In last few years we could observe how geopolitical competition between USA and China change the world piece by piece. With the USA in defense of his hegemonic position, they began to break the global economic order. The coronavirus crisis is just accelerating the collapse. COVID-19 has become an unpredictable factor affecting the global competitiveness of world economies. From this chaos, a new hegemon will certainly emerge, but there is no certainty that it will be the USA (which until now has benefited and guaranteed globalisation).
The best way to handle an evolving world is to have a system built around just that: exploration.
In front of us, we see supply chains falling apart, companies that make desperate pivots to survive and large companies that have until now held large chunks of the market are closing (or suspending operations). Entire industries that have virtually disappeared due to restrictions. Because of the uncertainty many of the customer segments profiles have changed completely. And if this confusion lasts longer (which is indicated more and more), tomorrow we can find that most of what we know about business doesn’t work any longer (or is working differently than we thought). I’m talking about business models: typical customer behaviours, their worries, the things which are attractive for them, partners, places where your business can buy the supply for the operations, the way companies operate and many more.
How to adapt to the rapidly-evolving world? Explore it
The best way to handle an evolving world is to have a system (or a part of company) built around just that: exploration. Only to explore it you must see the reality as it is.
So the first basic approach is (it is worth to execute it fanatically): Make decisions based on evidences not ideas.
The “yesterday approach”
How did it often work “yesterday”? There is an idea, there is the idea advocate (advocates), the are some decision makers, there is some presentation and discussion (do you remember last time when you presented your own idea? That was your idea, so I guess you made a lot efforts to “sale” it to others).
And the decision maker group (usually after the discussion and some thinking) is making decision: “this is a good idea” or “this is not a good idea”. “We like it” or “We don’t like it”. “It have to work” or “I can’t work”.
In a bit more sophisticated companies, there will be somebody who ask: “what is the evidences to back up that the idea will work?” So in most cases there are people who make a business plan. The issue is the business plan often is based on historical wins (why is this a problem? The fact you succeed in the past, doesn’t mean you will succeed in a future, especially in rapidly changing environments) or forecasts (which, if they are not backed up by tests or very good research, are basically wishful thinking – especially in fast evolving environment).
The success of such a project is quite random and the business risk of big failure is high.
The “decision based on evidences” approach
The decision process should change as well. It should not be important if the oldest rank in the structure likes the idea, it should be important what evidence lies on the table.
The “decision based on evidences” approach works differently: when you have an idea and you think this is a brilliant idea, you don’t ask yourself how to develop it. You ask what is the evidence that the idea will work (that customers want it, that customers care about it, that customer are willing to pay for it etc.). Then you need to be very honest with you and assess your evidences. How good they are (the evidence built on an interview with a customer is less valuable that the evidence obtained from sales of Minimal Viable Product)? How much of it you have (evidences from a 100 interviews will be much stronger that evidences from 5 conversations)?
If you are focused on exploration, during the process of obtaining evidence you will learn a lot, and when you will learn and build the evidence database, you will effectively mitigate the business risk and improved adaptation to the environment.
The decision process should change as well. It should not be important if the oldest rank in the structure likes the idea, it should be important what evidence lies on the table.
Don’t make decisions based on ideas. Make decision based on evidence.
In order to confront the rapidly-evolving world around us, we need to have a system in place to adapt with the changes. This article is the first from the series which aims to describe basic approaches, which can help to be more responsive and adaptive. Sign up to the newsletter – so you will never miss an update!