Can your company withstand disruption? Is it preparing you for disruption?

When you have high expectations and less control, it leads to stress. Our organizations go through the same, when faced with disruption. In a new world, the system comes first, then the manpower. Do you feel that your workload increases with every change in direction by your company and as the context changes? Does your company provide tools and techniques for you to handle disruption? I have gathered some pointers which are useful for you to do a self-check if your company, and you, are resilient against disruptions.

Disruption is change in standard market conditions. It can be due to change in technology, environment, political or social change.

Company's preparedness for Disruption

To start with, check if your company has any of or all the following actions in place to counter disruption:

1. Strategic: An informed view of future and making choices where to compete and where not to compete. Above all, does the company have a capability to shift resources when circumstances change? The company must prepare different scenarios of the future and find its success rate, if it can only survive in one scenario, then there’s a problem. The biggest dilemma for any leader in an organization who is responsible for strategy, is to find the balance between using cash flow to keep short term gains and investing in the long term to absorb the impact of disruption.

2. Operational: The capacity of an organization to keep functioning when faced with external shocks. Covid is the most obvious example of a shock that required operational resilience. Companies that were unprepared took time to comprehend the impact, resulting in confusion and sense of uncertainty among employees and customers. Companies who were prepared gained a competitive edge and won the trust of their employees and customers. Compared to Covid, which was a sudden shock, climate change is conversely coming slowly while having a huge impact on businesses. Climate disruptions lead to loss of productivity which may leave a deep impact on company and its employees. The key point here is to build diversity in processes, system and products to develop operational resilience.

3. Agility: An agile and dynamic workforce comes from the behavioral resilience of its employees. Excessively customer centric companies create a dynamic workforce. Such companies create training opportunities and incentivize innovation. They involve you as an employee and your resilience in crises. Does your company provide psychological safety and a sense of purpose and autonomy in your job? If you disagree or the company’s performance has impacted you personally, then you must improvise, maintain a growth mindset and continue the learning process.

It’s important to not only follow company's resilience plan but also prepare yourself to be resilient. Stop and think to focus on the things that matter, to create self-resilience.?

ACTIVE INERTIA and Building Self Resilience

So, if this concept is well-known, then why don’t companies follow these guidelines and prepare themselves? Big companies have more resources to build such resilience. They have more time to absorb the shock and equal time to recover. On the other hand, small and medium enterprises need support from governments and regulators to create fair play and provide incentives to be resilient. Allow me to introduce the concept of Active Inertia. Inertia in physics refers to resistance to any change when force is applied. Active Inertia in management refers to an increase in activity in an organization when it is faced with disruption crisis without a change in the organization’s core which leads to a ‘stuck in a rut' position. Organizations where employees get stuck to old values and fail to see what was important in the past may have trouble keeping the company relevant in the future. And it isn’t just employees, but management that continues to incentivize short term gains, while customers (except early adapters) and vendors tends to encourage the status quo. It is well described in this HBR article Why good companies go bad .

But we are not interested in failures, we are more interested in what is on the other side of disruption. History does not repeat itself but it’s important to know that history to avoid those same mistakes and learn from success stories. I’ve heard thousands of times about the failure of Nokia and Kodak that follows the pattern described in the article. But no one discusses as fondly the success of Samsung and Fujifilm in the same period. Now I know the reason for their success was innovative thinking and encouraging diverse views in the boardroom. Fujifilm unlike Kodak decided not to sell its chemical unit and instead diversified into cosmetic and pharmaceuticals. Nokia’s dominance in mobile phones blindsided them while Samsung diversified into other consumer products like television and consumer electronics. But if you look at Nokia, they follow history and joined hands with Microsoft for Mobile OS. Microsoft remains leader in PC operating system but did not hold true to become leader in mobile OS. My key point being, innovation should be driven by market dynamics and passion to serve customers, not to blindly follow history. Are you able to relate this to what is happening in your own company? How willing are you to be part of changes like this?

Keep the following learnings from Kodak to avoid being part of Active inertia in your otherwise successful company:

1. Employees protect legacy: They are experts on what was important yesterday but resist new ideas.

2. Most experiments fail because businesses hail success and punish failure: This makes employees vary of uncertainty hence protect their own ground (resulting in point 1).

3. Success gives rise to rigidities: Sales repeat as they continue to get incentives on time-tested business and count on support of internal experts.

4. Companies get trapped with commitments, it isn’t easy to let go of high value customers and partners: Customers themselves become experts and demand more value from the company at the same cost. Company does the same to its vendors and gets stuck in a loop of trying to keep high margins.

5. Breaking up the company is hard choice, and instead companies become centralized and hierarchical: In such scenarios, matrix organization (with dual reporting) makes it more complex to operate.

Futuristic Mindset and Adhocracy

The above is well-documented as part of best management practices. It’s also called the success paradox.? To avoid these missteps, organizations keep track on megatrends. Consider the fact that future is already here, it’s not just equally distributed. Take Blockchain, which is very much in use in many parts in more forms than crypto. Big companies and startups are already experimenting with new applications and learning from them. It’s important to keep group learning and exchange transparently with the industry. Read more about blockchain application in Media Industry or AI implementation framework in my previous articles. Is Media industry ready for Monetization using Web3?? Or How to avoid technical debt amid digital transformation?

Coming back to avoiding missteps, organizations have people dedicated to look into megatrends. Management makes choices by running different scenarios of the future. Such choices require resources and investment. The expectation from expert employees in the department is to become more efficient. The department leader must not act in silos but measure its impact on overall organization while becoming more efficient. That enables diversion of resources to fill for new strategic direction. Leaders should be motivated to bring efficiency to their departments. Employees should be incentivised to pick up new skills.? This requires you as an employee to be flexible and keep learning. As you improvise and maintain a growth mindset, you become resilient. Above all, take responsibility of your work. In turn, organizations must encourage culture of reliability and resilience.

A resilient organization avoid bureaucracy and encourage innovations. Current Microsoft and best practices by Amazon are examples highly customer-centric organization. Satya Nadella on becoming CEO, unlocked the Office suite to use on iOS and enabled innovations in Cloud that expanded their customer base. Amazon continues to launch new products that directly resonate with prospective customers irrespective of the fact if it’s in direct in line with their business or not (e.g. AWS).? No doubt Amazon has become a hugely diversified company. The future is unpredictable, and no one has exact experience, unlike old businesses where top bosses may use their wisdom acquired though experience to drive the organization. It’s important for companies to shun bureaucracy and adapt adhocracy. Following describes framework of adhocracy and promotes mutual trust within the company:

1. Organize around opportunities.

2. Accept the reality that opportunities are transient.

3. Speed is essential for success of any product/service.

4. Activities are transparent, between departments, to customers and partners.

5. Management is a light touch. The future is unpredictable, in this world there is no experience which has been seen before by senior executives. Managers are the enablers and coaches.

6. Governance is flexible. In this complex world, collective decisions are encouraged with the help of experts and not left in the hands of one senior manager.

If you are leader in your company, then follow the ABC rule with your direct reports.

a)??????? Autonomy: Provide control on work.

b)?????? Belonging: Value their contribution to be valued yourself. Bring a sense of responsibility.

c)??????? Competence: Let them demonstrate their strength and fan their desire to learn.?

Remember to keep yourself in the center while looking for resilience in your own organization. Resilience should be mutually beneficial for your company and you.

If your self-check based on what you read above brings any new insights, then let it become part of group learning and leave discussion points below.

In my next article I will discuss how a business unit survives a crisis like covid.? A business unit must keep its operations running for valued customers while ensuring supply chain, financial, IT and People resilience.

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