Keep Flexible, Seek Clarity, Discover Questions
The world has been fantastic lately, a truly joyful place for anyone interested in uncertainty and complexity. I will not spend time recapping the global changes that have taken place since my last entry, if you do not know them you are probably not interested in reading further. Anyway, the build up to the current global financial and economic crisis, and the recent presidential election, offers awesome opportunity for those willing to be serious about competing for the future, not those changing for the present based on the past.
It has been rough ride in the last few months. Many of the models and "best practices" have been razed, rightly so, creating historic value destruction that will play out for years. We could not ask for a better situation. The opportunity to create unique competitive position is unprecedented, if one can become comfortable with uncertainty (I was going to write "extreme uncertainty", before I caught myself categorizing levels of uncertainty, which would imply I know the difference between mild and extreme uncertainty).
The value destruction currently taking place offers incessant opportunity, to capitalize on said opportunities we need new actions to help lead thought the ensuing uncertainty. Below are a few of these actions.
Keep flexible: things change and nothing destroys value more than a rigid culture living in a lithe environment. Ways of doing business that were taken for granted a few months ago are being reevaluated. Governments, companies, markets, economies and individuals are now forced to reconsider how resources are allocated. Companies that prepare for the future by being flexible enough to create the future will earn competitiveness.
- Be prepared for the endless iterations of change the future will bring … continuous adaptation.
- Operate outside tradition, and be mindful not to become tradition.
- Accept the notion, in both thought and action, that there are no absolutes.
- Recognize market asymmetry as opportunity to solve complex problems.
- Acknowledge that the opportunities exposed by the current global financial and economic asymmetry are unrecognizable in the traditional / current paradigm.
- Develop strategies that evolve over time and reflect the dynamic insight of an organization's culture. Top-down dictates and commands are over.
Seek clarity: complexity is natural, and so is human's aversion to it. It is not surprising that our tendency towards simplification has run its course. The global financial meltdown was the product of distorted data, information and knowledge through simplification (forcing linear categories, ignoring complexity and asymmetry). The ability for financial models tools to provide a false sense of security has proven disastrous. Unfortunately the thinking these tools represent are so imbedded in the education systems and business cultures we all live in or are heavily influenced by, it will take some time for us to learn how to manage complexity and uncertainty with clarity.
- Do not blame. It wastes time and money by creating a culture whose members cloak themselves with self-interest and put politics first. The past will not provide the learning we need; no matter how deeply we study history. Exact knowledge of what happened and what will happen because of the global financial and economic crisis is not attainable. Blaming breeds obfuscation, creating emotional charged environments that demand separating yesterday's "right" from "wrong", at the expense of the future.
- Be very wary of attempts to use specific experience and historical examples to solve current problems and / or make forward-thinking decisions.
- Gather information, data and insight from outside the operating paradigm, focusing on the present and future. Seek information, data and insight that could prevent achievement or success, i.e. the routes to falsification.
- Constant dialogue: continuous strategic evolution through trusted dialogue captures the reality of uncertainty and keeps decision-makers in the now and focused on the future.
- Spend time, do not "answer rush". However, do not mistake thinking for freezing or waiting to see how things turn out. Take your time, but do not linger. Those who are able to make thoughtful, forward-thinking decisions in the current context of uncertainty will be leaders.
Discover Questions: after the (creative) destruction, there will be a strong need for the new, different and better. For example, we could be facing a significant period were thrift is an equal or greater factor of prosperity than monetary wealth. This concept demands radical innovations in the way we think, spend, plan and buy. As demonstrated by the current health of financial and automotive industries, continuing the practices of yesterday to succeed tomorrow is questionable.
- Do not cut the innovation (or at least as little as possible). An easy and vivid action is slashing or cutting investment in efforts that do not have immediate returns. How could one compete in a new and different world without serious innovation? For example, a large established global chemical company is cutting 11% of its work force, half of which will come from the sale of non-core businesses, which is inline with its "long-standing strategy" of selling low-margin units and investing in higher-growth sectors (materials for the technology industry). This same company is cutting its R&D by ~50%. I suppose, supplying compelling products for the ever-changing technology industry will be difficult with deficient innovation.
- Economic downturns reshape business at all levels. Aspects that did not look ripe for innovation during the good times will be revisited. Everything could be on the table, from how paper is order to the executives' compensation. Long standing processes and systems that were once ingrained and overlooked are now being questioned. When everything is being questioned … look for bold new answers.
- If you think you have an answer, think again. If you think you have a directionally correct answer, take action as an empirical skeptic. If you know there are parallel paths, improvise with questions.
WHCCM
Originally published December 19, 2008