Uncertainty Isn’t Going Away: How Can Companies Survive and Thrive?
Originally published in The American Management Association MWorld, August, 2010
As we enter this new decade, one thing we can count on is that we will all continue to face uncertainty in the years ahead. The economic crisis of the last two years has tested the mettle of many previously flourishing companies. More than a few have failed the test. Chances are you are asking yourselves when we will return to normal. Most of us would really like a break from the turmoil. However, all signs point to ongoing churn that will leave us in an uncertain world for the foreseeable future. Paul Light from the Rand Corporation refers to our present environment as ‘state of the world, deep uncertainty.’ He says that it is difficult to find any aspects of our current global circumstances that are stable, (Paul C. Light, 2005). He cites economic turmoil, terrorism threats, increased global competition and energy volatility, to name a few, as ongoing challenges for all of us.
So what do we do in the absence of business as usual? We pull ourselves and our companies out of the funk and move on! The more quickly we accept and maybe even relish this time of fundamental change, the sooner we can look for the areas of opportunity, renewal, and sustainability for our organizations.
How Do We Move Our Organizations Forward in this Uncertain World?
At this point you may be asking how your organization can actually progress in a world that is so unpredictable. Is success sustainable for anyone in this environment? The answers lie in learning to think differently about the qualities that make our organizations strong and healthy. We need new ways to create our companies’ future. In her article entitled The New Normal, Gwyn Martin states: “The sooner we recognize that this downturn is the precursor to another seismic shift in our economy and society, the quicker we can shift from a doom-and-gloom mindset to being excited about new growth and ready to embrace the next era of re-invention. “ (Martin, 2009)
Similar to the human body, an organization is more likely to be able to deal with stress and volatility when it is in shape. Currently and the years ahead, those companies that are robust will not only survive but are also likely to flourish.
What do Robust Organizations Look Like?
What does it mean to be robust? Would you know a robust organization when you see one? A robust organization is vigorous, powerful and healthy. The primary characteristics that define robust organizations are flexibility, agility and resilience.
Flexible organizations are capable of responding to a wide range of challenges. They are adaptable and proactive in seizing new opportunities. They question the assumptions underlying their current strategies modify them frequently. They assume that the future will be different from the past and they do not allow themselves to be seduced by their own successes. Refusing to be wedded to their current processes and practices, they are always looking for ways to improve as circumstances shift. Flexible organizations are never described as ‘comfortable’ places to work.
For example, a large health care organization in Detroit learned to be flexible in the face of health care reform. The leaders of the organization engaged employees in thinking about their company’s future in new ways as they waited and watched reform unfold. They were aware that the outcomes of the reform process could have some negative impact on them. However, rather than fighting it or playing victim, they grabbed hold of the opportunity to revise their business model and planned to take advantage of the opportunities that health care reform might offer them.
Agile organizations are quick and nimble. They are focused outwardly towards their markets and the world at large. Some progressive companies use a scenario-building process to bring possible future states into view. By envisioning future trends, they can anticipate change before it sneaks up on them. For example, Rand Corporation imagines the future using what they call a ‘robust decision-making process’. First they generate a set of feasible plans. Then they create hundreds of potential futures. They measure the strengths and weaknesses of their plans against each of the possible future scenarios. The plan that is likely to perform the best across the broadest range of possibilities is the one that they follow. Of course no envisioning process will render a completely predictable future. Nevertheless, as a result of their ‘robust decision-making’, they are far more prepared to move quickly as changes emerge, (Paul C. Light, 2005).
A variation in Rand’s methodology is to generate the future scenarios first followed by designing plans to fit each scenario. A consortium of executives brought together by the U.S. Environmental Protection Agency and the Global Business Network used this approach to picturing and planning for the future. A group of senior executives from 20 U.S. companies came together to deliberate on how energy might impact U.S. businesses over the next decade. They constructed four plausible scenarios of the world in 2020. Each of the scenarios would create significant challenges for U.S. industry. As a group, the executives designed strategies to address each scenario. At the conclusion of this process, they recommended that companies rehearse how they would actively manage exposure to the risks outlined in the four scenarios, (GBN, 2007).
While agile companies continuously focus on the outside world, they do not neglect the workings of their own internal cultures. Ongoing organizational learning is critical to being nimble. The most agile companies draw on the collective knowledge of all employees and apply the learning quickly.
Agile companies find many ways to learn. Among the most effective and practical approaches is to engage in disciplined reflection. Recently David Brooks wrote an editorial in the New York Times entitled ‘The Humble Hound,’ (Brooks, 2010). He described a successful leader who spends a lot of time reflecting on her strengths and weaknesses, and learning from her experiences. He states that,
“She believes we only progress through a series of regulated errors. Every move is a partial failure, to be corrected by the next one. Even walking involves shifting your weight off-balance and then compensating with the next step. She knows the world is too complex and irregular to be known, so life is about navigating uncertainty.”
Undoubtedly the company that she leads is agile. Agility, or the ability to move quickly, comes from being prepared. Preparing for the future requires ongoing, constant organizational learning.
Resilience is the ability to bounce back from shock. Of course robust companies are less likely than others to be caught off guard by change. Nevertheless, they are aware that surprises will always occur from time to time. Some of the unpleasant surprises are of their own making. For example perhaps they took imprudent risks that didn’t work out. Other times the surprises come from the outside. For example perhaps a new technology transforms the marketplace almost overnight. Even in the face of unwelcome surprises, resilient companies can absorb the shock quickly and move on.
Every company would like to become resilient. Yet few possess this quality currently. Why is resilience rare? Perhaps because trust within organizations is rare. Resilience must reside on a firm foundation of trust. If trust is in short supply within an organization, negative events tend to drive even greater wedges between groups and individuals. In a company without trust, everyone is likely to look out for their own best interest at the expense of all others in the company. Selfish actions can lead to a downward spiral that can tear the company apart. First comes trust and then resilience.
For example, a utility in the northern U.S. learned through a hard experience that their survival depended on resilience that could only be achieved by building trust. A few years ago they lost their biggest corporate client unexpectedly. The utility already had labor problems and tensions between the Board of Directors and the executive staff. The stress of losing the client put the entire utility into a tailspin. The strain among the groups caused problems such as a loss of productivity and even some sabotage. Everyone working for the utility was miserable, customers were suffering and the entire organization was at the point of imploding. The organization brought in outside assistance to intervene. As a result of hard work and lots of learning, the utility developed the trust that has become the foundation for their resilience. Today they proudly describe how they have demonstrated their strength and vigor as an organization through the economic downturn of the last two years. They attribute their recent success to the steps that they took to establish trust and to become resilient.
In addition to trust, a strong sense of purpose shared by all increases a company’s resilience. Management consultant Elizabeth Doty acknowledges that “one of our greatest fears is to participate in something meaningless. “ (Doty, 2010). If we build our company cultures on shared purpose and passion, we are likely to bounce back in the face of adversity.
According to Michael Bell from the Gartner Group, when people have a strong sense of the purpose of the enterprise, they are more likely to assume responsibility without question. Everyone at every level will commit to do what has to be done. (Bell, 2002). He suggests that companies with trust, purpose, passion, and accountability to do what it takes to succeed are equipped to withstand surprises.
So what Does it All Mean?
Currently many of us are feeling the wounds of an economic downturn that caught most of us off-guard. We have been experiencing uncertainty in almost every part of our work and our lives. Many of our companies saw quick and dramatic drops in revenue and profits. Our investments lost value and our hopes for our present and future security dimmed. While we are beginning to see a rebound in the economy, few of us feel that our personal and professional wellbeing has bounced back. And realistically we should not feel safe if we define safety as a return to life as we knew it in the last decade. Those days of unending confidence and invulnerability are gone. So what can we do? We can look at the future with fresh eyes. Since we now know that nothing is certain, we can learn to embrace the opportunities that will emerge through turmoil. We can look to the future with optimism as we transform our companies to be robust through flexibility, agility and resilience.