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To create a competitive advantage in an increasingly uncertain and unpredictable world, building an organizational change muscle is as important, if not more so, than having a great strategy, well-run operations, or the right talent. While the ability to react quickly to emerging trends, threats, and opportunities has been necessary for successful businesses for centuries, the pace of change in the past few decades has made it the most critical element for success.
The blacksmith’s foundry had to adapt to new technologies and customer demands on the scale of centuries, while car companies of the mid-20th century had to adapt to changing regulations and customer preferences on the scale of decades. Today, adapting to external changes is an almost constant need that takes place on the scale of months, if not weeks. It is, of course, not enough just to know that you need to adapt; you must also know what adaptations are necessary, how to make those changes, and how quickly they must be made.
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The form of organization that we are familiar with today dates to the industrial age, when reliability, consistency, and stability were core requirements. Many of our management systems and processes, and much of our thinking, still reflect this desire for control, with a predilection for minimizing deviations rather than maximizing change. Our biology and evolutionary history also bias us toward the status quo and stability. Additionally, a few misplaced beliefs about what makes organizations successful prevent us from creating adaptable systems.
Overcoming these limitations requires a deliberate approach to building a more adaptable organization. Our research and experience have uncovered three key elements to overcoming these barriers: effective management systems, employees at every level equipped with change capabilities, and an adaptive culture.
Effective Management Systems
Systems — whether planning, budgeting, or talent — evolve as an organization grows. These systems are largely designed for stability as companies evolve from being more ad hoc, nimble, and flexible to being more rigorous, repeatable, and consistent. In a faster-changing context like today’s, these systems must be more change-friendly. But a number of myths, both implicit and explicit, impede the design of adaptable systems.
Myth 1: Employees need detailed policies and procedures to have clarity and to ensure that they act in the best interests of the organization.
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