Being able to adapt to circumstances outside of your control has long been recognised as an attribute of successful leaders. But even the most hands-on chief executive can struggle to navigate through unforeseen waters; as much as we don’t like to admit it, certain events will always remain outside of our control.
Brexit is a wake-up call for businesses and organisations of all shapes and sizes. How leaders respond to this defining business concern will undoubtedly play a key role in their future prosperity – whether to act defensively and maintain consistency, or to shake things up and look for fresh opportunity.
The business leaders with whom we work are currently unsure about how to respond: just one third have confidence in their future strategy. In our work with Cranfield School of Management, we identified that many organisations are responding to uncertainty ineffectively; by sticking their heads in the sand or moving so slowly that they risk sleepwalking into disaster – or irrelevance.
The problem is that we’ve collectively seen risk as a binary issue for too long; you are either fleet of foot and fragile, or steadfast and slow to react. This characterisation is too simplistic. The best businesses take the bad with the good; they recognise that the tension between consistent, defensive behaviours and progressive, flexible ideas allow the good to prosper.
Four dimensional thinking
Success involves recognising that there is no single, right answer. There is instead a spectrum of success, which involves balancing opposing strategic tensions. Businesses are typically pulled in four directions: defensive (stopping bad things happening), progressive (making good things happen), consistent (sticking to a goal), and flexible (adapting to new challenges).
Organisations such as Google and Facebook have been challenged over their more overt advertising innovations, with a clear tension between what is possible and what is permissible. This is an example of preventative control, which focuses on monitoring and compliance: pulling back against adaptive innovation. Business leaders will face similar challenges in adapting to a post Brexit environment, pushing into untried markets in the wake of new trading agreements.
Similarly, performance optimisation can often cause a rift with the need for flexibility in defensive behaviours. Think how the automotive firms locked into a Lean Kaizen approach – in which waste is eliminated to boost efficiency for continuous improvement – were stung by Takata’s airbag recall, which uncovered a single point of failure in their collective supply chains. Looking two years ahead, as regulatory changes come into play, leaders will have the chance to re-evaluate established working patterns and work as an industry to reach consensus on best practice.
Stumble, don’t fall
While some high technology industries encourage a culture of failure among entrepreneurs, it is far tougher to build and maintain organisational resilience. Truly great leaders recognise that however good your balance, it is inevitable that you will stumble at some point.
The important thing is to encourage a culture of “zero trauma” rather than “zero defects”. Acknowledging and accepting failure is an important part of building such a culture. Hard pressed retailers such as Next, which is dusting itself down from bruising high street trading figures, set a good example with its clear vision of a multi-channel future.
The triggering of Article 50 marks the 24 month countdown to Brexit. Mastering organisational resilience offers businesses and organisations of all shapes and sizes a choice: wallow in the uncertainty of Brexit, or rejig the heart of your operations to reap dividends for employees, customers, investors, and the UK at large. Doing so will put the values of vigilance and continual improvement at the heart of any operation – and correspondingly cast politics and complacency to one side.
Howard Kerr is chief executive of the British Standards Institution.