Few of us would argue with the assertion that the pace and complexity of the business world has increased in the last five years. And if that's so, the time it takes companies to take critical business decisions ought to have decreased, too. But according to new research, the opposite it true; companies are actually taking longer to make important decisions – with potentially disastrous results.
"Game-changer", a report by the Economist Intelligence Unit, found that some eight out of 10 of the 390 global businesses they surveyed recognise that it is important to respond quickly to changes in their operating environment – that means factors such as the volatile economic climate (cited by four out of 10 respondents) and increased competition (cited by more than a third).
But despite this, half the businesses think the amount of time it takes them to make such key decisions has increased. Fewer than a quarter (just 22 per cent) feel that their decision-making has speeded-up.
According to the EIU, this implies that the internal strategy processes in many organisations simply are not able to cope with the speed of external events. And that's a view shared by the majority of senior executives quizzed for the report, more than six out of 10 of whom said that their firms are not making the right decisions about how and when to respond to change.
"If you are in an environment that is changing faster and faster, it means you have to make more calls and start experimenting," says Rolf Bixner, managing director of the Boston Consulting Group, in the report. "You need to fail fast, fail quickly, and fail cheaply."
In an increasingly interconnected and competitive world, the report argues, the probability of disruptive change will continue to grow. But organisations and employees tend to have a bias toward the status quo. So leaders need to come up with ways of counteracting internal resistance to change and cultures will need to adapt to faster and more disruptive change.
And critically, leaders need to be willing to conceive multiple futures and embrace an environment characterised by VUCA - volatility, uncertainty, complexity and ambiguity. For their organisations, this means that scenario planning and other long-term risk management techniques must become deeply integrated into day-to-day activities so that they can better think through how the future might evolve.
But as Hal Gregersen, senior affiliate professor of leadership at INSEA puts it in the report, they also need to remember that while disruptive innovations can bring companies to their knees, they can also be a source of rapid growth.
"The world is now so full of unexpected, surprising changes that companies today must either disrupt themselves or be disrupted," he said.