Organizations have always had to adapt to change in order to stay relevant, but in today's fast-paced market, change is more necessary than ever. The 'Digital Enterprise' requires major business transformations, delivered quickly. The 'unfreeze-change-refreeze' model, reasoning from a stable current to a desired future state, no longer applies. Organizations in the 'New Normal' are in a constant state of flux. How do you effectively organize, manage and execute change in this New Normal'?
This is the first Column in a series about 'The adaptive organization'.
A changing environment
Some of the challenges that organizations face today:
- New technologies disrupt the market every day
- Globalization facilitates the entry of foreign organizations in your local market
- Customers expect high quality and personalized experiences
- Social media can make or break your organization
- Virtualization of assets
- Markets are transparent
- Many old business models become obsolete
- New players can disrupt markets at the blink of an eye
Many of these are new challenges that show an exponential curve. This is not a temporary storm that will soon blow over. In fact, we can expect the storm to gain more force with each passing year. This situation has an enormous impact on organizations.
Impact on organizations
Every organization needs to adapt, but very few have a systematic and reliable way of translating their business strategy into action across all relevant elements of the organization. This requires top-down strategic guidance, but also bottom-up improvement, learning and feedback.
Of course many traditional organizations are strong. They have a strong name, strong reputation, strong brand and strong customer base. They can handle a 'punch' and deal with some change over time. However, if we look inside these organizations (and as a consultant, I have the privilege to gain insight into many organizations), we see that they struggle to keep up with new developments. They are used to taking their time to develop, launch and exploit their products or services. However, in an extremely competitive market, traditional structures and rules no longer apply.
Organizations are forced to move more quickly than before. Change is no longer something that can be managed in traditional ways. Organizations need to be agile and adaptive. This requires a new vision on business transformations, accompanied by new capabilities.
Learn from others
Some organizations are much better in dealing with change than others. Among the best are disruptive startups. Many could never have existed ten or twenty years ago. These organizations profit from all new developments, opportunities and uncertainty, and use them to bypass struggling traditional organizations. But it is not just the small startups that do well. Witness Google, Netflix or Alibaba; enormous organizations that have managed to grow and at the same time stay 'small' and adaptive (just like a disruptive startup).
Some lessons about handling change at startups:
- Always put customers and customer value first
- Challenge conventional wisdom
- Work on smaller changes on a continuous basis, rather than large change programs
- Don't organize everything – loosely connected organizational networks are much more flexible
- Keep things simple and use creativity (instead of just money)
- Experiment, learn and try again. Don't be afraid to fail, and fix mistakes along the way
- Agility 'in the large', requires agility 'in the small'
- Change is the 'new normal'. Embrace change!
Deal with uncertainty
As we look through these lessons, we can see a gap in the daily practices of many organizations. There is often a cultural gap. In successful, adaptive organizations, people are selected and hired based on their capability to change. Putting these people together fosters an environment that cannot NOT change. Change is really the norm.
So change is a cultural challenge. But there is more to learn. Many large organizations that carry all kinds of legacies (products, applications, processes, rules, culture, behavior) have become very complex. Complexity stands in the way of applying the above lessons. Also, complexity leads to uncertainty. Uncertainty about how the organization really works. Uncertainty about daily performance. Uncertainty about all developments in the outside world. Uncertainty about the right direction to go. And uncertainty about the execution of change. Uncertainty is a very poor basis for change…And one thing is for sure: not changing anything eventually brings even more uncertainty.
Key capabilities of the adaptive organization
How can we deal with complexity and bring back certainty for successful business transformations? In my next Column, I will introduce a set of seven key capabilities of the adaptive organization. These capabilities embody a wide range of techniques, but also cultural aspects and mindset (important!). By building and developing these capabilities in your organization, you create a sound basis for change. A necessity in today's environment!
I encourage and welcome comments on this Column.