Adapt or perish: Learn to anticipate and create change in a volatile world
Getting comfortable with -- and predicting -- change is the key to survival in a constantly changing business environment. Dr. Homa Bahrami, faculty director at Berkeley Executive Education, says leaders must strengthen their capacity to thrive in a world of constant change, by designing their teams and organizations to be adaptable and super-flexible.
“It is not the strongest of the species that survives, but the most adaptable.” -- Charles Darwin
The world is faster and more complex than ever, a reality referred to with the acronym: the “VUCA World” -- volatile, uncertain, complex and ambiguous. Globalization has created a multilateral business environment in which decisions or events in one part of the globe trigger disruptions to the status quo in other regions. Consider the US subprime mortgage collapse in 2007, the staggering drop in global oil prices in 2014, the recent “Brexit” referendum in the UK -- each individual event triggered market volatility and industry-wide uncertainties for even the most established organizations around the globe. It turns out, Darwin’s quote about evolutionary survival was prescient for today’s business leaders.
Silicon Valley adaptation modes
Dr. Homa Bahrami, is an international educator, advisor, Board member and author, specializing in organizational flexibility, a senior lecturer at the Haas School of Business, and a faculty director at the Haas Center for Executive Education. An active consultant for global companies headquartered in Silicon Valley, she says that adaptation is the most essential asset for survival in uncertainty, requiring a unique set of leadership skills she’s observed in Silicon Valley since the 1980s. “One of the key differences I’ve observed is that companies in Silicon Valley are much more dynamic and flexible; they constantly iterate their strategy, products and services, business models and organizational structures.”
But what accounts for this unique ability to adapt to constantly changing environments? Dr. Bahrami says that leaders must recognize, and be prepared for, three modes of adaptation:
- Forced adaptation occurs when external scenarios cause no choice but to adapt. A financial crisis, competitive disruption, changes in technology -- all necessitate a rapid pivot. “This is the most common form of adaptation, you adapt because you have to,” says Bahrami. “Hewlett Packard split itself into two different businesses because the original model was no longer relevant; Yahoo looked for a buyer because it couldn’t sustain its original differentiation. Forced adaptation occurs when market realities, and your unique circumstances, are such that you have to reinvent yourself.”
- Deliberate adaptation is much more intentional, says Bahrami. “You anticipate and look ahead, instead of reacting to today’s pressures. The ability to anticipate, and, -- even better -- create disruption, are essential hallmarks of deliberate adaptation”. This is what Silicon Valley is known for. “Apple could have cruised along on the success of its iPhone and iPad,” notes Bahrami. “Instead, they are constantly thinking about new products, whether it’s the iwatch, payment systems, or autonomous vehicles; they are always searching for new avenues to grow, differentiate and diversify.”
- Accidental adaptation is neither forced nor deliberate; rather, it’s the “aha” moments in which unexpected -- yet lucrative -- results can occur. “Amazon is considered an early pioneer of ‘the cloud’ not because they set out to do so, but realized they had all sorts of unused online storage capacity outside the holiday season,” says Bahrami. “So what did they do? They rented out that extra space to other players who needed it. It was a brilliant move that led to disruptive innovation and transformed the IT landscape.”
Two sides of the same coin
Every leader should strive for deliberate adaptation -- being in the driver’s seat will always be more advantageous than being forced into something -- but, leaders must be able to prepare their organizations and teams for all three modes of adaptation. Many managers assume that they must build robust strategic innovation plans in order to accommodate adaptation, eschewing other areas of their organization. But Bahrami notes that organizational culture is the make-or-break element of successful adaptation.
“Strategy and culture are two sides of the same coin,” she says. “Strategy is about where you want to go and what is the ultimate destination you have in mind at that particular point in time. Culture is your execution mechanism -- how you leverage your people and create processes to get there.”
Bahrami notes that culture becomes an even more important driver of adaptation for established companies. “If you’re an established industry or an older organization your culture might actually get in the way of adaptation. That’s why organizational culture and organizational strategy are both so essential, but for larger firms there is a more imperative to create cultures that accommodate those three modes of adaptation.”