Research shows that effective organizations display two characteristics simultaneously: efficiency and adaptability. The efficient organization follows well-structured, stable routines to deliver its products or services in large quantities with high quality at low cost. In a stable world, efficient organizations may be successful. But in a changing world, organizations also need adaptability. While efficiency implies mastering routines, adaptability means mastering the process of deliberately changing routines.
Adaptability is a proactive process: it allows the organization to deliberately and continually change and create. It entails deliberate discontent — discovering new needs to be met and problems to be solved, finding new things to be done, and adopting new technologies and methods before the competition. Adaptability is disruptive. It requires looking outside the organization for new opportunities, problems, trends, technologies and methods that may dramatically improve or change routines or introduce completely new products and services. Adaptable organizations anticipate customer problems and develop timely solutions. They deliberately and continually change how they do things to improve quality, raise quantities, reduce costs and stay ahead of competitors.
Organizations that build concrete strategies allowing them to confidently and capably shift the balance between adaptability and efficiency will be well positioned to adapt and prosper in volatile economic times, such as today’s environment. And while the results of emphasizing adaptability may take longer to appear than the results of an emphasis on efficiency, the long-term success of the strategy can be found by looking at Japan; While decision-making in many organizations in North America is driven by the next quarter’s results, Japanese organizations tend to favor long-term planning and reporting.
We live and work in an era of rapidly accelerating change with frequent upheavals and interruptions.
Just two weeks ago, Sears Canada, a 100-year old venerable nationwide retail chain, announced it was closing all of its’ remaining stores putting 20,000+ people out of work. Everywhere we look, traditional structures are abruptly being reshaped or falling down. Many organizations that prospered during more stable times — times that rewarded routinized efficiency — now find themselves poorly adapted to today’s new economic and social realities. Moreover, once successful companies are finding that their sure-hit formulas no longer work. Long revered icons of organizational excellence have been humbled, and even bailed out of bankruptcy and imminent demise by government intervention.
Individuals, families and entire communities are finding the world shifting beneath their feet as traditional markets, industries, societal structures and sources of employment disappear. Such change is occurring under the impact of new information technologies and automation, global competition, lack of regulation of financial institutions, uncertainty about the long-term effects of climate change, transitioning to new energy sources, and a restructuring of the world economy. It is not surprising that organizations whose main virtues during previous times were predictability and reliability should find it difficult to adapt to this increasingly dynamic environment. Their employees, too, are struggling to deal with these changing times as the vast scale of change has resulted in an unprecedented need for information processing and problem solving skills. But within the scope of the challenge lies a great opportunity for the future prosperity of organizations everywhere.
Taking advantage of economic uncertainty and turbulence requires a mindset eager to embrace change and innovation and determination to benefit from it. By making a deliberate choice to incorporate an innovation process into everyday work at all levels and across all disciplines, organizations can achieve sustained competitive advantage, positive people outcomes and an inevitable change to a more innovative culture. The right thinking skills and attitudes are fundamental to drive the innovation process so we never get complacent.
This is the first of six articles that looks at “How Might we drive economic prosperity in turbulent times”. It comes from an original article written in 2013 and I still see the relevance now. I look forward to any comments and suggestions on How Might We build on people’s thoughts behind this critical issue.