Why do some companies go from being an industry leader to an organization struggling to stay alive?
For BlackBerry, it lacked the capacity to listen to its customers who wanted faster browsers and responsive touchscreens. For GE, it was an organizational culture that disdained bad news that led to botched strategies. For the large retailer Sears, it was doomed by its short-sightedness, and failure to invest in digitalization.
We see in every failure – poor strategy and execution. Yet behind poor strategy and execution is the human failure in leadership.
Why companies collapse
Companies collapse because of a combination of complex factors that somehow come together to form the perfect storm. The obvious answer is that companies did not have the hustle and guile to stay ahead of competitors. But more difficult to recognize behind company failures is the powerful influence of values, attitudes, and culture.
Developed by Ronald Heifetz and Marty Linsky of the Harvard Kennedy School of Government, the Adaptive Leadership framework provides practical tools and mindsets for practitioners who seek to lead change in their organizations. Adaptive leaders recognize the fact that there are several reasons why collapse happens. People do not recognize the gravity of the problem, therefore they do nothing. People may acknowledge the problem but don’t want to stomach the change that must take place. People may see the problem but address it the wrong way. Or people see the problem, address it correctly but it’s already too late. Finally, the “beginning of the end” becomes irreversible because of people’s poor response or lack of it altogether. It is not just companies – but any social unit, organization, or even civilizations that face what are called “adaptive challenges.”
Contrary to what people believe, a leader’s first role is not to set a vision – but rather to understand what is actually needed in a situation. Center for Asia Leadership President and Co-founder Samuel Kim, an educator in Adaptive Leadership, puts it quite simply: “In this day and age, leaders do not have all the answers. Rather than being someone at the forefront, trying to be the solution to the problem, leaders must direct people’s focus on the problem itself.”
In an era marked by extreme uncertainty, real leadership is defined as:
- Helping people face and make sense of reality
- Solving complex problems
- Orchestrating change
- Creating something new and valuable for an improved future
The Adaptive Leadership framework says that leaders need to differentiate between a technical problem and an adaptive challenge.
Technical problems involve clear-cut solutions that only benefit those who are impacted by the problem. The solution usually lies within the know-how of the organization or by an external expert consultant. If the office copier breaks down, you send a technician to fix it. If there is a technology to optimize everyone’s work, you invest in that solution. If the change in strategy enables the CEO to be presented with convenient facts, then everyone wins.
But adaptive challenges are more complex because solutions necessarily involve a measure of loss with those who are impacted by the problem. Adaptive challenges require an adaptation in culture, values, priorities, loyalties, and motivations. The solution is never obvious because people would rather avoid the real work that needs to get done. What if optimization disrupts your department’s work and causes people to lose jobs? What if the new strategy you suggest requires you to confront your boss with unpleasant truths? What if your proposed solution negatively impacts how your followers perceive you?
According to Kim, a big part of leadership work is the proper diagnosis of problems. The pitfall of many leaders is trying to give a technical solution to an adaptive challenge. He explains, “If you come up with a technical solution to a problem that’s adaptive, then you’re not really solving the problem. It is a band-aid solution. Adaptive leadership is the type of work where you have to roll up your sleeves and deal with the messy issues, in order to make progress. Moreover, the ones who are part of the problem are also the ones who can best solve it.”
Even in matters of life or death, people are unable to make progress. Kim presents the example of a chain smoker who has developed chronic heart disease. Studies show that when doctors tell heart patients they will die if they don’t change their habits – only one in seven follow through successfully. In this instance, the technical solution is to prescribe medication. The adaptive solution, Kim points out, is to go deeper by finding the root cause, the adaptive challenge. “What are the personal needs which smoking fulfills in this person’s life – companionship, identity, comfort? You must go deeper in order to effectively address the problem. It usually involves a difficult change in values and ingrained habits.”
Kim said leaders need to understand human nature to do the work of leadership. As he states, “We are by nature, very factional. We have different values and loyalties and congregate towards those who we share an affinity. But systems fail when ‘tribes’ – whether they be within companies or civilizations – do not work together to learn about and address the changing realities that will impact their shared future.” Kim therefore emphasizes the value of listening and observing to discover with others the nature of the adaptive challenge , and then initiating leadership conversations to:
- Shape the interpretation
- Deal with breakdowns
- Work through differences
- Build partnerships to address the challenge
Surprises in the 21st century
Surprise has become a common theme for organizations in the 21st century. “The world has seen unprecedented growth in terms of wealth, technology, which has brought us efficiency. But on the other hand we have also seen an increase in uncertainty and volatility,” Kim says.
How well companies deal with change could spell survival, growth, or decline. Kim, who has helped design and organize leadership and development programs all across Asia, states, “Your response to these surprises can lead to either a system breakdown and ensuing failure or system upgrade and a sustainable future.”
The modern marketplace presents enormous potential for growth and the enormous danger of failure. The leadership work required decades ago is not the same one required today. This is why leaders need to learn tools, frameworks, and principles for leadership ready for the 21st century.
By Nirva’ana Ella Delacruz and John Lim