In the 2020s, Adaptive firms will outperform the competition

We live in an era of risk and instability: The pace of change has never been faster, and it is not going to slow down.

In my last public speaking with the Economist, we were discussing how will the workplace evolve with the technology disruptions that will occur towards 2030.

In the 2030s, to retain and win market shares, the most successful organizations will be those that are able to capitalize on these new technologies while adapting their workforce skillsets to stay competitive.

Adaptive Quotient: The New Competitive Advantage

Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled, as has the size of the gap between winners (companies with high operating margins) and losers (those with low ones).

Market leadership is even more precarious. The percentage of companies falling out of the top three rankings in their industry increased from 2% in 1960 to 14% in 2008. What’s more, market leadership is proving to be an increasingly dubious prize: The once strong correlation between profitability and industry share is now almost nonexistent in some sectors. According to our calculation, the probability that the market share leader is also the profitability leader declined from 34% in 1950 to just 7% in 2007. And it has become virtually impossible for some executives even to clearly identify in what industry and with which companies they’re competing.

How is it that some companies reach trillions of dollars market valuation and others never reach a billion? TO build technology businesses, workforces need to adapt to the technologist mindset.

“If the experience curve and the scale curve were the key indicators of success, Nokia would still be leading the smartphone market. But it was attacked by an adaptive ecosystem.” Martin Reeves is the chairman of the BCG Henderson Institute

But Nokia was attacked by an entirely different kind of competitor: Apple’s adaptive system of suppliers, telecom partnerships, and numerous independent application developers, created to support the iPhone.

“In one year 10 highly skilled P&G employees generated some 10,000 design simulations, enabling the completion in hours of mock-ups that might once have taken weeks.”

To overcome these barriers, a growing number of adaptive competitors are using an array of new approaches and technologies, especially in virtual environments, to generate, test, and replicate a larger number of innovative ideas faster, at lower cost, and with less risk than their rivals can. Procter & Gamble is a case in point. Through its Connect + Develop model, it leverages InnoCentive and other open-innovation networks to solve technical design problems. It uses a walk-in, 3-D virtual store to run experiments that are quicker and cheaper than traditional market tests. And by employing Vocalpoint and other online user communities, it can introduce and test products with friendly audiences before a full launch. In 2008 alone, 10 highly skilled employees were able to generate some 10,000 design simulations, enabling the completion in hours of mock-ups that might once have taken weeks. More than 80% of P&G’s new-business initiatives now make use of its growing virtual toolbox.

Forrester finds that firms with a future-fit strategy succeed in this new reality by being able to adapt their core business concepts and reconfigure them to create and deliver value to meet customer needs. And the difference is compelling. Forrester surveyed leading firms and found that adaptive firms grew nearly three times the industry average.

The primary capability of a future-fit tech strategy is their workforce’s Adaptivity Quotient (AQ). Gary Hamel, renowned writer of The Future Of Management, identified adaptive firms as able to “reconfigure [the firm’s] underlying business concept, by dramatically rethinking its core mission, its primary value proposition, its core competencies, the markets or industries in which it competes, [and] its end customer.”

The Adaptive Quotient of your organization is the assessed result of your workforce's digital behaviors, knowledge, problem-solving, and practical tech capabilities. The compound of these 4 parameters gives a clear view of which organization is adaptive and which organization needs to support its workforce to become more adaptive to stay relevant in the global marketplace.

[Image on the left] Gary Hamel, interviewing Bill Gates about The Future of the Workplace.

A high Adaptive Quotient in your team enables the company to execute strategies build on the foundation of the other two components of a future-fit strategy: creativity and resilience. Adaptive firms use technology-enhanced productivity and customer obsession as their North Star, as delivering value with less effort is paramount. By focusing intently on the customer and constantly assessing the environment for opportunities to enhance the delivery speed with automation, future-fit, adaptive leaders create better customer experiences, identify new markets, generate new products, and attract and retain tech talent.

Staying competitive with internal re-organization

Future fit leaders do this by using flexible technology, making decisions based on predictive insights, and having an adjustable organization that can adapt to changing market dynamics. To be adaptive, leaders should consider that:

• Flexible technology increases the ability to change. The organic evolution of the tech stack will not deliver the required speed of change. Adaptive firms leverage technology platforms and ecosystem partners to accelerate their capacity to deliver customer value at scale through thin customization layers. Platforms accelerate the uptake of new technologies and capabilities through innovation chains. A leading insurance company created several foundational technology platforms, which accelerated its time-to-market by 21% and its efficiency by 19%.
• Predictive insights uncover emerging opportunities. Firms cannot wait to witness trends before taking action. Adaptive firms constantly apply insights to predict emerging customer needs and expectations and act on those needs. Adaptive firms seek to create virtuous cycles in which they can leverage insights from customers and partners that enable them to continually provide value and identify emergent needs. A leading industrial manufacturing firm has built digital capabilities into its products to improve performance, conduct predictive maintenance, and create a tighter relationship and more value for its customers.
• Businesses are enabled through changeable orgs. Adaptive organizations are not afraid to pursue adjacent or disruptive opportunities. Tech execs at adaptive firms seek to build flexibility into their operating models. Platform teams provide consistency, scalability, and versatility. High-performing organizations structure themselves around the work that needs to be done, leveraging partner ecosystems to both unbundle work but also drive innovation. A customized business goods company quickly identified a new opportunity in the marketplace to create masks at the start of the pandemic and worked with partners to quickly introduce what became one of the most popular and highly rated masks in the US.

Adaptivity.us is a tech company dedicated to building products to help organizations and their individuals to stay adaptive and win market shares through technology skills enhancement.

4 Ways Leaders Can Boost The Workplace Adaptivity

1.Change Your Thought Process

Let go of the “Well, that’s the way we’ve always done it” mentality. While change can be scary and intimidating, embrace it and look at change as an opportunity to improve, learn, and grow. It can open the door to creativity as well. This also means, however, being open to the thoughts and opinions of others, i.e. different perspectives.

2.Force Yourself & Your Team to Take Risks

Little progress is made without risk. For some, the idea of risk is so adverse that they will run from it as fast as they can, but taking risks is a key part of being adaptable. Start small and to increase comfort, discuss risk-taking as part of team meetings, which can serve as a system of support.

3.Encourage Others to Be Open-Minded

One of the best ways you can develop an open mind is to encourage others to do the same. This creates a more open atmosphere in and around you, thereby further encouraging your open-mindedness and continuing the cycle. It also serves as a means to shut down closed-minded thinking, such as “Well, that’s how we’ve always done it.”

4.Embrace Adaptive Learning

As mentioned in my book, The Adaptive Economy, people who are curious and stay updated to new technology trends, tend to be adaptive and react better to environmental changes. This means you and your team need to embrace and create processes for volunteer lifelong learning. Read up about new technologies in your industry sector, get yourself and your team to attend Zoom technology seminars, learn about workflows technology enhancement with new tools available in the market, connect and hire growth hackers and innovators consultants who have this kind of vision, and learn from them, read what they read, etc.

5.Take The Adaptive Quotient Assessment

Do you want to know the Adaptive Quotient of your team? Access here the free Adaptive Quotient assessment of the organization dedicated to supporting global organizations to become Adaptive and stay ahead of the curve towards 2030.