25 NOVEMBER 2020
6 ways to rewire your business now
by Alison Benson
Despite real hope on the vaccines front, Covid-19 continues to be a scourge on most of the world. New and strict lockdown restrictions with little reassurance from authorities about how long these could last have sent a cold chill through businesses and economies.
It is a Herculean challenge to accept that the crisis is not only not coming to an end any time soon but is the starting gun for a quite different and more difficult future. This decade will be defined by uncertainty and change – in terms of the global economic environment and customer demand and internally, in terms of the historical traditions of strategic decision-making, leadership and incentivising workers.
The “fog of the future” is a direct result of the virus and the lockdown restrictions but also as a result of what Hélène Rey, Lord Raj Bagri Professor of Economics at London Business School, describes as “green swans” – slow-moving but entirely predictable trends that have complex, non-linear but highly impactful outcomes.
Some of these include the geopolitical tensions that are reframing globalisation, climate change, the rising importance of AI in business and the growing need for pre-internet organisations to be as agile as digital platform businesses in accessing opportunities while minimising risk.
So, what must businesses do now, immersed in crisis, to plan and prepare for success over the next decade – a future where few of the old norms apply? Our faculty members urge leaders to be braver than many before them and start the difficult – but necessary – process of rewiring their organisations for success in 2030 and beyond.
1. Make your organisation ‘antifragile’
Richard Jolly, Adjunct Professor of Organisational Behaviour
Businesses must allow their people to be creative and innovate to capture new opportunities and create new demand. They can’t just put up the umbrella when the hailstones drop from the sky; they need to change the lens of their reality so that difficulties, uncertainty and chaos become positives from which they can derive benefit. In his provocative book Antifragile: Things That Gain from Disorder, best-selling author and thinker Nassim Nicholas Taleb says only the antifragile will make it in a world dominated by black swans, unexpected and unpredictable events that have potentially severe consequences. He is right. So, how can leaders create antifragile organisations?
One of the first steps is to get out of your leadership bubble and focus on honest and two-way communication with employees. Try to avoid HR-led wellbeing initiatives and motivational speakers as a way of lifting the organisation out of collective malaise. These are superficial pacifiers not effective even in the short-term and they certainly do not help in creating the faithful workforce you will need to embrace the operating environment of the future.
2. Change the human systems of your business
Herminia Ibarra, Charles Handy Chair in Organisational Behaviour; Professor of Organisational Behaviour
To compete effectively with born-digital businesses, organisations need to improve the way they determine the value of their human capital. In an age where technology can be used to complete many of the tasks that workers have historically been promoted on, this is now more crucial than ever. Leaders must exhibit new behaviours and a different mindset – a growth or learning mindset rather than a fixed mindset, with empathy at its core. They must adopt new attitudes to performance management and change obstructive enterprise-wide processes like unhelpful appraisal systems to transform the culture of their organisations and foster the attributes critical to winning market share in the future. Brand initiatives led by the internal communications function cannot change a culture. Make sure your best talent is enabled to be their best selves and create ‘learn-it-all’ organisations that encourage experimentation, open conversations, curiosity and collaboration.
3. Recognise the ‘green swans’ before they become ‘black swans’
Hélène Rey, Lord Raj Bagri Professor of Economics
The term ‘black swan’, used to describe an unpredictable event that has significant repercussions on business, the financial markets and society at large, is well known. Green swans are different. They are slow-moving trends, predictable, and which can have impactful yet complex outcomes. The changing face of globalisation and escalating geopolitical tension is one ‘green swan’ that businesses with global supply chains and operations must acknowledge. Leaders must consider now what activities they can de-globalise, or localise, and the implications of their actions on supply chains, data privacy, cyber security and operating costs. Climate change is another green swan. Businesses cannot afford to wait for governments and regulators to introduce punitive carbon pricing measures to lower greenhouse gas emissions. Exceptional leaders will take action now, even if it means expensive behaviour change. The cost of pre-emptive action will still be lower than if organisations wait until they are suddenly forced into making changes.
4. Get comfortable with data science as BAU
Nicos Savva, Professor of Management Science and Operations and Tolga Tezcan, Professor of Management Science and Operations
Companies are collecting more data than ever before. This data has the potential to generate immense value. It can be used to improve operational efficiency, surface untapped opportunities and inform business strategy and planning. But many organisations fail to generate value out of their data. Some fail to do so because they do not collect the right data, while for others, introducing data science and analytics into their business is a seemingly overwhelming and expensive task. They don’t know where to start. But they must start now. The first step – as always – is to start small. Using existing data, resource and infrastructure, identify a small and specific problem in a division that can be potentially addressed using an algorithm. It may not work the first time – and that is fine. Learn from mistakes. Change the algorithm. Then, try the same thing on another problem. A succession of quick wins will help to build a business case to grow data science as a strategic capability.
5. Mitigate the effects of future shocks
Julian Birkinshaw, Professor of Strategy and Entrepreneurship and Deputy Dean, Executive Education and Learning Innovation
The past is littered with fallen titans: Kodak, Blockbuster and Merrill Lynch to name a few. These companies failed to respond in time to their changing context and changing customer demands, while also not having the funds to keep their core operations going. Agility is important to navigate the ‘fog of the future’ and embrace opportunities when they arise, but even more important, is for an organisation to have the resilience to mitigate shocks and keep the wheels turning during unexpectedly dark times. The first priority when hit by a disruptive shock like COVID-19- is simply to keep the business functioning – operational resilience. But you also need to work on your longer-term capacity to adapt (strategic resilience) and the capacity of your people to withstand a difficult set of circumstances (behavioural resilience). Business leaders cannot anymore rely on business plan models that builds in steady year-on-year growth with sensitivity analysis. COVID-19 has hammered the message home that the past is in no way – if it ever was – a roadmap to the future. We are living in a new operational reality and business leaders need to ask themselves whether they’re still using the right tools and techniques to help them make the right decisions to protect their value in a new social, economic and operational paradigm.
6. Understand what it means to create an inclusive workforce
Aneeta Rattan, Associate Professor of Organisational Behaviour
Many organisations are aware that they have diversity challenges and some even have different initiatives, programmes and workstreams to try and address these. But diversity is a broad term and can mean different things to different people. Corporate diversity efforts typically focus on representation, which takes many years to achieve, and even then is not really enough, because that doesn’t address power structures or the lived experiences of minority groups. It can be difficult to know exactly what the most practical, achievable and effective steps should be to move the dial towards creating a truly diverse and inclusive organisation where all employees feel they are connected to their workplace, can operate at their best and be equally recognised – a priority for financial success over the next disruptive decade.
Understand that diversity is a learning trajectory and there isn’t a one-size-fits-all approach. There are not enough examples of companies who have been able to fix their diversity challenges and make the required advances toward equality and equal opportunity for all their employees, but there are small ways in which some businesses have addressed some of their challenges. The BBC’s 50:50 project is one example. Initiatives like that must be tracked and evaluated. Successes – and failures – should be shared as both enable organisations to plot the path ahead more effectively.
Source: Leading business thinkers from around the world, both academic and managerial, come together in Think to debate current issues and present cutting-edge research and ideas. Visit our web-site at: http://www.london.edu/bsr.