Robots and AI aren’t going to kill your business. Your preoccupation with what’s happening today will.
Most mature businesses, in almost all categories, are struggling with the same issue. They lack a clear vision for how their business is going to evolve to meet the challenges of the exponential economy — the system where organisations like Uber develop new business models that employ intelligent technology to unlock infinite growth potential.
The result is they’re responding the same way: rather than dedicating resources to the problem, they’re cutting those resources and using the savings to help them make budget in the current financial year.
Why? Because we are largely assessed on business results with a very short-term impact. This year’s revenue. This year’s expenses. Next year’s forecast. Few businesses place any real weight on where their business might be in five years time when setting the KPIs of individuals in the current financial year.
Granted this is partly because it’s hard to assess the potential impact of any decisions made at this point, but largely because annual financial performance is the simplest way for all stakeholders to keep score.
The numbers don’t lie. But they’re also not the only metric that matters.
A business vision is key to a new, small startup. It’s what drives the growth to a medium-large business. However, over time they lose the clarity of the vision that brought them into existence.
Occasionally (usually on the annual planning day) they try to focus on that vision and how it might need to evolve. But then the pressure of the daily grind and the need to deliver the numbers sees those bold ideas fade into the background again. The vision that was so omnipresent in the founders’ every move becomes a mess of conflicting priorities, disconnected fiefdoms and political maneuvering in the mature business.
John F. Kennedy once said that, “Conformity is the jailer of freedom and the enemy of growth.”
The reality is most of the visionaries have been forced out of the business by this point anyway. Suffocated by the constant drive for efficiency they go elsewhere. This, coupled with a lack of true digital knowledge at a board or C-suite level, makes it unlikely that a strategic plan for an exponential environment is going to manifest itself any time soon.
The vicious cycle
Instead, the linear planning process of looking back at last year’s results to predict next year’s prevails. A process that fails to recognise the accelerating pace of change happening in the industry and throughout society. One that assumes a predictable business model without your industry’s version of Uber, Airbnb or Netflix showing up anytime soon.
The numbers are set, and so is the mindset of the organisation.
This is what we call the Vicious Cycle.
The business lacks a clear vision. It makes a half hearted attempt to build and implement a long-term strategy, so those resources are cut in favour of short-term cost savings. Until the whole thing starts all over again the next year.
Business needs a circuit breaker if it’s going to get out of this incremental mindset. It needs to assess its openness to change, to experimentation, to failure. Its future lies as much in its failures as it does in its successes.
You need to stop thinking of the business as a concrete entity. A permanent structure. That it’s defined by what it does today, or worse, what it did when you joined it. It must operate as an organism whose existence is defined by its ability to morph and adapt.
Not everyone needs to act as an agent of change within the organisation, but it can’t be the responsibility of a lone wolf either. Everyone needs to understand the business vision and their role in delivering it.
Change is the combination of vision, skills, incentives, resources and a plan, but without a vision you’re just going to keep running very hard to stand still. Your incremental thinking will be swamped by someone else’s exponential growth.
So next time you sit down to a team member’s review, why not start the conversation by inviting their vision for the business’s future by asking them to complete this simple sentence: “In five years, we can be… if we…”.
You might be amazed what imagination you can unlock.
John Halpin is senior partner at strategic advisory Unthink.
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