Adaptability is the road to Success

Today, almost everyone knows about the butterfly effect. Our world is more complicated and linked than ever. Growing globalization, improvements in telecommunications technology, changes in consumer tastes, geopolitical instability, and many other things have made it hard to predict what will happen in the future. Putting all of these connections into a reliable forecast is not possible.

So, what should business leaders do? In the work that Bain does for clients, we tell executives who are working in situations with a lot of uncertainty to make sure that their strategies are based on a willingness to change, built-in flexibility, and dynamic planning.

Ability to change and adapt "Intelligence is the ability to adapt to change," is a famous quote from Stephen Hawking. If you can't know what's around the next corner, then the key to success is to be able to change quickly.

The Covid-19 pandemic shows how important it is to be able to change. At the beginning of the year 2020, almost no company's strategic plan predicted how the global pandemic would affect business. The most successful companies, like Zoom, Amazon, GrubHub, and Disney, quickly adjusted to how work-from-home orders and other restrictions affected their workers and customers. Some companies increased their capacity in response to the sudden rise in demand, while others changed the way they serve customers to better meet their needs.

Businesses that weren't as successful, like most airlines and hotels, couldn't or didn't change. These companies sales and profits went down by a lot. If Covid-19 has taught us anything, it's how important it is to be able to change directions quickly when things change quickly outside.

Built-in adaptability

In times with a lot of change, flexibility is very important. As an example, think about sailing. Sailing upwind can be very hard in rough water because steering as close to the wind as possible can mean crashing into the waves, which slows the boat down. Instead, if you fall off the wind, you can get a better angle on the waves and pick up speed. Even though this move is farther, it is almost always faster because it is more flexible.

Planning on the fly

In a world where things can change at any time, it can be tempting to throw up your hands and stop making plans. But good performance is rarely just a matter of luck. It needs a direction, even if the exact path can't be mapped out.

Companies need to change how they plan their strategies in order to deal with the high level of uncertainty. They need to change from a plan-then-do model to a dynamic and ongoing way of making strategic decisions and carrying them out.

Shortly after Michael Dell took the company private in October 2013, Dell Technologies was one of the first to use this new model. The company changed from a traditional planning model, in which managers made a fixed strategic plan every year, to a model that focuses on identifying and making important decisions all the time. Since 2013, Dell Technologies' operating profits have grown by more than four times thanks to this new model and new ways to make strategic decisions when there is uncertainty. Planning was not given up on by the people in charge at Dell. Instead, it changed the company's model to make it more useful in a world where technology is becoming more uncertain.