but those who can best manage change.
Blockbuster, Borders, RIM, Kodak, ABC, NBC, CBS, CBC, Rogers, Bell, Sears, the taxi industry.
This is just a small portion of the roll call of companies that have either failed or whose futures are threatened by disruptive technologies. For those that are threatened, why do they find themselves in this precarious position? For those that went bankrupt, why did they fail? For example, why didn't Blockbuster recognize that Netflix, the disruptive technology that doomed it, was its logical future? It is obvious in hindsight that Blockbuster should have bought Netflix when it was a fledgling company and begun the transition from bricks and mortar to online.
The reason most companies are so deeply affected by disruptive technologies is their cultures resist adapting until it is too late. They are so entrenched in their current paradigms that they can't see the future iterations of what they are as a business. They are good at slow, methodical tinkering around the edges -- changing the plan incrementally from year to year -- but true adaptation is not entrenched in their business cultures. As a result, they get blindsided by disruptive technologies and by the time they recognize this, it is too late. To survive and thrive, a company needs to be in a constant state of adaptation, relentlessly adopting new ideas and technologies when they come out -- or be creating them -- and not waiting until these innovations have entrenched themselves in the marketplace.
Traditional Strategic Planning Is The Culprit!
For a company to be in a constant state of adaptation -- for it to be a fundamental part of its culture and processes -- it needs a business planning framework in which this takes place. But here's the rub: traditional strategic planning is the antithesis of being in a constant state of adaptation. A strategic plan is an inflexible process that says "here's where we're going and how we're going to get there." For all the talk about making a strategic plan flexible, that is not possible because strategic planning by its very nature says "this is it."
Adaptive Planning Creates An Agile Business Culture
The opposite of traditional strategic planning is adaptive planning. Rather than saying "this is it," adaptive planning creates a flexible framework for where the company is going and how it is going to get there. It does so by providing a central guideline for the company that gives it direction and shapes decision-making. From that central guideline comes specific next steps or an action plan. However, you can deviate from those specific next steps while at the same time being confident you are moving in the right direction as long as you stay true to the central guideline. The central guideline creates guardrails that keep your company inside a relevant direction but give you far more flexibility than a traditional strategic plan to bob and weave within those guardrails in response to threats. The result is the creation of a corporate culture that is agile, rather than one that is constrained by its traditional paradigm.
Here is how adaptive planning works:
- From the central guideline you develop an action plan with specific initiatives
- When specific initiatives -- or the company -- are disrupted by a new technology (e.g., Netflix), your first reaction may be "Oh no, our initiative or company is now totally irrelevant and we are in deep trouble."
- Then you regroup and ask: "How do we use our central guideline to adapt quickly while at the same time staying on course?"
If Blockbuster had identified its central guideline, it would have recognized Netflix as its future when it was a startup, bought it for peanuts ("peanuts" being a relative term compared to the cost of Blockbuster's bankruptcy) and begun the process of transitioning from a bricks and mortar company to a digital one.
By establishing specific parameters for how you are going to operate -- rather than creating an inflexible plan -- and baking this process into your culture, you create a company that is agile enough to act quickly and effectively in the face of disruptive technologies.