Reshaping Your Organization in an Era of Constant Crisis and Disruption
As it turned out, COVID-19 was less a “black swan” (catastrophic but highly improbable) than a “gray rhino”—a big grey beast lumbering along the horizon and then suddenly charging ahead as a high-likelihood, high-impact event. The COVID-19 crisis proved to us all that resilience alone was not enough to survive disruption. Firms also needed to be able to adapt to the uncertainty of the “new normal”: They needed to be agile.
Building organizational agility into “business-as-usual” has been a challenge for decades, and organizations are often impeded by the leaders’ and managers’ lack of disruptive mental agility and suite of disruptive leadership competencies. Many of them have a misguided belief that agility and resilience cannot work together. On the contrary, our research has shown that the two can be complementary.
Today’s business environment demands organizations to adopt organizational learning as a source of sustainable competitive advantage. This means they need to learn to scale and deliver growth at clock speed while enabling agility and sustainability.
Enabling growth today in an era of constant disruptions and crises would require a deliberate focus on elasticity: building agility and sustainability
into the design of the organization while ensuring that the business can meet strategic business objectives and goals. Companies need to adhere to evolving societal standards and operate using sustainable business practices to scale and drive growth. Opting in or opting out of sustainability is no longer an option. Sustainable organizations expand the term “performance” to optimize environmental, social, and governance (ESG) outcomes as well as financial results. Since the relative emphasis on these outcomes changes over time along with the methods for achieving them, there is no sustainability without agility. Indeed, the digital era has revealed the implications for the effective design and implementation of agile and sustainable organizations.
Organizations must be prepared for future disruptions which would evolve into crises if they are not prepared and those. that place importance on resilience now, only to let become an afterthought later, will do so at their peril. COVID-19, with all its indirect impacts, is the most immediate critical event organizations face so far in this decade, but it is hardly the only one. There will be other potential forces that are creating new and constant waves of disruption—creating both opportunities and risks as outlined earlier in Chapter 2.
Companies experiencing fast growth must build an agile and sustained organization designed to rapidly deploy and redeploy talent and resources without denigrating operational capability in other areas. Capability building includes everything from training on how to run virtual meetings and executive coaching to workshops focused on teaching fundamentals around how to lead change. While companies face a significant opportunity to expand and realize revenue and profit growth, they may not always readily have the organizational capabilities to do so effectively. Why? For one, external disruptions to a given market (e.g., new regulations, innovations, and customer performance requirements) can quickly make current business and/or operating models less viable. Organizational designs must be able to outpace disruptive changes of environmental jolts, economic shocks, and more classical reorganizations.
To evolve, organizations need to develop continuous change capabilities. For organizations seeking to scale and grow, not only should their leaders inspire change and be effective “change agents,” but they also need to adopt an integrative and future-focused approach to their strategic redesign, allowing them to integrate structure, people, process, and technology (PPT) as leverage points to drive growth. Engaging leaders at all levels and aligning their growth and disruptive mindsets and providing the relevant incentives to reinforce new behaviors go a long way toward executing large-scale organizational design efforts and growing the company.
Research by the Centre for Executive Education (CEE) and the Disruptive Leadership Institute (DLI) on best-in-class organizations that have successfully navigated the disruptive challenges showed that they took concrete steps to dramatically improve their capacity to anticipate, respond to, and capitalize on the disruptive forces heading their way. As a result, both CEE and DLI have developed the “L.E.A.DE.R.” framework for organizations to prepare for the era of constant disruption and crises ahead that could threaten the organization’s sustainability.
L: Leverage Organizational “Learning” as a Strategic Advantage
Organizational learning and management are at a transition point because of the shift in disruptive digital innovations. There is widespread recognition that investing in organizational learning drives change and innovation. Today’s organizations are operating in an environment characterized by high uncertainty, risk, and turbulence, for example, natural disasters, terrorist attacks, corporate scandals, and major product defects, to name a few.
These unanticipated crisis events, small or large scale, naturally occurring or human induced, have a far-reaching and significant impact on organizations and individuals within.
Avoiding or reducing such impact requires not only effective crisis management practice but also significant learning effort from everyone in the organization. Meanwhile, as the environment grows in complexity, it is more apparent that the rate at which organizations learn may become the determining factor in their ability to survive or adapt. Within such a context, constant and continuous learning has become a necessity rather than an option for organizational survival, adaptability, competitiveness, and long-term viability.
E: Embrace “Experimentation” and an Innovation-Driven Organizational Culture for Preparedness
Change is imperative. Yet many organizations’ large-scale transformation initiatives meet with setbacks, delays, and even failure. Those that succeed are soon confronted with a painful truth: They are not leapfrogging. At best, transformation can put these organizations on par with their newer, more nimble competitors. As the pace of change continues to accelerate, organizations across various industries are seeking a way forward. Developing an innovative-driven organizational culture can help organizations to withstand disruption in the future, and it also offers important benefits today.
While all innovation requires creativity and action to deliver value, crisis-driven innovation demands creativity and action under pressure— and oftentimes constraint—in response to a disruptive event or trend. Understanding the psychology of crisis-driven innovation is an essential component of building a more resilient future and creating crisis- driven innovation principles. Successful organizations run through the crisis-driven innovation principles by applying the “think, do, apply” model, cycle testing different scenarios and ways of working as you explore new ideas and potential solutions. They keep learning and experimenting.
A: Foster Organizational “Agility” and Speed
Organizational agility requires a cadre of disruptive leaders that can anticipate business changes, stay flexible to adapt to shifts in the market, and initiate change in their organizations. It’s the dynamic organizations that have a much better chance of surviving—and even thriving—in the shifting business environment. Embracing new ways of working and making decisions can help firms avoid becoming mired in the bureaucracy, which can bring change to a screeching halt.
It seems obvious that when faced with a crisis, organizations should simply ramp up more speed and agility to seize an opportunity. But not all organizations do. Speed is not simply an attribute of an organizational activity tied to clock time. Rather, speed is a complex, performance-enhancing organizational capability that requires a holistic approach to its development and execution. Speed alone enables companies to operate quickly only in already established product domains. During a crisis, companies must also demonstrate agility, a capability that allows the organization to pivot to adjacent or entirely new product domains.
D: “Decisiveness” and Rapid Decision Making
Agile organizations navigated the initial impact of a disruptive event and crisis better than most. One reason is that they delegate decision making to frontline employees and to other critical roles where value and risk are concentrated. Yet, delegating does not mean leaving people on their own; rather, it is about coaching (not micromanaging) decision makers to make successful decisions, providing guardrails, and empowering them to make final decisions.
Making decisions faster inevitably means mistakes will happen. However, organizations should adopt experimentation and give employees room to make those mistakes—as long as they don’t threaten the business. Our research unveiled that best-in-class organizations take steps to build risk mitigation into their decision processes. This lets them continue to move with speed: moving forward with implementation and quick test-and-learn cycles that allow for nimble adjustments and open doors to opportunities.
E: “Empathy” and Empathetic Listening
Empathy affects our ability to adapt and achieve results. It is the capacity to understand what someone else is experiencing. Leaders who practice empathy consider what people in the organization are experiencing through their frame of reference. When leaders are being profoundly impacted personally and professionally, it’s important to check in with people regularly. Asking someone how they’re doing takes on a whole new meaning and dimension during a time of massive disruption.
When you take a moment to connect with someone, you create the right experience for employees. During times of crisis, empathy is of great importance as our research has shown that leading companies that pivot from marketing to helping and from fulfilling customer desires to meeting customer needs have achieved great results. These socially conscious organizations across sectors and geographies are finding ways to get involved and support their customers and communities. By consciously providing empathy and care during this crisis, companies can build a foundation of goodwill and long-lasting emotional connections with the communities they serve.
R: “Resilience” in Navigating Disruptive Change
During times of disruption, embedding resilience at the heart of the organization is crucial for building a foundation for growth and innovation and pursuing new opportunities. Both leaders and employees at large need to be empowered to take positive action during a crisis, and organizations can achieve this by equipping them with the right skills and competencies. By rehearsing different risk-type scenarios, crisis management or response teams can develop the ability to operate effectively, even under the most challenging disruptive conditions.
At the same time to successfully navigate extreme uncertainty, effective crisis structures, plans, and processes must be developed to help absorb and recover from the impact of unprecedented or extraordinary events. By managing the response, owning the data, and making better decisions, the organization can move through a crisis and emerge stronger. As a result, even in a worst-case scenario, you can navigate extreme disruption; protect your people, customers, and business; and build trust with your stakeholders, regulators, and wider society.
Best Practices for Building Organizational Resilience
There are several actions that leaders could consider how to steer their organization toward resilience in an era of constant disruption and crises:
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Demonstrate Strategic Foresight
Leveraging cognitive readiness skills and disruptive mental agility where the leader could anticipate, predict, and prepare for their organizational future. This could involve activities such as learning to scan the external business environment, listen, monitor, notice, and learn from events, or things that can affect the organization. Strategic foresight seeks to help leaders think through uncertainty. It employs scenarios to consider how trends and developments in several areas may come together in different ways (“connecting the dots” to affect the operating environment of an organization both positively and negatively).
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Demonstrate Cognitive Readiness and Critical Thinking
Next, the leader must be able to critically evaluate and analyze the data collected to develop insights, in other words, be able to interpret and respond to the present conditions. Building situational awareness and searching for latent problems and errors are two key skills in this space. Adopt the inspirational leadership style by encouraging experimentation and people to report anomalies, mistakes, and concerns, and providing confidence that these will be addressed is a fundamental part of this stage and may require a step change in the organization’s culture. This will enable people to explore the problem and encourage novel solutions, which might shift people’s mental models and adopt growth mindsets. (Someone with a growth mindset views intelligence, abilities, and talents as learnable and capable of improvement through effort whereas, on the other hand, someone with a fixed mindset views those same traits as inherently stable and unchangeable over time.)
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Adopt System Thinking and Connect the Dots
Here, the organization must learn to monitor and review what has happened and assess the changes and implications from both risk and sustainability perspectives. This can be achieved by putting in place a robust process for identifying, prioritizing, sourcing, managing, and monitoring the organization’s critical risks and ensuring that the process is continually improved as the external or macro-business environment changes. Systems thinking offers a way to better predict future outcomes—based not on past events, but on a more intimate understanding of the surrounding structure and its elements. Structure, to a large extent, determines the behavior and actions of the leader.
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Adopt Organizational Learning and Knowledge Management
This is about being able to correct organizational practices by learning from experience and past mistakes which is part of the organization’s knowledge management (KM) system. Future performance can only be enhanced if your organization is willing and able to change behavior as a result of experience. In simple terms, reflecting on an event is not about where the fault lies but what could have been done differently. Through KM, organizations seek to acquire or create potentially useful knowledge and to make it available to those who can use it at a time and place that is appropriate for them to achieve maximum effective usage to positively influence organizational performance. It is generally believed that if an organization can increase its effective knowledge utilization by only a small percentage, great benefits will result.
Reference: Sattar Bawany (2023), Leadership in Disruptive Times: Negotiating the New Balance. Business Expert Press (BEP) LLC, New York, NY. Abstract available at: https://www.disruptiveleadership.institute/second-edition-book/
