Are you the leader you need to be? How’s your adaptive capacity?

In times of tough market conditions and endless change, might a safe, process-driven approach to organisational leadership actually be counter-productive? Being nimble and adaptable – having adaptive capacity – is arguably more critical. But what does this mean for leaders, boards and investors?

Change makes most people anxious, particularly when it happens in their workplace. Yet change is all around us. It’s either happening to us (as a consequence of shifting markets, customer needs, technology, regulations and competitors) or it’s being driven by us (or our organisations) often in a bid to reduce costs, improve sales and protect income streams.

Despite the tepid economic conditions that currently prevail, change seems the only thing we can be certain about. And in change there is opportunity.

It’s ironic then, and potentially fateful, that many companies are choosing to hunker down rather than innovate and expand their horizons. Indeed, new CEO appointments in major Australian companies are being described as “safe choices” and “administrators, less colourful and more process driven” [1].

Knowing isn’t doing

Yet it was only a few years ago that the capability to lead and manage change was recognised as a critical competence not only of organisations but of CEOs. A dialogue with 1500 CEOs conducted by IBM [2] reported that:

Creativity is the most important leadership quality, according to CEOs. Standouts practice and encourage experimentation and innovation throughout their organizations. Creative leaders expect to make deeper business model changes to realize their strategies. To succeed, they take more calculated risks, find new ideas, and keep innovating in how they lead and communicate.

Detailed, five-year strategic plans are now largely irrelevant for many organisations, whether they realise it or not. Equally, organisations that are overly dominated by processes and controls risk being too slow to respond to changing needs. The same controls can provide people with a false sense of security and a place to hide from difficult but important decisions.

So what’s the alternative? It’s being highly attuned to your market. It’s having a risk-balanced portfolio of growth initiatives under way. It’s being nimble and adaptable. In a nutshell, it’s having a high adaptive capacity.

Building adaptive capacity

This is where the new book, Adaptive Capacity, by Juan Carlos Eichholz [3] makes a timely and valuable contribution. While it mirrors many other books on change management [4] in its scope, it differs in dealing with the factors that build the capability not just to envisage and manage change, but to embrace and thrive on it.

Having designed and lead change initiatives in local and global business settings, two things become starkly evident: (a) it’s all about people, always, and (b) there’s a constant balance to be achieved between creating and maintaining enough tension to motivate change without it becoming destructive. This is the operating space that Eiccholz calls the ‘holding environment’.

Business leaders often lull themselves into a false sense of security – that a logical business case and their enthusiastic directions will be enough for people to fall into line and execute the planned changes. Often it couldn’t be further from the truth. In overt or covert ways, people at every level of an organisation can impede or thwart change if they feel threatened by it. The African proverb rings true: “If you want to go faster, go alone. It you want to go further, go together.”

Adaptive leadership

As emphasised by Eiccholz and in IBM’s CEO study, “going together” doesn’t mean staff adapting to a leader’s commands, but leaders adapting with their people. Everyone must be open to challenge, learning and adaption. Indeed, Eichholz raises a critical point: “it’s difficult for leaders to see and solve organisational change problems because they’re part of the problem and the solution calls for personal change”. This in itself may be too bitter a pill for many leaders to swallow, particularly those who are “safe, process-driven administrators”.

It may be in years to come, when business schools and journalists are pouring over the charred remains of failed companies that a lack of adaptive capacity will be recognised as a key causal factor. Charles Darwin’s quote will no doubt be recalled:

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.

Boards and investors would do well to ask their executives to explain how they are building adaptive capacity in their organisations, and how they as leaders are fueling their own creativity, learning and performance improvement. It may be one of the most important questions about organisational fitness and sustainability that’s asked.

Here’s a few questions to ponder

• Do you know how to assess your organisation’s adaptive capacity?
• Do you know how to assess your organisation’s adaptive capacity?
• Is your organisation’s adaptive capacity fit for purpose?
• Can you prove your organisation’s adaptive fitness to your board or a key investor?
• As a leader, what key changes will you personally make to enhance the adaptive capacity of your team and enterprise?
• What assumptions or biases might be hindering your perspective on this topic, creating personal and organisational risk?

 

[1] Jamima Whyte (2015) New breed of CEOs playing it safe, Australian Financial Review, 21-22 November 2013
[2] IBM (2012) Capitalizing on Complexity: Insights from the Global Chief Executive Officer Study, IBM Institute for Business Value, New York.
[3] Juan Carol Eichholz (2014) Adaptive Capacity – How organisations can thrive in a changing world, LID Publishing, Greenwich.
[4] Dan S. Cohen (2005) The heart of change field guide, Harvard Business School Press, Boston.