Being future-ready is not a luxury: Organizations must act and transform to survive and thrive
The following contribution is from the IMD International Institute for Management Development portal and the authors are Howard Yu, originally from Hong Kong, holds the title of LEGO® Professor of Management and Innovation at IMD. He leads the Future Readiness Center, founded in 2020 with the support of the LEGO Brand Group, to guide companies through strategic transformation. Recognized globally for his expertise, he was honored in 2023 with the Thinkers50 Strategy Award, in recognition of his significant contributions to management strategy and future readiness. At IMD, Howard leads the Strategy for Future Readiness and Business Growth Strategies programs and Zhike Lei is a Professor of Leadership and Organizational Behavior. She is an award-winning organizational scholar and an expert in psychological safety, team dynamics, organizational learning, error management, and patient safety. Lei studies how organizations, teams, and employees adapt and learn in complex, time-pressured, consequence-laden environments. As a global management educator, she has taught executives and PhD, DBA, EMBA, and MBA candidates, as well as undergraduates, and has won numerous teaching awards and recognitions.
The most successful future-ready organizations operate on a dual horizon. They continue to act while transforming and exploiting their core business.
They do so by driving efficiency and continuous improvement while exploring new opportunities with equal effort. To succeed on this dual track, leaders must have strategic clarity and promote a business culture that wholeheartedly embraces change.
Leaders and organizations have always had to adapt to changes in technology, society, and the environment.
This challenge is not new; what makes our current era unique is the scale, depth, and speed of these changes and the response that is required of organizations to survive and thrive.
Today, companies must constantly review their strategies
and develop new skills – for individual leaders and their teams, and at the organizational level – to maintain their competitive advantage.
When we interact with leaders from many sectors around the world, a recurring theme is the increasing pressure placed on them to navigate and lead in a context simultaneously characterized by massive change, social and demographic shifts, political upheaval, and revolutionary technological advances, especially in AI (artificial intelligence).
Looking at some of these organizations’ transformation attempts, a pattern emerges: more than half of these strategic programs struggle to meet their objectives.
This is because these efforts are often marred by an internal focus
incrementalism and a reactive culture that, in turn, traps organizations in a cycle of addressing immediate concerns at the expense of shaping their future. As the saying goes, if you’re waist-deep in alligators, it’s easy to forget that the original goal was to clean up the lake.
But how can companies be future-ready?
Future-ready companies simultaneously focus on performance (e.g., delivering results and healthy cash flow) while transforming for the future and financing a future product line. If we draw on examples from global companies, we can see how organizations that are adept at acting while transforming suffer less in tough times and generate higher profits in a positive market environment.
Future-ready organizations are also able to change course faster, and their financial performance outpaces that of their competitors.
Future-readiness refers to a company’s ability to anticipate and adapt to external changes
Retail strategy tests courage, resilience, and agility at Nike
Nike pursued a dual-focus strategy: selling footwear, sportswear, and streetwear as a business-to-business company.
Lacking its own manufacturing plans, it contracted smaller-scale suppliers to make products and sold them wholesale through brick-and-mortar retailers and e-tail platforms globally.
In 2016, it took control of its e-commerce offering and launched Nike.com, where it controlled the look and feel of and relationship with its customer community. With B2B sales still generating the bulk of revenue, it got off to a slow start.
However, by 2020, it had flagship stores in key strategic locations and $5.5 billion worth of e-commerce sales, up $4 billion from 2016.
The Nike.com sales platform was crucial to the company’s success during COVID-19, when lockdowns severely limited sales through traditional retail outlets.
It then produced an app with special functionality in its physical and online stores, thereby creating a community of Nike fans and providing insights from the app’s invaluable sales and behavioural data.
By 2023, Nike’s direct-to-consumer sales through stores and e-commerce had reached more than $20 billion, representing 40% of the company’s total revenue, while it had reduced its wholesale accounts by 50% since 2018.
Moreover, in what was a challenging year, in 2022, Nike maintained greater confidence in the financial market despite a 38% drop in its share price. Competitor Adidas fell 58% over the same period.
Nike’s outperformance and resilience is due to management’s courage in creating an e-commerce channel when its sales through wholesale channels were strong and remained dominant for many years.
Maintaining investment levels in the e-commerce platform required resilience
And, crucially, a shared vision for the dual-track future of the Nike brand and its routes to market that put the trade-offs between channels into a broader context. The company’s ability to shift to online sales during COVID provided resilience to the entire business.
Nike continues to transform as it ramps up partnerships with wholesalers again.
In an investor presentation last year, Daniel Heaf, vice president of Nike Direct, said, “People always ask me: Are you a direct business or a wholesale business? And the truth is, we’ve chosen both.”
Nike ranks first in IMD’s Future Readiness Indicator: Fashion Brands
Rankings for the pharmaceutical, technology, FMCG, automotive, and financial industries are available here.
Leaders must create the conditions for success
Much of future readiness relies on the leadership and team behaviors needed to enable them to develop new capabilities.
These include promoting mutual trust, psychological safety, and diversity of thought, while avoiding human decision bias and groupthink.
Another key element of future readiness is bringing these behaviors together to create and sustain a culture of growth. Thus, individuals continue to build their career paths and the organization.
Yet leaders in civil society and corporations try to tackle problems alone
Perpetuating the stereotype of the “strong leader with all the answers.” Today’s leaders must learn to ask questions and cultivate the art of “humble inquiry” rather than giving orders.
They must frame the work accurately, admit and show their fallibility, invite participation, and respond productively.
“Creating a psychologically safe place can trigger powerful collective problem-solving and build future resilience.”
As an added benefit, leaders who make themselves available and promote clarity and discussion create psychological safety for their team and foster an environment where “dynamic delegation” can flourish.
In practice, this means that team members without formal authority can lead
on specific issues because they have an idea, suggestion, or experience to solve the problem.
This leadership humility—being willing and open enough to cede authority—recognizes that other people may be better qualified to lead, guide, and ultimately find a workable solution that reflects well on everyone.
Failing to Win
Playing to win requires courage and the understanding that failure is part of learning and therefore a critical component of success. There is a new paradigm shift of accepting both success and failure—but not just any failure.
Broadly, there are three types: first, basic, avoidable failure, such as when a faulty component installed in a car causes it to malfunction.
Second, complex failure, where several factors combine in a familiar but complex environment – for example, giving a drug to a patient who has a known allergy, or failing to label a lab sample that is then attributed to the wrong patient, resulting in the patient’s death.
Third, intelligent failure, where taking thoughtful action and intelligent risks results in useful learning opportunities and the ability to move forward smarter and into new territory.
Executive Brainstorming Coaching Session
In fact, companies with first-class cultures are 72% more likely to invest in training their leaders compared to all others (67% vs. 39%).
In this regard, the launch of Elon Musk’s SpaceX spacecraft, which resulted in a “rapid, unscheduled teardown,” provided a wealth of engineering data to identify problems and refine the approach for the next launch.
Nobel Prize-winning physicist Richard Feynman said in a speech about how we learn about the laws of nature:
“We are trying to prove ourselves wrong as quickly as possible. Because only in that way do we find progress.”
This kind of “failing forward” is a team sport played in an environment that builds psychological safety (the “care”) while embracing “daring” (the responsibility).
So where innovation is often measured in inches, intelligent failure can move us forward by feet or miles. Key Insights
To support the development of performance and transformation capability, the company needs to develop a culture around new behaviors and attitudes:
Future-ready leaders will create a shared view of how things work over the long term to accommodate trade-offs between performance and transformation.
In this way, they will encourage and embrace healthy debate, while building strong trust and creating synergies.
To be future-ready, a company must scale new capabilities, including developing the necessary leadership and team behaviors.
Future-readiness supports the resilience and growth of the organization and its people. Creating a psychologically safe place can trigger powerful collective problem-solving and build future resilience.
The road to success is paved with smart failures
Failing forward or learning as a team from things that go wrong can accelerate the discovery and implementation of innovative business opportunities for the future.
Why successful organizations need to embrace change
The following contribution is from Andrew May who is the founder of Performance Intelligence and is a globally recognised human performance expert, renowned for his innovative approach to mental skills training, leadership and wellbeing. As founder of Performance Intelligence, Andrew integrates cutting-edge science with practical wisdom to help people and teams reach their full potential.
Success isn’t about doing the same thing every day, it’s about adapting and trying new things
Forbes Business Council member Chad Wachter writes, «if you want different results, you have to embrace change and try new things.» (Read more here: The Importance of Embracing Change in Business)
In my latest «Inside Job» keynote at the BT roadshow, we discuss the power of embracing change from within
We often stick to routines, but true growth comes when we step out of our comfort zones. Change is inevitable; without it, we risk falling behind.
Look at companies like Netflix and Amazon: they changed course to stay ahead. Netflix evolved from DVD rentals to streaming. Amazon expanded from the book business to become a global e-commerce leader. Both thrived because they embraced change.
On the other hand, Blockbuster and Nokia failed to adapt and are now reminders of missed opportunities.
How can you embrace change in your business?
- Start small – change doesn’t have to be overwhelming. Take baby steps.
- Take risks – experiment, but always have a clear plan.
- Be adaptable – the market changes, so be flexible.
- Keep an open mind – the best ideas often come from unexpected sources.
Change isn’t easy, but it’s essential in today’s complex, fast-paced business world. What change can you embrace today to grow – whether in business, career, relationships or mindset?
A huge thank you to the team at BT (Matthew Rady, Anoushka Heming and Kate Skokan) for putting together an exceptional tour and prioritising the wellbeing of their teams
Leading the Way
The following contribution is from the Ideas and Perspectives portal of Harvard Business Publishing Corporate Learning and the author is Abbey Lewis
Insights and Perspectives from Harvard Business Publishing Corporate Learning
Learning and Development Professionals Talking the Talk and Walking the Walk
Good leadership? It all starts with trust.
Trust is one of the most vital forms of capital a leader has today
Amid economic turbulence and global uncertainty, people are increasingly turning to their employers and business leaders as the source of truth, rather than their institutions and government officials, according to a new global survey from Harvard Business School’s Institute for the Study of Business in Global Society and the Edelman Trust Institute.
Trust, which can be defined as belief in another person’s abilities, integrity, and character, is often thought of as something that personal relationships are built on, but according to recent research in Harvard Business Review, trust is the foundation of most successful organizations.
The Benefits of a High-Trust Organization
A high-trust organization is one in which employees feel safe to take risks, express themselves freely, and innovate.
When trust is instilled in an organization, tasks are accomplished with less difficulty because people are more likely to collaborate and communicate with each other productively. As a result, outcomes tend to be more successful.
In fact, according to a Harvard Business Review study, people who work in high-trust companies report 74% less stress, 106% more energy at work, 50% more productivity, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, and 40% less burnout than people who work in low-trust companies.
In contrast, employees in low-trust organizations are often overwhelmed by office politics and infighting.
They are more likely to withhold information and hoard resources because they don’t feel safe sharing them. As a result, decision-making is slower and less effective.
In a time when mistrust seems to be the norm, fostering a high-trust organization has never been more important—and it often starts with leadership.
How leaders build trust
Leaders play a crucial role in building trust within their organizations. Leaders set the tone for the culture and establish norms for behavior.
If leaders don’t focus on trust, communication, collaboration, and innovation will suffer.
So how can leaders build trust?
It starts with creating a safe environment where people feel comfortable speaking up and taking risks.
It means being transparent and authentic. And it requires setting clear expectations and following through on commitments.
Here are some things leaders can do to foster an environment of trust:
Be transparent
Share information openly and candidly. Keep the team informed about what is happening in the company and at the senior leadership level. Don’t withhold resources from employees or make decisions in secret.
Provide regular feedback
Be clear about the team’s vision and team member expectations. Share how employees are progressing in their performance, both positively and constructively.
Encourage open communicatio
