Snow Melts from the Edges
Snow melts from the edges. The changes that are going to fundamentally influence the future of your business are brewing on the periphery. To avoid being taken by surprise by an inflection point, you need to be exposed to what is happening at the edges.
Eight practices can help you make sure you are seeing what is going on along the edges.
- Ensure direct connection between the people at the edges of your company and the people making strategy.
- Go out of your way to include diverse perspectives in thinking about the implications of the future.
- Use deliberate decision-making processes for consequential and irreversible decisions. Use small, agile, empowered teams for reversible experimental decisions.
- Foster little bets that are rich in learning, ideally distributed across the organization.
- Pursue direct contact with the environment—“get out of the building.”
- Make sure your people are incentivized to hear about reality, not the reverse.
- Realize when your people are in denial.
- Expose yourself and your organization to where the future is unfolding today.
You do not need to be a CEO to see how an inflection is likely to unfold. In fact, you are probably more likely to see it the closer you are to the external trends that make your business possible.
Early Warnings
An inflection point happens when a 10X change alters the basic assumptions upon which a business is built. Because these are taken for granted, it is often hard for executives working in the here and now to see the implications of change.
In the early stages of an inflection point, it is difficult to see the potential impact because the possible solutions are invariably incomplete—the change affects only certain parts of the system. The big mistake is to make a huge investment at this point.
There are three kinds of indicators in any business.
- Lagging indicators provide information about what has already happened and cannot be changed.
- Current indicators provide information about what is going on, based on assumptions about how the business currently operates (which can create blind spots).
- Leading indicators are the most critical for spotting impending inflection points, but they are the most difficult to make sense of—they are often qualitative and emergent.
The quality of the information you have to work with is inversely proportional to your ability to do anything to change the story. A way of increasing your decision-making confidence is to create a time zero event that represents something important that might happen in the future. Then you can work backward in time to see what could anticipate this kind of event.
Galvanizing the Organization
It isn’t enough to see an inflection point coming. Many people in the organization need to align around a common point of view in order to respond effectively. Internal friction and competition can undermine even a correct response to changing times. Managing politics is a key task for any would-be change agent.
Sometimes companies are their own worst enemy when it comes to the big changes an inflection point brings. Bringing a growth mindset, rather than a fixed one, to the problem of detecting and responding to inflection points is crucial. Empowering individuals to take action broadens the amount of experimentation an organization can undertake, increasing its odds of seeing the early warnings of an inflection point in a timely way.
If you want experimentation, people who try things that don’t work out need to know that they will be supported. Building leading indicators into your organization’s incentives ensures that people will pay attention to them and increases the likelihood that they will be acted upon.
How Innovation Proficiency Defangs the Organizational Antibodies
Navigating through an inflection point often means working on two massive challenges at once
- Bringing the core business forward in its competitive capability and
- Creating new capabilities that will be relevant to the future.
Recognizing that both the existing business and the new business have contributions to make and designing incentives accordingly are key. Simple techniques—such as a hierarchy-free communication system and widespread availability of training and upskilling—can help break down hierarchical barriers.
Moving up the innovation proficiency scale often involves sweeping change in company practices and procedures. It is a challenge to long-held assumptions, incentives, and organizational arrangements and needs to be well orchestrated with significant senior level support.
How Leadership Can and Must Learn to See Around Corners
Simply seeing an inflection point on the horizon is the first step toward successfully navigating it. You next need to decide what direction you will take and then mobilize the organization. Invest the time in keeping key executives on the same page and working together—a lack of alignment will diffuse your efforts. It isn’t so much about the individuals’ talents as about how they work together.
- Clarity about strategy, the “why” of what you are doing and key priorities, is not optional.
- Absent candid feedback, it is very easy to get off track. You don’t have time to waste on anything other than total candor and brutal truth.
- Push decisions as close to the edge as possible.
- Simplify complexity—create a common rallying cry that resonates with everybody.
- As a leader, you may increasingly need to be prepared to act in wartime
Seeing Around Corners in Your Own Life
Recognizing inflection points early on can lead to positive personal outcomes. Look at changes in the arenas that you or your organization depend on to acquire insights into how these changes might offer opportunities or create risks.
- Expanding your network beyond the usual suspects you spend time with can help you see things you couldn’t otherwise.
- Deliberately getting feedback (and listening to it) can help you avoid blind spots you aren’t aware of.
- Getting out of the building by finding and investing in different perspectives can give you great ideas.
Often the most successful career path is one that builds diverse skills. It may be windy, but that can be surprisingly effective. Skills can come together in unexpected ways to create great value.