Creating the agility your firm needs to thrive in uncertain times is a transformation that begins with you.
Digital disruption challenges traditional business practices in ways that are difficult to predict. Here, Sam Bourton, Johanne Lavoie and Tiffany Vogel, writing for McKinsey Insights, explain that rethinking business models to embrace the uncertainties of the digital age demands leaders transform their personal outlooks. Here they outline five ways to cultivate the kind of “inner agility” you need to steer your firm through uncharted waters.
FIGHT OR FLIGHT
The stress of managing disruptive change sees many business leaders falling back on what they know – the tried and tested way of doing things. When that fails, there’s a tendency to panic: “We act before thinking, we analyse an issue to the point of paralysis, or we abdicate responsibility by ignoring the problem.”
What needs to change, the authors argue, is your relationship to the problems you face. To manage novel dilemmas successfully, you must learn to be comfortable with complexity and uncertainty. To explain how, they point to five new behaviors to embrace.
1) Pause to move faster. “Pausing in the chaos of great change is a counterintuitive action that can lead to greater creativity and efficiency. It carves out a safe space for self-awareness, for recentering yourself for something new to emerge.”
The CEO and CFO of a global company meet to discuss why a merger is failing to deliver promised gains in productivity and innovation. The CFO wants to close some manufacturing plants, while the CEO thinks increasing funding to the same factories will solve the problem. Failing to reach agreement, and with each beginning to assert that his own experience makes him “right”, the pair agree to take a creative pause.
2) Embrace your ignorance. Ask yourself: “Do I suspend judgment and listen for what is below the words, or do I listen for what I already know or believe?”
The CFO talks to factory managers who explain that reworking product designs is causing project delays. The CEO hears from HR that staff at all levels are struggling to meet the ambitious targets set during the merger, and that this is creating a stressful working environment for all.
The pair now meet with everyone from the executive team, outlining their understanding of the problems, but now asking questions like: “How may we be wrong? What else is happening? Who sees this differently?”
3) Reframe your questions. Ask yourself: “What is wrong with my assumption? What am I missing? Am I expanding the boundaries of the problem to allow for unexpected factors? These kinds of questions and conversations take you into the unknown, which is where you’ll find the most valuable answers.”
As they listen with fresh ears to what their people have to say, the CEO and CFO realise they have failed to reassure staff about the huge changes happening; they discover that the productivity problem actually arises from a more important important existential question: “What kind of culture are we creating at this company?”
The pair go on a listening tour, talking to everyone from those on the shop floor to HR execs, and operations specialists. Having reframed their line of enquiry around the new question, they gather fresh insights.
Now the CEO and CFO are ready to “reset the merger”. Based on their new knowledge they’re able to set targets with new, more realistic timeframes. At the same time, newly created change agents fuel transformation at every level of the company, helping to re-energise staff.
4) Set the direction. “Setting a direction that is rooted in purpose and meaning can inspire positive action and invite others to stretch out of their comfort zone.”
The new CEO of a parts supplier to the manufacturing sector wants to reverse losses to overseas competitors. He replaces 60% of his execs with incomers from entrepreneurial backgrounds, and announces that the company will now produce its flagship part for the new low cost of $3.
A year later, profits and sales haven’t budged, and employee engagement is down by one fifth. The CEO undertakes a listening exercise. He realises he’s set a destination without explaining the context of his decision. He’s created a goal but not a vision, and so he hasn’t brought his staff along for the ride.
Now the CEO engages with his employees to investigate ways to achieve his three-dollar price goal while maintaining the reputation for service and innovation on which the company’s success, and the motivation of its employees has always been based.
5) Test yourself and your solutions. “Developing inner agility is a process of accepting less control than makes you feel safe. But that doesn’t mean you’re embracing chaos.”
Becoming a disruptor rather than simply being disrupted means you’ve got to be prepared to experiment. But that doesn’t mean betting the company on a bright idea. Safe-to-fail testing is your key to the kind of learning that makes you quick to react to changing technologies and markets.
Testing is a fundamental principle of modern leadership that feeds into all five behaviours, and it begins with being willing to challenge yourself. Use routine scenarios – like presentations – to experiment with new ways of doing things. If you bomb, so what? You’ll still have taken a step towards adopting a learning mindset.
Digital disruption is a fact of life, and while you can’t change the nature of the problems it poses, switching to an agile and open-minded approach to problem solving will help you find the solutions you need.