There are a lot of changes happening in the world of business, and this is all down to the way that leaders are building their organisations. With world pandemics, supply chain issues and economic uncertainty, leaders are working hard to make their organisations as resilient as possible.
5 ways leaders are protecting their organisations against change
● By focusing on plausible scenarios - Leaders are starting to look at extreme, but plausible, scenarios within their organisations. This is a big change from previous generations, when leaders tended to focus their attention on future predictions and forecasts. This often led to incremental thinking, rather than looking at the bigger picture. CMS Energy, an electric and natural gas utility in the US, has already made this change by thinking about what the future holds. When gas prices started to fall in 2014, they were prepared.
● By being strategic with real options analysis - Using real options analysis, organisation leaders can determine the value of flexibility, by comparing a variety of different strategies. Instead of being limited, leaders can use real options analysis to find strategies that hedge risk, whilst also keeping their options open going forward. Disney put this into action when it purchased 21st Century Fox. By investing in direct-to-consumer streaming technology, Disney used 21st Century Fox to place itself ahead of competitors within the industry. Though this was an expensive investment in the time, it was a good long term plan due to how flexible the strategy was.
● By looking to the future - When organising the company’s strategy and management, leaders are looking to the future, rather than looking at past performance. There is a clear focus on what needs to be done going forward, and answering the question “what do we need to do?” This helps leaders to continually grow, develop and push their organisation to greatness. For example, when customer preferences change, leaders are adapting their offerings accordingly.
● By identifying trigger points and metrics - Signposts, metrics and trigger points help organisations to determine where changes need to be made. Leaders are paying more attention to these, and using the ‘known unknowns’ to better the company as a whole. As more information becomes available, leaders are continuing to use it to refine their processes. When new events happen or when metrics change, leaders need to incorporate these things into how they run the business. By quickly identifying a growing market need for a taxi booking app and utilising this information, Uber had a significant headstart on Lyft.
● By conducting investment experiments - Leaders are realising the importance of conducting experiments before locking in a big investment, and this is exactly what Amazon has done in the past. Before Prime, there was no proof that free shipping in exchange for an annual fee would make Amazon any money. It was a new idea, but Amazon conducted local and global experiments to ensure it was a money making plan.
