Disruptive change is inevitable – Change is constant

Change is inevitable.

More and more organisations today face a dynamic and changing environment. The oft-heard rallying cry in today’s organisations is “Change or die.” Survival in today’s global economy requires organisations to be flexible and adapt readily to the ever-changing marketplace. Change has become the norm. It is as necessary for organisations to pay as much attention to the psychological and social aspects of change as they do to the technological aspects.

We live in an era of risk and instability. Globalisation, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled, as has the size of the gap between winners (companies with high operating margins) and losers (those with low ones).

Change is the one true constant in business, especially when it comes to operating a business. Having defined processes in place to effectively manage change can help companies sustain success.

In today’s business environment, knowing how to successfully navigate these changes and develop appropriate and effective processes to properly manage such change is a must. It’s virtually impossible for organisations to make sound strategic decisions and completely accomplish objectives when deprived of strong change management strategies. This is especially true in the world of project, program and portfolio management, where obstacles and ambiguity are inevitable at every juncture.

Companies all over the world find that they have to continually make changes to the way they work in order to stay ahead of the game, be profitable, and be relevant. Oftentimes, the changes could be externally mandated, internally conceived, or both, but the reality is that companies do have to evolve, change, or die. The global landscape is changing: businesses are moving to take advantage of new markets; organisations are restructuring to operate better, given the current market dynamic; competition is causing companies to radically change the way they do business.

The old business is not coming back – this is not just a statistic, it is a fact.

Companies operate in an increasingly complex world: Business environments are more diverse, dynamic, and interconnected than ever – and far less predictable. A study I read recently suggests that 75% of the S&P 500 will turn over in the next 15 years.

Many businesses that “have done things the same way for years” are affected by disruptive change: the economy changes, the competition changes, products change, technology changes, customers change, employees change, vendors change, buying methods change, delivery methods change.

Disruptive change is coming, and the only question is whether companies are going to cause it or fall victim to it. Disruption is not easy, to create or to confront it.

Businesses need to grow continuously in one way or another to achieve and maintain success. Growth comes by making positive changes that promote growth and by responding correctly to external changes.

Organisations throughout the world and across the global markets also recognise the need to embrace ‘nimbleness’ and ‘agility’ if they are to survive in the long run. The ever-changing landscape, globalisation, global dynamics, make it inevitable that companies have to evolve fast, repeatedly, and in a continuously improving manner in order to comply with regulations, collaborate with customers, and stay ahead of competition.

Whilst awareness of the challenges associated with change is prevalent, there is also compelling evidence of the long-term benefit of being great at driving organisational change. Therefore, it is expedient to look at some of the reasons why change is difficult, so that we can deliberately tackle the reasons for change complexity.

Sustaining success depends on an organisation’s ability to adapt

Why can some companies take advantage of any change the market brings, while others struggle with market-necessitated modification? The reasons why will differ for each organisation, but the question is definitely worth asking especially in light of the fact that the pace of change is accelerating at the fastest rate in recorded history.

Most companies find it hard to transform themselves in difficult circumstances. Corporate transformation under pressure.

Leadership needs to have a mindset that although change ability (agility, resilience) is essential for the survival and growth of many companies, there needs to be a concerted effort to build capacity to lead change effectively, and to purposefully build a change friendly culture in a systemic manner. This means that change leadership or sponsorship becomes a leadership competency that is recruited for and developed in leaders in the same way that it is done for other competencies such as decision-making.
Companies most likely to be successful in making change work to their advantage are the ones that no longer view change as a discrete event to be managed, but as a constant opportunity to evolve the business.

Change readiness is the new change management: change readiness is the ability to continuously initiate and respond to change in ways that create advantage, minimise risk, and sustain performance.

Organisations, and the people within them, must constantly re-invent themselves to remain competitive. Sustaining success depends on an organization’s ability to adapt to a changing environment.

Senior executives recognise that in order to compete optimally in the current and future landscapes, their companies will be expected to do more for less in a more dynamic landscape with issues of globalisation, new market opportunities, and new ways of doing business. There is a recognition that the changes are going to increase and the demands for business benefits realisation will also increase. It is therefore no longer optional for leaders to increase their ability to successfully implement strategies by increasing their ability to manage change and in fact leveraging this change management skill to become a competitive advantage.

If you’re struggling or your market is down, change management is especially critical because growing companies are not afforded the time to weather the storm of down markets or decreased demand. Offensive change when the company is doing well is a whole lot easier to manage than defensive change.
With this sentiment, I am not suggesting that you overhaul your business entirely change your mission, vision, and values or abandon your product strategy with every minor bump in the road. I am suggesting, however, that the best companies the ones that experience exceptional long-term success are able to quickly recognise the need to change and make the tweaks necessary to help their business continue its growth trajectory.

Here are three tips that can help the journey of change easier:

  • Top down support from the CEO level down to the senior executives below the CEO is what ultimately drives successful change. When the changes are major, you need to create a burning platform scenario that will encourage a sense of urgency.
  • Clear, consistent, and transparent communication by all executives is critical to explain why the change is necessary. Throughout the change process, it’s important to regularly and clearly communicate the reasons for change and reinforce that message to your team so they understand why you’re taking the hill in front of you.
  • Quickly identify the senior team members who don’t buy in and encourage and support them to leave the company if they refuse to embrace change. This means you may lose some very good people who helped you get to where you are, but those people won’t be as valuable going forward if they aren’t willing to help you get to where you need to be.

Final thought on the subject – business is a little like the growth rings on a tree. Every year, something changes it could be your product, your top competitors, your customers’ preferences, or any number of things. The best companies adapt to those changes, reinvent themselves when change requires it, and find a way to grow – in good times and bad.

Successful organisations foster a positive attitude toward change by anticipating it and purposefully planning for change. Change must be addressed in an intentional, goal-oriented manner. Change is something that people should do, not something that is done to them. People are more comfortable with change when they participate in planning for or implementing it because they gain some sense of control which reduces their fears.

As George Soros once said:

‘Market fundamentalists recognize that the role of the state in the economy is always disruptive, inefficient, and generally has negative connotations. This leads them to believe that the market mechanism can take care of all the problems.’

What is required to be an effective leader in today’s totally disruptive business world?

A discussion and running theme that seems to be on every leadership and executive director’s mind, is ‘what is required to be an effective leader in today’s totally disruptive business world’?

Experts have opined for decades on the reasons behind the spectacular failure rates of strategy execution.
In 2016, it was estimated that 67% of well-formulated strategies failed due to poor execution.
There are many explanations for this abysmal failure rate, but a 10-year longitudinal study on executive leadership conducted by my firm showed one clear reason.
A full 61% of executives told us they were not prepared for the strategic challenges they faced upon being appointed to senior leadership roles.
It’s no surprise, then, that 50%–60% of executives fail within the first 18 months of being promoted or hired.

Becoming a disruptive leader is not a straightforward journey, no matter your background. It requires the embrace of wholesale change, the nurturing of innovative thinking and behavior, and the management of outcomes rather than resources. It requires a personal transformation that many will choose not to make.

Over the past year, we’ve been struck by how many times we’ve heard C-suite leaders use these words, or very similar ones, to describe the strengths they believe are critical to transforming their businesses, and to competing effectively in a disruptive era.

What’s equally striking is how difficult organisations are finding it to embed these qualities and behaviors in their people. That’s because the primary obstacle is invisible: the internal resistance that all human beings experience, often unconsciously, when they’re asked to make a significant change.

Cognitively, it shows up as mindset — fixed beliefs and assumptions about what will make us successful and what won’t. Emotionally, it usually takes the form of fear.

Amazon changed how we buy things. Netflix transformed how we consume videos. And companies like Airbnb and Uber have shaken up the hotel and transportation industries.

A few years ago, digital disruption was something that happened to someone else. Now, no company is immune.
Disruptive technologies, products, services and business models are being introduced almost daily. So executives need to take charge of their organisation’s response to ensure long-term business success.

But while many organisations are eager to “get ahead of the curve” on digital, there’s no instruction manual or template on how to do it successfully.

A recent KPMG survey of chief executives and chief information officers found that while most are concerned about digital disruption, few are adequately prepared to address it.

Although digital may be disrupting your business model, it also creates opportunities for those that embrace change. Organisations that don’t will find it increasingly difficult to catch up as technology continues to advance rapidly.

So where do you start?

First, understand how digital disruption is affecting your products, services and business model. Then develop a digital strategy. That includes acquiring the necessary digital skills and getting the company to buy into the required changes.

KPMG’s CIO Advisory survey shows this won’t be easy.

The majority of CIOs (58 percent) and almost half of the CEOs (43 percent) are involved or very involved in their firm’s digital business strategy. But only a small number are actively leading the effort.

Given the magnitude of digital disruption, the lack of strong leadership could have a major impact on the company’s ability to adapt.

Companies must master and implement new technologies. That requires new skills, many of which are in short supply. Most CIOs in the KPMG survey cited a lack of critical skills and the limits of existing IT systems as their biggest challenges.

There are no quick solutions to these challenges. But first, companies need to develop a strategy. Without one, it is impossible to tackle the other issues.

Final thought, the complexity of the challenges that organisations face is running far out ahead of the complexity of the thinking required to address them.

Consider the story of the consultant brought in by the CEO to help solve a specific problem: the company is too centralised in its decision making. The consultant has a solution: decentralise. Empower more people to make decisions. And so it is done, with great effort and at great expense. Two years pass, the company is still struggling, and a new CEO brings in a new consultant. We have a problem, the CEO explains. We’re too decentralised. You can guess the solution.

The primary challenge most large companies now face is disruption, the response to which requires a new strategy, new processes, and a new set of behaviors.
But if employees have long been valued and rewarded for behaviors such as practicality, consistency, self-reliance, and prudence, why wouldn’t they find it uncomfortable to suddenly embrace behaviors such as innovation, agility, collaboration, and boldness?
Einstein was right that:

“We can’t solve our problems from the same level of thinking that created them.”

Human development is about progressively seeing more. Learning to embrace our own complexity is what makes it possible to manage more complexity.

The challenges of leadership and digital disruption

The pace of digital disruption has left 50 per cent of businesses and public sector organisations fearful or worried that their organisations will not be able to keep up with what is still to come over the next five years.

As technology continues to transform business models, a new breed of corporate leader is emerging who is digitally-savvy and assiduously curious. Rather than fearing change and obsessively trying to retain control, the most accomplished CEOs accept that for an organisation to compete globally and attract and retain the best talent, they must be highly collaborative, operationally focused and ruthlessly strategic.

It is not enough for businesses to simply be aware of digital advance they must interpret what these could mean for them and how they might benefit. Senior executives of large incumbent organisations have many legitimate concerns and questions about the opportunity that digital presents.

Whether due to unclear monetisation models, baffling market valuations, inflexible IT systems or never-ending jargon and predictions, digital can certainly seem disruptive, and not always in a positive sense.

Despite a sea of uncertainty, it is becoming evident that organisations that successfully leverage digital technologies for new growth operate with a different set of rules and capabilities, and see a greater return also.

Below is a list of seven critical management concerns:

1. Sense and interpret disruption
Merely sensing change is not enough. The trick is to interpret what these changes mean to the business and, more importantly, when they will have an impact.
If business leaders are unable to interpret these change signals, they are no better placed than those who did not see change coming. Research shows that half of business leaders expect competitors to change at least some part of their business model.
The key question is: What will these new business models be, and when will they become relevant?

2. Experiment to develop and launch new ideas more quickly
Ask most entrepreneurs about how they innovate and they may look nonplussed. Most digital disrupters do not see themselves as “innovating”, per se.
In their minds, they are solving specific customer problems the best way they know how. As such, innovation is a consequence, not a goal.
Solving customer problems requires two actions: experimenting more and learning to self-disrupt. Digital technologies enable a new way of experimenting at almost an unlimited scale.

3. Fully understand and leverage data
Businesses hold almost unimaginable amounts of data, and are grappling with how to use it to develop new products and services that bring new value to their customers.
Mastering the art of exploiting data, not only by turning it into useful information, but also by finding new ways to monetise it, will be fundamental to how businesses run in the future.

4. Build and maintain a high digital quotient team
While IQ and EQ measure intellectual and emotional intelligence respectively, the time is ripe for “DQ” ‒ a measure of the digital quotient (or digital savviness) of organisations. As companies evolve their digital capabilities, they need to measure and rapidly build their teams’ DQ ‒ not least among their senior members.
Some organisations are pursuing a strategy of “acqu-hiring” ‒ buying the right skills through acquisitions of technology start-ups, or by establishing formal relationships with the start-up community.

5. Partner and invest for all non-core activities
One of the characteristics of effective digital leaders is their intuitive understanding that the journey is not one to be undertaken alone. A recent report that I read indicated that companies will be increasing their partnerships and alliances as they attempt to boost digital growth in the next three years.
Whether looking for new application programming interfaces (APIs), corporate development or business development partners, aligning with an ecosystem of partners is critical to digital progress.
The more they invest in others, the more organisations extend the team that is as vested in their success as they are.

6. Organise for speed
Two elements are essential for businesses to be organised for speed: according to “digital leader” aspirants, the first is CEO-level support and the presence of a dedicated central team to drive new digital growth.
The second is a team of “fixers” ‒ those at the centre of operations who are independent, respected and can draw on the right skills at the right time.
Many organisations are establishing the role of chief digital officer (CDO) ‒ a sound choice when that person also has the power to drive change and has responsibilities that are distinct from the chief information officer (CIO), chief risk officer (CRO) and chief marketing officer (CMO).
New structures are emerging to help organisations respond more quickly to digital change. Banks have partnered with accelerators that help bring new ideas, while many retailers have set up venture funds to access disrupters.
Other companies have acquired digital teams to enhance their internal capabilities, often funding entrepreneurs who know little about their industry to create a start-up that could seriously hurt their respective businesses.
This counterintuitive process can reveal some implicit industry assumptions that are holding back the business.

7. Design a delightful customer experience
Customers’ primary motivation for repeat business is the quality of their experience. Digital technologies have reset expectations here.
Today, a banking customer using a mobile banking app does not compare it with apps from other banks, but against their best mobile user experiences for usability or functionality, whatever the industry.
It’s important that organisations put the customer at the heart of their business and stand in their shoes when designing beautiful customer experiences.

Digital technology has already broken down the old, familiar business models but the effect it will have on the future of organisations’ operations as it evolves remains significant and unknown. So, CEO’s and business leaders are rightly concerned about keeping up with speed and objectives.

Embrace the change, or get left behind
While executives do not necessarily need to be literate in coding, it is imperative that they understand the role that digital technology plays in a modern organisation, especially if they are to realise the benefits of optimised productivity, efficiency and responsiveness to customers. In fact, nine out of 10 senior decision makers say digital technology is essential to a business’s future success.

Meeting customer expectations before someone else does
Delivering good customer service has become more challenging due to an overwhelming consensus that digital, and a hyper-connected society, has changed customers’ expectations. Business must adapt the way they do things to keep up.

Business to business organisations that may not have originally seen these consumer-focused demands as relevant to them are also feeling the pull, increasingly citing digital media as being very important from the perspective of recruiting talent, engaging colleagues and disseminating and sharing information across teams. As a modern day leader it’s critical to understand not only what technology exists, but how to utilise it to satisfy consumers’ and employees’ ever increasing expectations to drive a competitive advantage.

A modern workforce is a collaborative workforce
With the increase in the use of digital tools for working, boundaries are blurring and businesses are becoming more agile. To enable collaborative working, CEOs are turning to their CIOs, CROs and CDOs to make use of technology to achieve this.

By taking a more collaborative approach with all leaders in the business, digital can be used to transform business processes. By reaching out to the wider team, the CEO can unearth processes and areas of the business that could become more efficient and effective through digital technology, such as customer service and workflow management.

Digital is an enabler, not a disrupter
Having acknowledged that digital technology will play a central role in future success, business leaders cannot afford to show fear of, or reluctance to implement it. Instead they must lead by example, embracing technology with a clear view of the potential advantages to be unlocked.

Using technology to meet the rising expectations from the consumer is a must in today’s marketplace. Business leaders need to first understand what customers expect and then make best use of the available technology to meet their customers’ needs.

By embracing technology and using it in an innovative way, business leaders will be better positioned to maintain a competitive advantage by driving innovation, productivity and efficiency throughout the business.

Finally, when leaders move toward improving their observable behaviors, they have the extraordinary ability to positively influence employees to willingly become engaged. That’s a powerful investment that pays dividends not only in developing good people, but by directly affecting the organisation’s bottom line.

My conclusion is that leadership in today’s world is a balanced mix of universal characteristics and digital leadership traits which has the potential to guide us through years of transformation with optimism and idealism. Technology continues to prove that it can be used for the benefit of mankind, but only if we set sail on the right course and with smart individuals that make our journey, progress, and performance so much worthwhile.

As Robin S. Sharma once said:

By seizing the opportunities that disruption presents and leveraging hard times into greater success through outworking/outinnovating/outthinking and outworking everyone around you, this just might be the richest time of your life so far.

Is the world really out of control?

After the worst shooting atrocity in American history, the question, macabre but inevitable, arises once again: “How do we respond to a world that seems out of control?”

The world and its people are changing and losing knowledge. Females and males are losing virginity as early as 10 years old. The crime rate is increasing daily. Every tenth of a second a crime takes place somewhere in this world. Children are disobeying their parents, teachers have no control over the behaviour of children, mental health is at an all-time high in every society in the world.

Entire countries are poor and their population is literally starving to death while diseases eat away at them. Bad weather is increasing. Meteors hitting earth are increasing, hurricanes and tornadoes are increasing, the summers are hotter than usual and the winters are colder. Earthquakes are being felt in places where they should not be felt, earthquakes are happening in places where there are not even fault lines. Wild fires across the globe are destroying many many acres of land and destroying civilization.

The ozone hole is getting bigger, oil prices are rising and oil reserves are getting lower each day. The prices of goods and services are rising and the value of the world currency is lowering. Many new hurtful laws are going in effect and more and more people are experiencing some type of illness.

What are people to do about these major challenges?

Have these things been happening all throughout history and no one realised it or is things getting worse and making people pay attention to it?

The world seems that way because it is out of control the sun rises whether we want it to or not, the toaster breaks, someone cuts you off on your way to work. We’ve never had control. We have the illusion of control when things go the way we think they should. And when they do not, we say we have lost control, and we long for some sort of enlightened state beyond all this, where we imagine we’ll have control again. But what we really want is peace. We think that by having control or becoming “enlightened” (and no one knows what that means) we’ll find peace.

All around us things are changing. People are talking about disruption: personal lives being disrupted, businesses being disrupted, society being disrupted. This disruption, this change, is coming from lots of directions: technology, things that are happening in the world, the connected globalisation, urbanisation, the changing and ageing demographics, the refugee problems, politics, terrorism, the mobility of people, climate change.

One of the notable issues is that fear tends to dominate. Some people are finding themselves and their organisations in the scared quadrant as they don’t see the opportunities or they focus on the things that go wrong and are risky. How people react in uncertain moments is a good indicator of how they will react in the future.

Digital transformation is one of the largest of our time, translated in business model disruption, new services, cybercrime and new devices in an app- or bot- centric world, and disruption in our ability to cultivate new multi-generational talent and respond to a rapidly changing marketplace. We create more data than people can consume. We used to talk about innovation trends as if they were in silos. The trends are still important and have impact by themselves, but their combined impact will be much greater. We need to change how we think about business to remain successful and productive as individuals and as organisations.

We can see it happening all around us with accessible, affordable, adaptable technologies that are changing the way we live and work, becoming so fundamental to our lives that they are even shifting our understanding of what it means to be human. The adoption of new technologies is accelerating and technological breakthroughs are speeding up. It took radio thirty-eight years to reach 50 million users, TV thirteen years, iPod four years, internet three years, Facebook one year and Twitter just three quarters of a year.
While the digital economy holds great opportunity, it also brings new risks and challenges. So, what’s at stake?

To understand the future, we need to look at the past. Half a century ago, the life expectancy of a firm in the Fortune 500 was around seventy-five years. Now it’s less than fifteen years and declining even further. If we look at the Fortune 500 companies in 1955, 88% of them have disappeared since the year 2000. That means that only sixty are left. They went broke, they were taken over, they merged or they were split into pieces. In five to ten years from now a large portion of today’s companies will probably have an offering that doesn’t exist yet. Companies are going to change massively, and the rate of change is just accelerating.

Maybe, Charles Dickens, had a point when he quoted in ‘A Tale of Two Cities (1859), set in London and Paris before and during the French Revolution’, when he said:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, …”