“Predictions are difficult – especially about the future.”

This quote from Yogi Berra sums up the challenges we all face in today’s dynamic and fast-changing world.

None of us has a crystal ball that allows us to predict the future and the rapid changes in our business environment that the future will bring.

The best response to an uncertain future is to build a culture of flexibility and rapid adaptability in our organizations.

To create such a flexible organization, we need to:

Hire Adaptable People

We need to ensure that our leaders have a broad outlook and have many ways of looking at and solving problems.  We need to avoid hiring Fachidiots.  This is a German term for someone who might be an expert in one area, but always takes a one-track, single minded approach to all problems and scenarios.  We do not need a leader (or an employee) who is a hammer and sees every problem as a nail.  We need leaders who are not afraid to let go of the past and embrace a changed world.

Create Scenarios

During yearly budgeting time, we should be spending time creating different scenarios about the business environment.  While the scenarios will almost certainly not come to pass, the insight gained by thinking through the different scenarios will help us make our companies more adaptable under different business conditions that may occur.  As President Dwight D. Eisenhower wrote about preparing for battle:

Plans are useless, but planning is indispensable.

Build in Slack

A frequent conclusion of scenario planning is to build some slack into our operations.   This slack can mean additional people (e.g. succession planning), back-up suppliers, redundant factory floor space, or additional office space or equipment.  Organizations without any slack can be effective and lean; but they are vulnerable to the slightest changes in the environment, be it the death, the quitting, or the meltdown of a key manager, the closing of a factory, the bankruptcy of a supplier, or a sudden uptick in demand. Lean is good; too lean is inflexible and fragile.

Scan the Horizon and Look at Trends

While we cannot predict the future, we can be the first company to recognize it.  This requires having all of our employees – executives, sales, marketing, customer service, and the front line – provide feedback on changes that they are seeing.  Regular evaluation of trends and discussions of changes in the market and business environment are critical to understanding whether the changes are particular to one small area or a development that could impact our business broadly.  As the science fiction write, William Gibson wrote:

The future is already here – it’s just not evenly distributed

We need to have the whole team involved in scanning the horizon to increase our odds of seeing where the future already is.

Think Through All Decisions

We need to think through any strategic response to our changing environment.  We need to fully understand the consequences and risks of any strategic pivot:

• Do we have the resources to achieve our objective or will this distract us from other initiatives or our core business?
• How can we minimize any upfront investment or sunk cost in case we do not succeed?
• If successful, can we deliver on our commitments to customers and others?
• If successful, would we be able to sustain our differentiation and/or competitive advantage to make it a long-term viable opportunity?

Act Quickly (Without Over-committing)

Once we have thought through our decisions, we must act and act quickly in order to seize the initiative before our competition.  Most times this may be a small bet or task force (Experiment…A Little). Having a culture of flexibility is useless unless we also have a culture of rapid action and being opportunistic.  As the marketing consultant, Adam Hartung, has written:

Being agile, flexible and actually able to pivot into new markets creates success.

Conclusion

At the end of 2019, no one had predicted the Covid-19 pandemic and the changes that it is bringing to our companies and the world.  So, yes, making predictions is difficult, if not impossible.  But, that does not prevent us from preparing for a changing world by creating a culture of flexibility in our organizations.  The American Physicist and Author, Leonard Mlodinow, said it well:

We can focus on the ability to react to events rather than relying on the ability to predict them, on qualities like flexibility, confidence, courage, and perseverance.