The challenge for business is to re-imagine its place in a world where government and investment models are unrecognisable
We’ve discussed that it’s never been a more vital or exciting time to be a political or business leader or a major investor. The government, investment and business models we’ve relied on for 75 years to determine the way we live, learn and earn are failing.
Not appropriate to respond to the combined exponential impacts of technology, climate and that third catch all category of societal restlessness around: inclusion; gender; ethnicity; the gap between the rich and poor in all its forms; or the west reaching peak influence in the world. These challenges won’t wait for the incremental change models we’ve relied on to catch up.
Western business leaders have a second problem, dealing with three exponential challenges at the same time with incremental change models is challenging enough! Now they must build in the uncertainty of the new government and investment models, which are yet emerge. The last time this really happened was just after the second world war, when we had reset and re-imagined based on the future because there was no immediate past to incrementally change.
Our paper on Non-Linear People Strategy, sets out this argument in more depth.
We believe a CEO has four broad options to tackle this new reality and it’s really important that they are at least considered. Firstly, let’s consider a common starting point. Our clients usually experienced two types of linear transformations: The bolder incremental change approach, the boldest yet in fact, which questions more of the “sacred cows” but now they realise confuses more change with different.
A slash and burn approach, usually over focused on technology, often led by a technology person, which struggles to distinguish between ‘good’ and ‘bad’ legacy.
In summary they’ve got 3 common problems They have an incremental change model to address multiple exponential challenges, and they often haven’t built in the breakdown of current government and investment models. Their change model can’t cope with this level of uncertainty because it’s never had to before. They’ve overly focussed on just the employee people group, don’t have an overarching people strategy for all people groups, let alone a non-linear strategy across all people groups. They haven’t fully appreciated how each group acts as a brake or accelerant and that the most linear or incremental group will set the pace. They overly focus on Technology as the primary exponential threat to their model.
We appreciate it’s a real challenge for business to re-imagine their place in the world where government and investment models are unrecognisable. It introduces too many variables, where the past is less relevant.
It also requires a change in leadership model and indeed style, which essentially says “ I and indeed the current cohort of leaders across all of society have never experienced this before and neither have the previous generation, so we really don’t have the answers, but follow me”.
So, what are the four choices to the new reality? Once you realise the extent of the challenge, but also the fact that you, yourself, have a skill set based on an incremental change model which appears to have less and less relevance.
Option 1 — Ignore and continue with bolder Ignore might be too strong a term, perhaps diluting your response is more appropriate. It’s the logical choice, it plays to your strengths, you’ve probably been appointed with that brief and will be judged and rewarded accordingly. The main reason CEO’s take this option is a) A lack of traction with the investor/owner group. So their unwillingness to re imagine traditional success metrics. Which make it increasingly difficult to invest enough time and money in reimaging the future, and still hit today’s metrics at the same time. b) Or, they delay and dilute by focussing on the employee group, unwilling to truly challenge the investor group until they’ve experienced success here first.
Focussing on the employee group certainly makes sense initially but in the medium term it’s flawed. (See Option 2 )
Option 2 — Leave and Access more aligned investors Take your business plan and leave, seek to access the increasing amount of aligned non-linear capital available that can be spent building the right business rather than trying to transform the business you have.
We’ve never worked with a business where this is our entry point, but it certainly helps to focus the mind on the challenge of a non-linear transformation if we raise it as a feasible option before they go any further. CEO’s usually dismiss this out of responsibility and loyalty to their current business, but also a genuine desire to be bolder. They’ve decided they can’t leave it to the next CEO. This of course combined with a recognition that they often don’t have this entrepreneurial skillset.
However, Option 2 — Leave and build from scratch is more likely if you have real success with a non-linear transformation based on the employee group. You see the proof points emerging as do other key employees, but investors remain too linear. You now have the confidence to seek a more aligned set of owners or investors, especially if key employees start to leave or share the same observations.
Option 3 — Stay and compete This is really an extension of the disrupt yourself mantra. Where you set up in competition with core business. Secure abundant funding from current investors at an unprecedented level, but treated completely separately with non-linear outcomes built in. Perhaps the timing is right for this option now, but we struggle to give real case studies of where business have cannibalised themselves to this extent at the in the type of time frames, we now face. What’s more common is more time and money spent on business incubators, impact funds, or taking a division and applying a completely set of success metrics. Perhaps a division which is say 5 -10% of revenues, so big enough for the company to take it seriously, but not big enough to negatively impact the current metrics which currently dominate. We would still define that route as Option 1, bolder than last year, bigger than last year, but not different.
Option 4 — Embrace it — Non-linear People strategy Commit to assess your Non- Linear competency across all primary and secondary groups, not just the employee group, prioritise where you need to identifying and attract non-linear people immediately across all groups and where you can develop your own.