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TPL Insights: Building Peak-Performance Cultures #134 – Protect Your Organization Against Rogue Waves Part 2

September 1, 2022

By  

Rob Andrews

By Rob Andrews with paraphrased content from Getabstract’ s summary of Jonathan Brill’s book Rogue Waves

As we learned from last week’s post, assessing, protecting, and nurturing your culture is the most important thing you can do to protect against being swept away by rouge waves. This week, we continue to explore the remainder of Jonathan Brill’s observations and recommendations.

Global connectivity places a premium on data and shrinks the innovation window.

Making money from data is cheaper and easier than monetizing products or services. Increasing global connectivity promises to make data the “world’s most valuable commodity.” Accordingly, the worldwide business economy will focus less on physical goods and services.

The expansion of the global economy affects innovation. At one time, you could turn a novel idea into a lucrative product that might carry your company for years before the competition caught up with you. These days, the time gap between an executable idea and the arrival of a better, less expensive alternative is diminishing. Thanks to global connectivity, your competitors can easily spot your innovation and engage your client base.

History shows that one – or several – of the following problems are often to blame for catastrophic events that destroy respectable organizations:

  1. Arriving at an inaccurate conclusion as the result of analyzing only a portion of the available data.
  2. Focusing on the pieces as opposed to the whole.
  3. Believing the future will resemble the past.
  4. Anticipating a tomorrow that won’t come.
  5. Failing to utilize innovation to alter probability.

To improve your assessment of threats and opportunities, take the following steps:

  1. Assemble a team of insiders and outsiders to scan the horizon for rogue waves. This team should act independently of profit and loss concerns and report directly to the board.
  2. Determine the actions you can take now to prepare for future changes.
  3. Find a leader who is ready to expedite a shift in perspective. Assign him or her an executive sponsor and a professional trainer.
  4. Conduct a thorough evaluation every year or two.

Corporate stakeholders demand performance and resilience.

Stakeholders judge CEOs by how they handle crises. No one pays attention when things run smoothly, and profits meet investor expectations. But COVID-19’s devastating effects on the world’s economy expanded board and stakeholder priorities. Investors and boards demand high performance and seek assurance that your organization can withstand the next rogue wave. You are responsible for developing resilience by examining and realigning your priorities, processes, and behaviors.

The captain of the Titanic didn’t prioritize the looming threat of icebergs because he felt his ship was unsinkable. Similarly, Kodak and Blockbuster failed to acknowledge impending catastrophe on the horizon and fell to disruptive innovation.

Follow the “ROGUE” method to avert disaster:

You don’t have to be an expert in all five ROGUE categories. But each team member should be strong in at least one. Collectively, they can cover all these elements:

“Reality Test” – To prepare for the future, you must understand the present.

Companies typically expend energy gathering information about the past and trying to forecast the future, but they put forth less effort interpreting the present. If something is happening that alters your system, the data from your last reporting period won’t help you with tomorrow’s issues. If your perception of the present is inaccurate, your future model will be flawed.

Abductive reasoning, the clue-based method often associated with fictional detective Sherlock Holmes, helps you interpret current facts and their future implications. American philosopher Charles Sanders Peirce originally systematized the technique in the late 1800s. Beginning with a partial set of observations, abductive reasoning moves on to the most likely explanation for the events or circumstances you observe.

This approach is not popular with seasoned executives, who prefer working with fact- and evidence-based conclusions instead of sequential reasoning. Gathering as much information as possible about your dilemma will improve the quality of your questions and lead to the most effective conclusions.

You can arrive at a decision or deduction without having all the facts. The American outdoor recreation equipment retailer REI wanted to learn how its millennial customers felt about spending time in the wilderness. The company found scant information and deduced that an absence of research meant no one had tapped that market segment, so REI launched a line to serve that demographic.

“Uncouple your opportunities from your threats” – Shift the odds in your favor.

Constructing your future business model means navigating uncertainties. While nothing can guarantee a favorable outcome, shift the odds in your favor and limit your vulnerabilities by taking these steps:

  1. “Identify trigger points” – These interactions prompt a release of energy that sparks the next interaction. For example, Archduke Ferdinand’s assassination didn’t cause World War I, but it set into motion a series of events that did.
  2. “Nudge your system” – Simple adjustments can create a major impact through pointed, timely effort. McDonald’s tailors its menu to suit local tastes. Customers can purchase shrimp burgers in Japan and lobster rolls in Maine.
  3. “Prioritize threats and opportunities” – You can’t build resilience in one big step. Establish orders of importance for each step you must take.
  4. “Shift certainty and impact” – Know which adjustments not to make. Be candid and honest about the feasibility and effects of each specific change before instituting it.

Experiment” – Maximize success and minimize failure.

Innovation and failure go together.  Mistakes are inevitable, particularly in situations that combine “many unknowns and high volatility.” But you can make sure that you’ll rebound from a worst-case scenario, and generally, you can prevent everything from failing at once.

Safeguard your business model by building a well-balanced portfolio of experiments. Let’s say a manager proposes a new project with only a one-in-five chance of success. Many executives would balk at the odds and never grant approval, thus missing the opportunity to provide a team with a valuable learning moment should the initiative falter.

You can’t afford for all your experiments to be high risk, but taking a chance is often reasonable. The outcome is not always the most important factor; give your employees the opportunity to flex their creative muscles and spin the wheel. We would love to be your thought partner. Give us a call.

Rob

Rob Andrews
Allen Austin
Consultants in Retained Search & Leadership Advisory

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