On this last day of 2016, I am reminded that in the coming year, I shall be celebrating 30 years of working with enterprise transformation. I have served in the role of program leader, consultant, counselor, coach, quality assurance lead and in a number of other roles. From these vantage points I have seen strategic efforts succeed spectacularly, peter out, stagger on like a zombie or go belly up. Being a curious person, I constantly analyze the factors that contribute to success and failure. Is it the strength of the leadership? Is it the quality of the strategic plan? Or is it about execution capability? And what role does sheer luck play?
The more data points I gather, the more deeply I am convinced that a key success factor is leadership’s understanding of the nature of the challenge / opportunity. Using Ronald Heifetz’ terminology, is the challenge being addressed a technical challenge / opportunity or is it an adaptive one?
We face technical challenges all the time. These are challenges where the problem is well-defined and there is a known way to get to an answer. This way may not be easy, and it may not be widely known, but it is known by some people and it can be learned. Linear logic applies, and you can sign up for a course to acquire the tools and the skills, such as root cause analysis, five whys, fish bone diagrams, Monte-Carlo simulation etc. Experts can play a decisive role when addressing such problems and the expert can successfully take a command-and-control approach. The expert typically knows the effective mindsets and behaviors, and these are often captured in simple ways: “blame the process, not the person”, “eliminate waste”, “get the process under control”, “limit variability”. Finally, technical challenges are typically local – they can be solved within a function / a process / an organizational unit. This limits the need for collaboration with others and it greatly simplifies the analysis. Solving these challenges may require hard work and deep thinking … and may yield spectacular results. Having cracked a number of such challenges, we may become enamored of our toolkit and proud of our record of accomplishment. We might come to think that all challenges are amenable to such approaches. But this is dangerous.
As leaders become more senior, they increasingly face more adaptive challenges. Such problems cannot be clearly defined. Any attempt to define them will fail to capture the full complexity of the problem or it will provide a very high-level definition which does not really advance problems solving. As there is no clear problem definition, there cannot be a straight forward way to solve the problem. Linear logic does not apply – there are simply too many variables and too many dependencies; in fact, we don’t even know all the variables and dependencies. Such challenges cannot be solved with a command-and-control approach. While some top-down guidance may be helpful, a bottom- up approach needs to play a greater role. Experimenting, piloting and prototyping typically become more important. Solutions can only be developed in an incremental fashion. Also, and perhaps more importantly, the solution will not consist of simple changes to organizations, processes or technology components – they must involve deep shifts in mindsets, in how we view ourselves and the world around us.
Enormous amounts of human energy and effort are wasted in naive attempts to tackle adaptive challenges using technical approaches. When such efforts fail, the people involved are often blamed: “They are not willing to change”. “The inertia is too high”. “We simply don’t have the right people”. Or external factors are blamed: “Our competitors are not hampered by the ethical concerns that we hold dear”. “Companies in our sector based in other geographies are not constrained by the onerous regulations we are subject to”. “Other players with a protected home market can subsidize their exports”. We have an innate need to find explanations that exculpate us. Such explanations bring comfort and it is easy to enter a collective delusion where the organization concludes that there was really no way to succeed. It takes deep courage to challenge this view and to ask: Did we perhaps apply technical fixes to an adaptive challenge? Might we have succeeded if we had treated this challenge as an adaptive challenge? What can we learn about ourselves from these outcomes?
Several of my current and recent clients are grappling with adaptive change in a particular area. They seek to exploit new opportunities that digital innovation brings while protecting their current markets, products and services from competitors. These competitors sometimes seem to come out of nowhere, they appear to be more agile and they certainly do not respect traditional sector boundaries.
As these client organizations seek to re-position themselves in response to the advent of “Digital”, I observe two distinct categories of responses.
First, the technical response. We send our people to training courses, such as “Digital Marketing” or “Deriving Consumer Insights from Data Analytics” to understand how to exploit new opportunities. We form new organizational entities – perhaps a “Digital Innovation” unit, perhaps a “Digital Architecture” group within the IT organization, perhaps a “Big Data Analytics” team. We hire some people with “Digital” skills. We introduce new tools and make them available to our people. The list is long. There is nothing wrong with any of this – except the fact that these interventions often add cost and it may be unclear exactly how they will bring benefit. Often such interventions smack of copying what seems to have worked for others. It is highly uncertain whether a technical response will bring success.
The adaptive response is more interesting. We start by asking some fundamental questions. What implicit assumptions underpin our business and how can we surface them so that we can challenge them? How might our past success get in the way of future success? What norms and values that served us in the past may no longer be effective in our current and future environment? What fears are currently constraining us? What would it take to let go of these fears? In which areas are we mainly being reactive? When are we at our best, truly driving creativity and innovation? What will it take for us to be at our best more of the time? How can we tap into our values so we muster the courage to break down barriers and chart a new course? How can we encourage more experimentation and controlled risk-taking? How can we foster inclusion, so we take into account a more diverse set of perspectives?
It certainly requires a different skill set to guide an organization through this kind of soul searching. When done well, it lays the foundation for new ways of working that profoundly enhance performance. With a deeper, shared understanding of the opportunities and a shared commitment to a future vision, collaboration can become much more productive and technical solution components can be slotted in where they are needed.
A new year with fresh opportunities lies ahead. I wish my readers a prosperous new year filled with excitement, joy and exciting discoveries. I also wish that you will find the courage to tackle adaptive challenges with adaptive approaches and, through this, deliver deep insight and great success.