At TomorrowToday South Africa’s recent showcase in Sandton, our team asked the 60 or so business leaders who attended what their biggest organisational needs were right now. Nearly one third rated “understanding changing business contexts” as their most important business need, and nearly half rated this as very important to them right now. In our work with companies around the world, across every industry and sector, we’ve seen the same issue over and over again.

It is indicative of business leaders who are more comfortable operating in conditions of certainty now finding themselves in a sustained era of uncertainty and change. Recent reports from Deloitte UK indicate that public companies are stockpiling cash at historically high levels – in the UK alone, public companies have over £ 60 billion in cash in their reserves. The main reason for this is that these companies just don’t know what to do. Holding cash does not generate jobs, does not grow profits and has been proven to ensure the company will underperform the market. Not clever, in other words. But business leaders would rather do nothing than do the wrong thing. For all their talk of innovation, when the chips are down, they’d prefer caution and inactivity. They just don’t know what to do right now.

Not that they would admit this, of course. And there’s lots of busy-ness inside their businesses. But their strategic actions speak loudly.

What is happening is that a number of change drivers are all working together to cause deep structural, disruptive change in the world right now. We are therefore living through more than an era of change. We have reached an inflection point in history, and are now living in an era where processes, systems, structures, products, services and careers no longer change – they transform.

The Bad News

UncertaintyThe bad news is that this era is not going to go away. It’s not being caused by the economic downturn (although the financial situation has served to accelerate the change drivers). It’s also not being caused by shifts in technology. In fact, almost all the technologies that appear to have changed the world (mobile phones, the Internet, smartphones) over the last decade are nothing more than the prologue for deep disruption that is about to crash on our shores. We firmly believe that the overwhelming majority of change is still ahead of us. “You ain’t seen nothing yet”.

By the end of this decade, technology will transform how we sell, market, communicate, interact, collaborate, innovate, lead, train and educate. The transformation that is underway will impact every business process. Successful companies will therefore be those capable of transformation, and not just change.

And that’s going to require a lot of “understanding changing business contexts”.

The Worse News

In a disruptive world, having a disruptive innovation capability is essential – not just for growing new markets, but also for protecting your existing ones. But leading disruptive innovation requires new mindsets, attitudes and behaviours from your leaders – and within your organisation itself. Books like Clayton Christensen’s The Innovator’s Dilemma, authors and speakers like Seth Godin, the remarkable success of innovators like Apple and Google, and the high-profile failures of Blockbuster, HMV, Borders and Kodak, have heightened the awareness of and fuelled a desire for game-changing innovation. More resources, models and tools exist to help companies innovate than ever before.

And yet, most public companies are doing nothing. They’re sitting on their cash. They’re unable to make sense of the compexity of the changing business environment around them.

Many business leaders have risen through the ranks of management where predictability and control are valued and rewarded. But now disruptive times generate levels of constant uncertainty very unlike this. Unexpected events, constant change, new information, inevitable failures and a fundamental lack of control are inherent to the new world of work. Few leaders are formally prepared to deal with the realities of leading or responding to this type of disruption – especially when it is incessant.

We don’t have to look far for examples of the effects of sustained disruptive change: the music, entertainment, pharmaceutical, computing, communications, travel, estate agency (in fact, any agencies), book publishing, photography and healthcare industries have all experienced dramatic change due to new technologies, business models, distribution channels, lead times, pricing models, regulations and market expectations. Companies in these industries have had no option but to experiment and introduce new technologies, methodologies and business models – not just to compete but to survive.

Many have not survived. And generally this can be attributed to a failure of leadership, and a failure of the leaders to make good, assured, timeous strategic decisions.

The challenge for organisations of all types is that the competencies necessary for leading through disruptive change are not formulaic or quantifiable. There are no 1-2-3 easy steps to follow to ensure success. And even models and methods that work today might not work again tomorrow. As Gary Hamel says in The Future of Management, “New problems demand new principles. Put bluntly, there’s simply no way to build tomorrow’s essential organizational capabilities — resilience, innovation and employee engagement — atop the scaffolding of 20th century management principles…. In an age of wrenching change and hyper-competition, the most valuable human capabilities are precisely those that are least manageable.”

The Good News

The primary focus of leadership in volatile, disruptive times should be to make sense of the times for their team. The good news is that most good leaders should be able to easily shift into this success-building mindset. But the key is simply that: a change in mindset.

This mindset shift involves at least the following:

  • Recognise that we live in an era of remarkable change and disruption that is not going to go away for at least another decade.
  • Doing nothing is not an option.
  • Do not look for one-size-fits-all solutions.
  • Best principles are much better than best practices (in fact, best practices can be downright dangerous).
  • You need to unlearn and relearn – not just once, but over and over again. Question your assumptions.
  • What got you here won’t get you there. New leadership competencies are required. (This might mean you’re not as good as you think you are as a leader).
  • You must embrace paradox. Think right-right instead of right-wrong. Learn new ways of thinking that rely on looking for new patterns and connections.
  • Push your own personal boundaries. Every day.
  • You will never have enough information ever again. You can’t let this stop you from deciding, and acting.
  • You don’t need to be able to see the whole path in order to take the first step. (This is a huge lesson that corporate managers can learn from serial entrepreneurs).
  • Don’t prevent uncertainty. Stop avoiding surprises.
  • Go on the offensive: create disruption, don’t just wait for it.
  • Take time to make sense of changing world. As a leader this is your primary task: sense-making.
  • Communicate more. Listen more.

That is not a random list. Please read it again, and honestly assess yourself: is that a characteristic of you?

You’ll find lots of examples and practical tips on how to go about this in other posts on our blog. But for now, ask yourself a simple question: do you enjoy disruptive change, or do you attempt to avoid it?

Understanding our changing business context is something we can learn to do. We can develop horizon scanning techniques. We can build new approaches to flexible strategies and use scenario-based planning. We can work on personal adaptability, creativity and resilience. We can improve our thinking and analytical skills. We can implement any number of change processes in our businesses, and change what we measure and reward to support these. We can – and must – do all of these things, and more, if we’re to be successful.

But first – and most importantly – we must change our mindset about the era we’re in and what it means to be living in a time of constant, disruptive change. It really is as simple – and as tough – as that.

TomorrowToday Global