From Rigidity to Reinvention
Thriving in a Rapidly Changing Business Landscape
Building an organization that can survive changing market trends, emerging threats, and shifting customer demands takes a lot of effort.
But it’s an imperative for any company that wants to survive to build the right set of re-invention skills.
Leaders understand the imperative to reinvent. In its recent annual survey of CEOs, consulting giant PWC captured the angst of CEOs in one statistic:
45% of CEOs surveyed said they believe their company will not be viable in ten years if it stays on its current path.[1]
It’s safe to say that most companies have experienced more change in the last five years than they had in the previous five. Nearly every organization has had to learn to adapt to new customer needs, adapt to digital transformation, and learn to operate in complex and hybrid work environments.
If that weren’t enough, they have also learned to build new levels of resiliency, simultaneously managing through massive societal change, shifting demographics, supply chain risks, and potentially catastrophic cybersecurity risks.
And yet, more change is required ahead just to remain viable.
We talk a lot about resilience but reinvention is really the corporate imperative.
The greatest impetus for reinvention comes from the acceleration of technology development. And it’s not just how much is changing, but how fast.
Academic, futurist, and entrepreneur Ray Kurzweil observed that we are in a period of accelerating change, stating:
“Today it’s an axiom that life is changing, and that technology is affecting the nature of society. But what’s not fully understood is that the pace of change is itself accelerating, and the last 20 years are not a good guide to the next 20 years. We’re doubling the paradigm shift rate, the rate of progress, every decade.”[2]
It’s an accurate description of our time, isn’t it?
Kurzweil said that 23 years ago…
And it’s true that we’ve seen an acceleration of change since then.
At the time, Kurzweil outlined what he called “the Singularity,” an era in which human intelligence and machine intelligence would merge to accelerate the development of new technology—essentially technology which helps us create technology. That would move us from a linear to an exponential growth rate, with a doubling in the rate of change every decade.
How can leadership stay up to the task of addressing that type of exponential change?
The most important way is to develop three core capabilities that are the heart of reinvention: Innovation, Engagement, and Agility.
Capabilities are the things that organizations do well and that deliver meaningful business results. They include skills, processes, know-how, and unique ways of using assets and resources which provide a competitive advantage.
Leaders know capabilities are important. A McKinsey corporate leadership survey found that 58% of respondents ranked building capabilities among their company’s top three priorities, and 90% placed it among their top ten.[3]
Yet not many companies put adequate effort into capability building them. Only 25% of company leaders rated themselves good at building capabilities at all.
Yet, here is the paradox: When your organization does become very good at building specific core capabilities, you actually become pretty bad at reinvention.
Researchers have noted this capability-rigidity paradox, a tension between an organization's need for both flexibility and incremental innovation and its tendency to become inflexible and resistant to change over time as it becomes good at what it does.
According to research, organizations develop routines, structures, and processes to efficiently operate and get better at what they do, they can inadvertently become less adaptable to changing environments.[4]
So, while capabilities enable success, they can also inhibit future success.
Take for example, Google’s exceptional search engine technology. It’s one of the company’s core capabilities, and they’ve spent over two decades perfecting it to provide users with fast and relevant search results.
So, when it came to launching AI solutions, despite already owning advancing AI technology, Google found themselves lagging to OpenAI and Microsoft.
Being a capabilities-driven organization is a key to success today, but the only way to survive in the long run is to complement them by enabling your organization with reinvention capabilities.
And those reinvention capabilities start with exceling at non-linear innovation, fostering employee engagement, and building organizational agility to anticipate and adapt to change.
Balancing these two aspects types of capabilities is crucial for sustained success in dynamic environments.
In my post next week, we will begin to break down each of these capabilities, starting with a breakdown of what it takes to be innovative.
Some things to consider:
Reflecting on your organization's current trajectory, do you believe it will remain viable in the next decade if it continues on its current path? Why or why not?
Considering the rapid pace of technological advancement, how is your organization adapting to stay ahead of emerging trends and market shifts?
What are the core capabilities that your organization excels at, and how do they contribute to its success? Are there any risks associated with over-reliance on these capabilities?
Reflect on instances where your organization may have struggled to innovate or reinvent itself in response to changing market conditions. What lessons were learned from these experiences?
Until next time, lead with purpose.
Will
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[1] https://www.pwc.com/gx/en/issues/c-suite-insights/ceo-survey.html
[2] https://www.edge.org/conversation/ray_kurzweil-the-singularity
[3] “Building Organizational Capabilities: McKinsey Global Survey Results,” McKinsey and Company, March 2010.
[4] Resolving the Capability–Rigidity Paradox in New Product Innovation, American Marketing Journal, Oct 2005