“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.” This quote, often mistakenly attributed to Charles Darwin, was actually delivered in a 1963 speech by a Louisiana State University business professor named Leon Megginson in presenting his own interpretation of Darwin’s central thesis. Regardless of the attribution, the message is an essential insight for business leaders who are struggling to meet the unprecedented challenges of our rapidly changing times.
In times of great change, the past is no longer a proxy for the future, which means executives can no longer rely upon the traditional disciplines of strategic planning to chart the future course of their companies. In times of great change, strategies aren’t planned by looking backward and then extrapolating forward; they’re discovered by envisioning a future that may look very different from the past. This is a lesson that was lost on stalwart companies, such as Nokia, Kodak, Blockbuster, and Borders, each of whom were well-established market leaders that failed to adapt to rapid change.
Meeting the challenges of accelerating change means that business leaders need to embrace news ways of thinking and acting that emphasize evolving the firm over preserving the status quo. Since Frederick Taylor first codified the nineteenth century top-down hierarchical organization, management’s basic formula has been “plan and control” and its mission has been to sustain lucrative product models for as long as possible. But now that innovation is a critical strategic competency, the new framework for success in 21st century business is not a formula, but a three-phrase journey of discovery that traverses the key activities of “envision, experiment, and execute.”
These three activities are the pathway to the ultimate goal of business leaders in a post-digital world: evolve the business to successfully adapt to rapid change.
The Essential Challenge
The essential challenge for business leaders in times of great change is to proactively manage the evolution of their companies. Those who master this challenge survive. Those who don’t, regardless of how strong their market position or historical knowledge, are highly likely to fall by the wayside.
When change is incremental, as was the case throughout most of the 20th century, preserving the status quo makes good business sense because business models can be sustained for 40 or more years. However, in a rapidly changing world, business models may last only five to seven years before a technological breakthrough transforms an industry.
When this happens creating a sustainable competitive advantage shifts from sustaining historical product models to having the sustainable capacity to rapidly test and deploy new business models. When companies become competent in the three dimensions of strategic discovery - envision, experiment, and execute - as a by-product, they will naturally manage their own evolution. Imagine how differently things could have turned out if Kodak had the wherewithal to develop the digital camera it invented into the smart phone or if Borders had expanded its presence in retail by creating the capacity to deliver books to your door. When it comes to managing in a fast-forward world, the primary difference between companies who are lagging and those who are keeping pace is that, by embracing the strategic discovery journey, those who keep pace continually measure what’s most important to customers, have the capacity to learn fast and cheap, and the ability to innovate when markets shift. That’s what it means for a company to manage its own evolution.
Envision is the foundation for strategic discovery and can take different forms depending upon the context of a company’s challenges. There are times where data analytics can provide insights into emerging trends and how they are transforming markets. This activity is different from traditional business analysis, which is often focused on industry trends. Data analytics, on the other hand, tend to be more market-based and hone in on cross-industry developments that are reshaping the basic contours of business.
At other times sophisticated facilitative processes, such as design thinking sessions or collective intelligence workshops that accelerate the exploratory power of serendipity and emergence are rapid pathways to the critical knowledge that serves as the gateway to uncovering unknown unknowns, making unusual connections, and creating breakthrough thinking. This critical knowledge is often only accessible by gathering the “whole system” of people in one place at the same time. Because the whole is greater than the sum of the parts, these facilitated sessions are rapid incubators and potent accelerators of key insights into the dynamics of business transformation and the necessary moves that companies need to take to avoid being casualties of market disruptions.
Whether using data analytics, facilitative processes, or some combination of the two, the purpose of these exploratory activities is to unearth and define strategic options for managing at the pace of rapid and disruptive change, so companies can change as fast as the world around them.
Because innovation is a core strategic competency and the past is no longer a proxy for the future, we can’t rely on historical data analysis for providing reliable assurances when making key strategic moves. In a rapidly changing world, the best source for reliable assurances is found in people, specifically in customers. The key guiding principle for choosing among various strategic options is a simple proposition: Will customers buy the good or service that the company is selling? The best way to gather this knowledge in a fast-changing world is through rapid and low-cost experimentation.
The essential operating principle in experimentation is to learn fast and to learn cheap. Accordingly, ideation is the entry point for experimentation and rapid prototyping is the crucial activity. The purpose of experimentation is to rapidly learn what is most important to customers when their expectations may be radically shifting in response to new emerging technologies, and to then use this knowledge to provide reliable assurances when selecting among strategic options.
Experimentation usually involves the creation of some type of a minimal viable product and can also take different forms. There will be times when the production of a facsimile product that gives a potential customer a solid sense of how the real product would work is sufficient enough to gauge customer receptivity to a product idea. There will be other times when a more robust hardscaped product model will need to be constructed for customer demonstrations to get the feel necessary to determine the product’s market potential. Whichever form is used, it needs to be a reliable window that accurately simulates customer buying behavior.
When the envision and experiment parts of the journey are complete, the company has fully discovered what it needs to know to adapt its business, product, and operating models to successfully compete in a rapidly changing world. However, strategy without execution is nothing more than wishful thinking. The full journey isn’t complete until the strategy is successfully executed.
This is the part of the journey where companies are likely to be well skilled because this is where their traditional competencies in planning and control will be valuable. In a rapidly changing world, planning is a tactical and not a strategic activity. And while planning’s importance in defining strategy may be diminished, its value in execution cannot be overstated. Depending upon the context of the strategy to be implemented, the use of either traditional project management or agile methodologies to plan, build, and launch new business, product, or operating models remains an important part of a company’s work during this part of the journey.
The goal of the three-phase journey of envisioning, experimenting, and executing is to enable a powerful and sustainable dynamic: the capacity for business leaders to proactively manage the evolution of their companies. Unlike the “plan and control” formula where the objective is to achieve a sustainable stable state, the goal of the “envision, experiment, and execute” journey is to enable business leaders to sustain the company by having the ability to change as fast as the world around them.
When change is incremental, stability is a desired attribute in constant markets. However, in a rapidly changing world, professor Megginson’s interpretation of Darwin into the world of business seems to be a very useful guide for twenty-first century leaders: it isn’t the most stable, but rather the most adaptable companies that thrive and survive.