I picked up “Future-Proof Your Business” because I have an interest in strategy. I think strategy is about predicting the future and placing your business (and yourself) favourably in that future. My favourite book on future proving is “Future vision”. It is hard, if not impossible.
One wrong move now could be catastrophic
Imagine you are driving down the motorway at speed and you lose control of your car. You realise that your accelerator pedal is stuck and your brakes have stopped working. As your speed increases, cars and trucks start rushing towards you, and you begin to swerve across the road as you try desperately to avoid a collision. Your adrenaline levels skyrocket, panic rises and survival strategies whir through your brain at lightning speed. One wrong move now could be catastrophic. What is going to keep you alive? It is the scenario that every leader in business faces today.
The problem with a lot of leadership (and politics) is short-termism. In the US, almost half of the CEOs of large organisations stay in post for less than five years.1 In fact, five years is the average tenure, down a full 20 per cent since 2013. This shapes leaders’ behaviour, blinding them to opportunities beyond the scope of day-to-day operations.
Hyper optimised or agile
That is unfortunate. Today, businesses can be completely undermined by a high-frequency change that appears on the near horizon and takes effect in just a few months. An agile business, ready to transform to meet changing demands from customers and the market, is one that is assembled from the corporate equivalent of Lego bricks. So, companies and their leaders have a choice. Do you want to be hyper-optimised for today’s environment? Or do you want to be agile so that you can adapt to tomorrow? You cannot be both.
The future is networks
I remember a book called “The starfish and the spider”. It predicted that in the future, networks will always beat monoliths. Platform businesses. With a few exceptions, there is no longer a clear operational advantage to maintaining anything except your core functions and outsource, near-source and automate, the rest and create an enterprise ecosystem.
The business model
The author uses a model where it helps you to identify the core, combined with several layers or rings. The customer is at the heart of that core, and there is an assumption that you run your day-to-day operational success with the minimum amount of friction. With a smooth flow of information as that determines much of your organisation’s ability to change.
- The presentation ring; in the presentation ring, the aim is to eliminate inconsistency in the language, tone, design, culture and data used in the interaction with customers.
- The connection ring; at the most basic level, the connection layer requires a consistent data model, so that everyone is dealing with data using the same terms. The ultimate example might be a single server containing all the company’s data, though this is not always possible or even desirable for various reasons.
- The process ring, the process ring is where any back-office functions that do not belong in proximity to the customer sit, as well as operational management.
- The collection ring, the collection ring is where your operations interface with suppliers up-and downstream in the value chain.
The questions to ask about the rings
- Does your technology infrastructure support low-friction interaction between units?
- Does the culture of the business encourage entrepreneurial leadership in the units?
- Do you have the personnel to take ownership of each unit and operate them on a semi-autonomous basis?
- How long does it take your organisation to make decisions?
The author thinks that you need to build an organisation for extreme adaptability, with ambidextrous leadership that can balance the challenges of today and the opportunities of tomorrow. That describes the gymnastic organisation that Sunil Prashara is talking about. You all need to become gymnastic. COVID, digitisation, existential VUCA and system shocks will force you down the transformation route. The bad news is that the reported failure rate for corporate transformations was first estimated at 70% in 1996 by John Kotter in his book Leading Change. McKinsey’s 2018 global survey on transformation put the failure rate at 74%.
Everything starts with a perspective on the future
Unfortunately, the annual strategy documents are rarely based on the understanding that radical change might be required. With few exceptions, they are plans for optimising today’s business, not adapting to a foreseen new reality. Occasionally a more radical plan is put into place. In most cases, though, this tends to be a reactive rather than proactive exercise. It is usually triggered by issues that are already causing material harm to the business, rather than trends that were spotted early through formal horizon scanning.
The old practices are a dead end
Running a business based on the current array of budgeting, strategy and response processes is a recipe for disaster. Combine this with the near-exclusive focus on process optimisation, and you have a recipe for a company that will, sooner or later, drive itself into a dead-end, blind to the changing world in which it is operating.
Scan the horizon
You need to start scanning the far horizon. Using scenario planning. The process of creating multiple scenarios in order to understand how you might plan for them. Ultimately it is organisational anticipation muscle that needs to be developed. You can use a variety of factors, starting with the time frame. It is easier to bring that out 10 to 15 years to force you to think long term. Use PESTLE, use exponential thinking when you consider technology in particular. Make the distinction between hard and soft trends. The author uses more change, more choice, more power, more speed and different shape.
Internal pressure points
In order to link the big macro trends back to hyper-local effects on your business, you need to look at the pressure points. Typical internal pressure points might include ageing or obsolete infrastructure, poor communication between departments, slow or difficult internal processes, investment in technology, internal politics, decision-making, customer service or reputational issues, financial health, poor margins, space – too much or too little, staffing, skills and recruitment. The way to find these pressure points is quite simple: you just have to ask. Here are some examples of questions you need to ask staff in order to elicit the right feedback:
- What frustrates you most at work?
- What stops you doing your best work each day?
- What are your colleagues’ biggest gripes and concerns?
- What are your customers’ biggest complaints?
- What do you think keeps the chief executive up at night?
External pressure points
External pressure points are those that affect everyone in your industry. Examples of external issues might include regulation/deregulation, changing customer behaviour, margin pressure based on price competition or materials costs, macroeconomic factors, skills shortages. The questions to ask:
- What are the biggest issues in the media that cover your sector?
- What’s wrong with your supply chain that also affects your peers?
- What downstream issues affect you and your peers?
- What keeps your investors/stakeholders up at night?
Then consider the key effects. What this trend does to businesses, for example, shortening the time a product will remain competitive in the market. What primary business areas are affected. The functions or processes in your business that will be most affected by this trend. What are the risk factors. The business traits and behaviours that you know are evidence that a company may be particularly at risk from the effects of this trend. Will this increase the pressure? Will this cecrease the pressure? Will this create a new opportunity?
Your decision making speed
Consider your decision-making process. Organisations have two-speed of thinking. They are generally too slow. Be faster than your environment. It is simple. Adapt or perish. If your clock speed is too slow, extinction is inevitable. You have speed 1 and speed 2. Speed 1 is operational decision-making. Speed 2 is strategic decision-making. What slows down decisions in your organisation today? Here are some good places to look for problems:
- How fast is your expenses processing, order handling, budget approval and new employee onboarding?
- How rich are the data that support your decision-making?
- How long did the relevant information take to collate and present?
- How confident are you in the quality and transparency of the data?
- Do you get the right information to decide, fast and untainted?
- How far does information have to travel through your organisation before it reaches a decision-maker?
- How much are the data interfered with as they make their journey?
- How much work is required to extract meaning from the data?
- Is the ultimate decision taken in a timely fashion?
The only way to create a faster clock speed is to empower people. The devolution of power to the edges of the business. Sharing autonomy and responsibility. Maximising the value of employment for the employee. The downside to devolving power across the business is a risk. So you need to set boundaries they have to operate within. And supply them with the quality data to make the right decisions. The ideal is that everyone with decision-making capability in an organisation should be data-literate.
We are living in an age of automation and augmentation
The price of data coherence, and the ease of integration, has become more attractive year on year as technologies have matured. Most young enterprises will operate on a single system, developed in house or acquired. On top of this coherent store of data you can apply the modern tools of data interrogation, be they reporting tools based on a graphical user interface (GUI), corporate performance management systems (CPM) or the latest iterations of business intelligence (BI). Suddenly, you don’t have to be a spreadsheet wizard to find the answers you are seeking. The language of the citizen developer.
Future-proof businesses are athletic businesses. Like great athletes they: sense the world acutely, take decisions quickly, train for agility.
Step 1: Make time
Step 2: Start to scan the horizon
Step 3: Accelerate delegation
Step 4: Improve information flow
Step 5: Structure for agility
Step 6: Tell the story.
I would only add one extra dimension. Introduce citizen development. It will speed up the transformation, the staff empowerment and increase your innovation capability in one fell swoop.
Leaders must lead change. It comes back to the analogy of the athlete. The greatest sportspeople are not necessarily the ones with the most technical skill or talent. They are the ones with the vision. The footballer who always looks up to spot that critical pass. The runner who knows their opponent and times their break perfectly. In an age of high-frequency change, the leaders who build future-proof businesses will be the ones who keep their heads up and focused on tomorrow.
Never underestimate serendipity. I read this book a few months ago and frankly had forgotten about it. I am now in the middle of writing a book about complexity reduction, codeless business architecture and gymnastic organisations. It dovetails perfectly. Combine this book with reading “Humanocracy“, follow the steps, and you are halfway there. Then contact AgilePoint.
You have everything to lose
If you do that, I guarantee that your transformation has a much higher chance of success than the percentages quoted before. Try it. You have nothing to lose and everything to gain. Actually, it is the other way around(wish). If you do not become athletic or gymnastic as an organisation you have everything to lose and everything to gain.