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Faculty Insights

4 Ways Corporations Could Become More Adaptive

By Charles West

January 21, 2016

Companies spend considerable time and energy every year updating their strategies, plans, and organizations. These efforts usually amount to improvements to their existing business but not adapting to the major forces that are changing their business. Are companies capable of true adaptation?

Chuck West
Chuck West, Program Director of Sales, Sales Management, and Advanced Management programs for the Center for Professional and Executive Development at the UW-Madison Wisconsin School of Business.

A recent Harvard Business Review article, “The Biology of Corporate Survival,” points out that the lifespan of companies dropped from 55 years to 32 years from 1970 to 2010. The article goes on to draw a Darwinian analogy to the species that have roamed the earth and their reasons for survival or extinction. Their analogy focuses on survival at the corporate level, not the unique individuals that make it happen. My interest centers on the skills, attitudes, and behaviors of adaptive individuals and whether corporations are hiring, encouraging, and listening to them.
Let’s start with the highly adaptive individual. Adaption requires a wide scope of awareness, time to reflect, the ability to synthesize massive amounts of information into meaningful concepts, and the will to take appropriate action.
Contrast the adaptive individual traits with corporate adaptability:
Wide Scope of Awareness: Companies divide jobs into specific measurable functions to grow expertise and efficiency. Very few, if any, employees look at the major and diverse forces impacting the firm’s future.
Time to Reflect: Companies spend 90 percent or more of their energy on executing their current mission, vision, and strategy, leaving little time or energy for reflective thought. We all have to look crazy busy!
Synthesis: Companies use analytic processes to dissect problems: identify the root cause, develop criteria, generate alternatives, and select the alternative that best satisfies the criteria and the decision-making team. This system is the opposite of synthesis and synthetic thought.
Action: Company leaders are rewarded for good, quarterly financial results and that’s where it ends. Making major changes in the company’s direction is regarded as a high-risk undertaking.
The corporate adaptive score card is 0 for 4, and the evidence is everywhere: GM, Kodak, Blackberry, Borders, and Bear Stearns, to name a few.
How can companies do better?
In his book, Adaptability: The Art of Winning in an Age of Uncertainty, Max McKeown recommends three basic steps for corporations to become more adaptive: recognize the need for adaption, understand the required adaption, and make the adaptation. That seems simple enough but executing those steps requires significant changes in corporate thinking. Corporations need to change the type of talent they seek to attract and learn to value employees who are curious and synthetic thinkers. Developing adaptive talent will require a wide variety of internal and external assignments, some not remotely related to the business. Corporations also need to encourage well-being in the workplace. Finally, corporations will need to validate their efforts and embrace the associated risks.
I’d like to close with a story of adaptive success here in Wisconsin. Many years ago, John West, (unfortunately no relation) started building ships at his father’s company for the Navy during World War II, mostly submarines. After the war, the business understandably tanked. Instead of building other types of ships, West slowed down and considered the unique strengths his company had. He concluded that building all those ships and putting them on railroad cars to be floated down the Mississippi River made the company really skilled at building strong cranes that could handle odd shapes and awkward lifts. Hence, the very successful Manitowoc crane business was born.
West noticed the crane business was subject to large cyclical swings and felt the company needed a steadier source of revenue. He noticed that most ships and construction sites he visited had ice machines and very few of them worked. He asked his staff if they could build a more reliable ice machine. They did and now they build the most reliable and bestselling ice machine in the world. Three successful and timely adaptations.
Years later West was asked, “How could companies be better at adapting to change?” He said, “I think companies should shut down every 10 years or so, forget what they have done in the past, and start over.” An extreme answer, but it speaks to how difficult it can be to get an existing enterprise to make a true adaption.
What are your best ideas for helping corporations become more adaptive?