One can look at the unprecedented changes that are disrupting the world of business and technology as something akin to evolution. The natural world changed dramatically over time with some species changing form and others disappearing completely. That’s what happening in the world of business today, but at an astonishingly breakneck speed. It’s a VUCA (volatile, uncertain, complex, ambiguous) world where the rules of survival remain the same—evolve, or perish.
So, what exactly should businesses do to become the fittest and stay in the game? What can transform them from being mere survivors to disruptors and leaders?
If we were to apply Charles Darwin’s theory of biological evolution to the realm of business management, we’d see that first and foremost what the theory implies is that ‘variations’ increase the ability to compete and survive. In our context, these variations are nothing but constant innovations that contemporise the product or service offering, and thus serve as differentiators.
Such innovations can be brought about either independently or by working closely with customers to co-create new products and services that bear more relevance for them. Data analytics is a strong survival tool in the VUCA world. Data flowing in from multiple customer touch points needs to be swiftly processed into actionable insights and real-time responses.
Tesla is one example of a company that uses innovative technology to demonstrate a profound understanding of its customers to offer them a superior driving experience. Proprietary knowledge is a key factor that provides competitive advantage.
Much like Darwin’s world, the business world also favours impactful transformation. It’s a world where a highly successful new product or service would, in effect, cannibalise its own predecessor. The organisation should be ready for this type of sacrifice, because if it doesn’t, a competitor could end up doing the final honours.
To stay ahead of the pack, organisations need to not just adopt a culture of innovation; they also need to embed technology into the enterprise DNA. In this time and age, a business needs to view itself as a technology company no matter what sector it occupies. Technology has to be a core competence, a necessity for survival.
Another business reality is that when the landscape changes, the tactics and strategy of the past automatically become redundant. In today’s economic context, moving away from the ‘business-as-usual’ approach and reinventing oneself every few years to move to a new S-curve has to be the new mantra. A long-term strategy, elaborate and well laid out, does not serve as the ultimate road map anymore. Enterprise strategy needs to be fluid, flexible and easily executable. Strategy today has to be constantly updated by connecting the dots back from what’s happening at the market front.
Most important, strategy should be constantly aligned with reality—reflective of the changing market trends and customer needs. Accepting this pace of change is crucial for survival.
A relatively short time ago, almost every business decision was influenced by the transformative changes heralded by e-commerce, big data, and cloud. Today, those game-changers have been succeeded by just-as-big megatrends such as IoT [Internet of Things], AI [artificial intelligence], blockchain and robotics. And there’s no telling how soon the next big wave would make these technologies commonplace. Kodak went bust only because it did not ride the wave of digital photography that was fast replacing its film-based business.
To continue the Darwinian analogy, change is not limited only to the landscape (business world) or the tools (technology); the food source—read customer—is evolving rapidly too. Increased access to digital technologies has empowered customers with wider choices and price transparency, causing margin pressures on business. Enterprises need to stay aligned with the changing customer profile.
Business models are changing too. Established companies that used to rule the roost and enjoy enviable margins now face threats from new players that have redefined the marketplace with their innovative models. Amazon, Uber and Airbnb are examples of how new-age companies have challenged the status quo and changed the fundamental nature of the industry. What’s more, business cycles are shortening.
Entrepreneurs are leading the way with disruptive and attractive models that compel established businesses to reduce their time-to-market cycles drastically to stay competitive. In the VUCA world, businesses that don’t handle this pace of disruption risk becoming unprofitable and eventually non-survivors.
Once we’ve accepted the change and reprogrammed our strategy, ability and agility in execution is key. Enterprises need to get moving and get the product or service off the ground—from the drawing board out into the marketplace—in the least time. Thus, speed aligned with risk management, simplicity over perfection, and empowerment rather than control are the ‘agile’ business principles to follow.
When agility is critical, a business model that favours partnering goes a long way, especially at a time when the walls between competitors and collaborators are becoming blurred. Blue Dart Express first formed an alliance with DHL worldwide before being acquired by it. Both companies started leveraging each other’s strengths and expanded their collective global footprint.
Keeping things simple eases the process of execution and improves agility. Enterprises need to consider doing away with unnecessary layers of complexity and bureaucracy. Far better to redesign and simplify complex structures and processes, and inculcate the habit of continuous learning (with humility built in!) and knowledge-sharing in order to stay relevant.
Finally, organisations need to adopt an entrepreneurial culture and develop leadership accordingly. Leaders of today need to be trained to improve their creative, decision-making and implementation skills even in the face of ambiguity. They need to focus on resilience and bouncing back from failures while constantly learning from them. ‘Failing fast’ is the mantra to be adopted when managing the duality of the new business world—that is to chase growth versus profitability, short-term versus long-term, speed versus thoughtfulness, and adaptability versus consistency.
In the VUCA world, change is the only constant. Unlike the natural process of evolution, thankfully, here in the world of business, there are enough variables within our control. These, when exploited to their maximum potential, can play a defining role in an organisation’s journey to gain leadership position in the industry.
Views expressed are personal.
The author is CEO, Incedo, a Bay Area, California, headquartered technology consulting and services company, and is the former head of Fidelity International.