue they are similar moved from a regional to product structure approach to markets presenting products by businesses to what we were in, that it is a sheer and then from product to regional structure; I chemistry and targeted to disease types, plus expansion, but they have also confirmed our believe it is a cycle. Either way is not good, a new range of products that correspond to thinking of ourselves as a consumer products we need a blend, so we keep moving from the specific life-stages of crops and is and experience business – that is a better one side to the other. supported by crop-based teams. definition of how we think about ourselves now, Tech: This is a big change…moving to a not confined to media and entertainment. more services-led company, rather than Metals: We decided that we want to have Industrial Tech: Our ethos is simple, if we see a technology company. There's a lot of global supply chain, but we have to be more big problem and thinking about it can see how reshuffling, moving people around, trying to nimble – and we can do that by coordinating technology might develop to provide a solution, embrace the whole culture…. I think it will across the global network and having options then we will want to be the pioneers. take a while. For such a massive change, we through leveraging multiple previously semi- need to take apart and reassemble the independent plants. ‘aeroplane’ mid flight. Reposition & Reconfigure: Spotlight Capability to Reposition & Reconfigure Define new market Choiceful Glide don’t jump spaces Duplication “We pursue a model of high-value innovation, rather than commodity technology, products and services. Our commitment to this model compels us to reinvent businesses continually; grow new ones organically and through acquisitions; and occasionally divest businesses that do not fit our profile.”  Adaptive Leadership: On the ‘balcony’ and On the ‘dance floor’ To address Adaptive Challenges you have to be BOTH Observe what is happening (Be ‘on the balcony’) AND you have to be involved shaping the work that creates the solutions (on ‘the dance floor’) An Adaptive challenge is one for which no expertise currently exists about how to solve it. There is an ever-present temptation to see adaptive challenges as technical ones – and thus to wrongly attempt to apply expert knowledge to new problems that require new solutions. Adaptive challenges are murky, systemic problems with no easy answers. Adaptive work is tough. Rather than providing solutions, you must ask tough questions and leverage employees’ collective intelligence. Note: A Technical challenge is the sort of problem for which there is already expert knowledge about how to address it. This does not mean that it is trivial; often it takes excellence in management to organise the experts and resources required. Acting quickly can be a measure of Agility.  Dynamic Capacity = Superior Performance Dynamic Capacity is the product (multiplication) of the strength of each of the three Dynamic Capabilities On average, those firms which had a higher than average Dynamic Capacity out-performed their industry Difference in Stock-price +63% peers by over 31%. performance (5-years) between companies with Low vs. High Dynamic Capacity! Take the FREE online survey +37% http://www.corporaterebirth.com/ Ask 5-8 people from your organisation to take the survey (individually) On average those firms that had a lower than average Compare and discuss the report that you each Dynamic Capacity receive underperformed their Identify actions to enhance the strength of each of In slower evolving In faster evolving industry peers by 15%. the Dynamic Capabilities Markets/Sectors Markets/Sectors  5 GRC Take-aways 1. Manage the Dynamic Capacity of the enterprise ⎼ Measure and track the Dynamic Capacity annually ⎼ Action plans to enhance 2. Enhance the capabilities to Sense & Make Sense ⎼ External insight and perspective ⎼ Regularly review ‘idea fragments’ ⎼ Ask…’what else’ 3. Enhance the capabilities to Seize & Replicate ⎼ Identify and mentor stand-out talent ⎼ Ensure knowledge sharing 4. Enhance the capabilities to Reposition & Reconfigure ⎼ Organisation structures and business models are updated and evolving ⎼ New technologies are being considered and adopted 5. Ensure the leadership is leaning-forward ⎼ Purpose & Mission focused ⎼ Shape the future [email protected]  Build the Dynamic Capacity of YOUR Enterprise THANK YOU My recent books, available from AMAZON Connect with or Contact me [email protected] https://www.linkedin.com/in/stephen-steve-wyatt-b81521/ [email protected]