Few readers will need reminding that we live in a time of great challenges. Indeed, “disruption” is the word on everybody’s lips. Whether it is taxis, hotel accommodation, traditional media or – come to that – just about anything else, technology is having a devastating effect on how business is conducted. But it is not just technology. As Richard Dobbs, James Manyika and Jonathan Woetzel, directors of the McKinsey Global Institute, point out in a new book, there are “four global forces breaking all the trends.”
The acceleration of the scope, scale and economic impact of technology is one of them. However, in No Ordinary Disruption (PublicAffairs), they describe three others that are adding to the tumult. Two are fairly familiar: the shift in economic power to emerging markets and, in particular, to certain cities within them; and the ageing population. The fourth is less well-known, but arguably the most powerful. It is the growing connectedness of the world through “flows” of people, goods, services, money and information. These connections have been developing for years. The ability, for instance, of supermarkets in Britain and other industrialized countries to sell fresh produce all year round by flying it in from Africa and elsewhere was one notable development. But in recent years connectivity has both increased in speed and in scale, with movements between emerging markets particularly gaining momentum. The beneficial aspect of this is that it has never been easier for companies to find new customers, but there is a downside in that what happens in one part of the world – whether it is an earthquake in Japan or an economic crisis in Greece – quickly makes its presence felt thousands of miles away.
So far, so predictable. But what can the embattled leader do about it? The short answer is “quite a lot”. First, they need to look to themselves. “One fundamental realization is that to drive the necessary change, leaders must first develop the capabilities to reset their own intuition,” write Dobbs and his colleagues. Pointing to research by their own organization and client experience, they say that half of all efforts to transform companies “fail either because senior role models fail to drive change or because of the inherent tendency to defend the status quo”. Many leaders react to a changing environment by focusing on finding “a technical solution” – changing policies, processes or organizational models – when what is really needed is a thorough re-examination of the situation that probably includes such changes but also requires a different approach. “If the sea level rises by three feet, traditional thinkers are inclined to add another three feet to the existing seawall, pipe in new sand, or put beachfront homes on stilts, rather than fundamentally rethink the logic of building, insuring and protecting properties that face the ocean,” say Dobbs and co. All leaders, they stress, need to have self-awareness. They need to understand their own tendencies and biases and to recognize the factors that drive their decision-making processes if they are going to be able to respond effectively to change. They must also take the time and make the effort to change the mind-sets and behaviors of those they are tasking with carrying out the solutions.
Another key action is to embed curiosity and learning in an organization. We all hear a lot about “lifelong learning”. But this is different. Leaders and others need to make great efforts to monitor and understand the unexpected. “Simply setting aside time each day to keep up with the changing external environment – and encouraging others to do the same – can make the difference between responding to a new trend and allowing it to leave you irrelevant,” write Dobbs, Manyika and Woetzel.
It is also essential, they add, for leaders to surround themselves with the right people – “those who are able to act as ‘reset catalysts’ for an entire organization”. This is because in the modern business world people tend to respond to the actions and inspiration of peers and colleagues rather than to edicts coming down from on high. Pointing out that it was long thought impossible to run a mile in under four minutes – until in 1954 Roger Bannister did it – the authors add that within a few years another 16 people had followed him. Bannister had merely shown what was possible and so acted as a catalyst. “Resetting the intuition of a large organization can at times feel similarly impossible, but often all it takes is for one person to embrace a new perspective and actively discredit the old way of thinking,” Dobbs and his colleagues write.
Agility is seen as another vital attribute. As the environment changes, companies that can adapt nimbly will be able to seize new opportunities while more sluggish competitors will miss out. Doing this requires having leaders who make agility a priority instead of dismissing it as too expensive, too defensive or too difficult. In fact, agility does not always require heavy investment – “pop-up” shops, food trucks, serviced offices, even the basic “lean” skill of continuous improvement are all examples of agility, point out the McKinsey people.
Last, and most important, according to the book, “all leaders will have to resist the temptation to focus on the hazards of the period ahead instead of the opportunities it presents”. While accepting that there is plenty of reason for pessimism, especially in the geopolitical arena, the authors believe that optimism will still win out. In particular, those who see the opportunities in the turmoil should be able to thrive.
