If the increasing pace of change makes most long-term plans nothing more than what military leaders would call SWAGs (scientific wild-a** guesses), how can leaders ever plan beyond 180 days with any degree of confidence?
Management strategist Baba Prasad is the president and CEO of Vivékin Group. His new book, Nimble: Make Yourself and Your Company Resilient in the Age of Constant Change, proposes that leaders and their organizations can become more change-friendly by developing five types of agility that will help them to become not only more nimble in their strategic planning but also more resilient in handling the unanticipated outcomes that will inevitably occur:
Analytical Agility: To cope effectively with change, business leaders must be able to “change their analytical patterns and processes” in response to new information or a change in context. As such, those leaders have to demonstrate flexibility in their analytical thinking in order to approach the problem from a fresh perspective.
When AT&T, for example, asked McKinsey & Company in 1980 to project what the cellphone market would be in 1999, the consultants took current market data –– high prices, big phones with poor batteries, and patchy wireless coverage –– and predicted a total market of 900,000 subscribers. AT&T took that advice and exited the market, only to re-enter it in 1994 with the purchase of McCaw Cellular for $12.6 billion.
By 1999 there were actually 190 million cellphones in use, with 900,000 new subscribers being added every three days. McKinsey’s error, Prasad argues, was the rigidity of their analytical thinking in using regular business projections for a brand-new product and market facing exponential growth.
Operational Agility: For the times when change requires immediate hands-on action, effective leaders need the ability to lead from the front and, if necessary, to abandon established policies and procedures, to transform “knowing into doing.” Having a solution to new information is of limited use if that solution cannot be put into practice in a timely manner.
Innovative Agility: When change is so disruptive as to demand that the organization needs to be completely shaken up, the ability to challenge the status quo through innovative intelligence is critical. This involves more than just creative thinking. New ideas must be assessed from an enterprise-wide perspective to ensure that all potential conflicts are identified and potential synergies leveraged.
Prasad underscores the warning that this is more than just a need for innovation, by recounting the example of Lego. The company responded to a revenue plateau in the early 1990s by launching “an average of five major new product themes each year from 1994 to 1998.” They were all poorly conceived and subsequently failed, leading to the first loss in the company’s history, of $38 million in 1998. Only a drastic 50 percent cut in product lines by the first non-family CEO saved the company from bankruptcy.
Communicative Agility: The ability to motivate and inspire people to chart a new course when traditional data measures would indicate that the mission is suicidal requires communicative agility, both emotional and social.
Johnson & Johnson CEO James Burke’s response to the poisoning of Tylenol Extra Strength capsules in Chicago in 1982 is presented as a classic example of a leader understanding the significance of people over profits. His choice to pull the product from all shelves, rather than guessing which cities had been impacted, is widely attributed with saving the company.
Visionary Agility: Prasad considers visionary agility to be the most important of the five. While the escalating pace of change may handicap the accuracy of long-term planning, a leader must still be able to embrace a long-term vision, if only to avoid being reactive rather than strategic in planning the future.
Nimble goes beyond a simple acknowledgment that change is a constant in today’s business world. Prasad’s five agilities model –– the Vivékin Intelligences Framework –– presents a skill set that will enable any leader to embrace uncertainty, risk and the inherent unpredictability of strategic planning.