Authors: John Brodie – Consulting Director & Fortune Gamanya – Associate Director
Business leaders find themselves in a highly disrupted environment, where many of the rules of doing business, expectations of their stakeholders and ways of work are being fundamentally re-shaped. The challenge for leaders is that they need to move from having the change happen to them, to beginning to shape the change in a way that will enable sustainable and potentially exponentially successful organisations of the future.
Crises can be incredibly transformative because they directly threaten our survival or the status quo and “force” people to make changes to survive. The cause of the crises is not what drives the disruption to businesses, societies, economies…, but rather how people responded and changed the way they see the world and adapted by doing things differently. It is in these changes of perceptions and behaviour that the opportunity lies.
If we think of two recent crises in world history, the Global Financial Crisis (GFC) and the Covid-19 pandemic. The GFC shifted perceptions of financial institutions by breaking trust in these organisations and launched an exponential growth in the “risk” management and continues to shape how these institutions do business as one example of the impact. The pandemic restricted access to the workplace and forced many people into remote work. It has begun to change perception of where work gets done and how many organisations do business with their customers. The disruption has seen the adoption of new technology and digital platforms in the workplace at an unprecedented speed, as well as the acceleration of e-tailing and platform-based businesses.
The challenge for leaders is that the threat a crisis creates often compromises our ability to think and engage our creativity to develop new and innovative solutions. To lead, one needs to choose. That is explore options and make decisions, which requires leaders to take time to think. In times of crises the ability to access our pre-frontal cortex (the part of the brain that holds our executive functioning i.e. ability to think about future consequences, connect the dots, explore options etc…) is compromised. In times of crises the more primitive areas of our brain take over as we kick into survival mode. The amygdala takes over and pushes us into learnt responses and habits, because based on our evolution in times of crises the danger was imminent and we needed to act immediately “flee or fight”, there was no time to think. Paradoxically for business leaders when they are faced with significant disruption that is up-ending key fundamentals of how business is done, they find themselves reacting, rather than thinking and acting strategically.
Many leaders demonstrated their ability to react appropriately to the recent pandemic-led crisis and have managed the crisis effectively through the implementation of their business continuity plans and managing to operate in a shifted reality. The critical question is how effective have they been in creating a platform to thrive, by beginning to make fundamental changes to their business’s strategies, operating models, real estate, technology, organisational structures, people skills and cultures as we move into recovery? A recovery thatneeds to recognise that some fundamental shifts linked to the 4th industrial revolution that were in their infancy have been significantly accelerated, and that we are no longer at the beginning but moving toward the middle of this significant economic shift.
The most fundamental shift that needs to be recognised is that to the nature of work. What was spoken of until recently as the Future of Work is now been shifted significantly to the recognition that the world of work has now changed and will continue to significantly evolve over the next few years. As with every industrial revolution this has been the key disruption for humanity as work evolves to align with the new economic drivers, so does the need for humans to develop new skills and evolve their social and organisational structures. In thisrevolution humans are needing to strengthen their uniquely human qualities such as empathy and creativity to leverage the insights that significant amounts of data enable. Learning to collaborate in a digital economy where we move from functional specialisation to the ability to collaborate in non-hierarchical team structures and can effectively leverage the capabilities in our broader eco-system to innovate and scale at speed.
The above changes are shifting the capabilities we require, how we design our organisations, structure and access skills. Leaders need to base their organisational shifts on how they are evolving work (what and how we do it) to create the next level of value. Why is this the fundamental task of leaders? As with the disruption it is ultimately the shift in human perceptions and behaviour that is driving the shift in the economy, similarly until we shift the perceptions and behaviour of our people in our organisations we will not be able to respond effectively and deliver the next level of value. The technology is the enabler, that is shaping change, however, it is what we do with it and how we use it that creates value.
A key concern with the current industrial revolution is that machines will take over the work of humans. The above applies particularly to repetitive tasks where automation, machine learning and ultimately AI (Artificial Intelligence) can processes things faster, more accurately and efficiently at enormous scale. The businesses that are beginning to thrive and grow are those that are leveraging these shifts and using them to fundamentally shift their business models and more importantly the work that their people do and how they organise themselves. We all are aware of Google, Amazon, Uber, Netflix…. The shifts, however, are now accelerating in traditional industries. Many banks are now evolving into platform businesses, Telco’s are becoming digital operators, retailers are moving to e-tailing, mining is seeing operations become increasingly automated and leveraging data an AI to operate more efficiently and safely, automotive companies are building business models around a world where people don’t drive, or own cars…
If leaders are going to lead their organisations to take advantage of the changes that are happening and enable the shifts, it needs a fundamental shift in thinking around the work we do. Every business model has at its centre work: what we do and the unique or optimum way that the way we do things to deliver value. If what and how we do things do not deliver the right level of value, we will initially perform poorly and then ultimately go out of business. Recognising that at the core of the disruption is the shift in work and how we think about creating value requires a fundamental shift in thinking and perhaps more importantly how we do things as leaders. A core function of leadership is to translate the strategy into how we do things differently to deliver on the strategy. Plans don’t execute, people do, and if we are facing a key disruption the key requirement is to understand how what we do needs to change, and how we need to do things differently to achieve the results we want.
Figure 1: Designing with work at the centre
Leaders can have an immediate and real impact on their organisations thinking and ways of doing things, by beginning to shift some key behaviours and ways of doing things (habits) across their leadership group. A key first task of leaders as they begin to shape the shift in their organisations is to break some of the learnt habits of their leaders that would perpetuate traditional thinking and ways of reacting to situations within their business. Remembering that we want to enable our leaders to engage their pre-frontal cortex, and not slip back into learnt habits and ways of doing things. Shifting habits i.e. making meaningful change in the way you do things as an organisation requires consistent and deliberate effort, because you are rewiring the brain.
The way we interpret information and therefore react to situations is wired into our neurophysiology in the way that our neurons are linked through the different synaptic connections. As we learn and experience new things, we create new synaptic connections. The more we repeat something the stronger and more entrenched these connections become, and ultimately these shape our habits. Electricity follows the path of least resistance, so when we are learning a new way of doing things, the challenge is that without persistence in grooving a new neural pathway we will quickly revert to our old way of doing things. It literally requires less effort, because we don’t have to think. Recognising that ultimately the key task of leaders is to drive change, thinking about new things requires more energy, and changing the way we do things requires lots of persistence. It is a different way of thinking about why real leadership is hard, because the leaders have to do the hard thinking work, and then persist in shaping the way things are done differently in their teams andorganisations, when you have a whole lot of people doing things in the older “easier” way.
It is therefore key that leaders are extremely deliberate, clear and simple in the behaviours (habits) they want to change in their organisations. Success is based on making some key changes to key habits, however, as the above illustrates trying to change to many will most likely result in limited long-term change, as there is not enough energy to change so many habits at once.
The below are 3 key habits that should be considered:
Leaders need to be very deliberate in making time to think and engage their executive functioning to ensure that they can tap into their creativity and develop new solutions and ways of working. It can be practically done by focusing on 3 key habit shifts: 1. Slowing down to speed up and ensuring the right level of alignment before solutioning and executing. 2. Communicating for purpose, by defining what problems need solving and how success will be defined and 3. Resourcing for the future, by bringing in new skills, thinking and ways of working.