It is self-evident that this is one of the most disruptive times for businesses since what has become known as the Great Recession of 2007-09. Unlike that period, which was chiefly caused by unsustainable debt, the current crisis has a broader set of causes which impact businesses in multiple ways.
Even before the invasion of Ukraine companies were struggling to obtain the materials to fulfil the increased orders arising as pandemic precautions were relaxed in Western economies. Costs related to the materials themselves and to the supply chain, reduced transport capacity and higher prices, increased significantly. Those costs have continued to grow, in some cases by hundreds of percent, as availability of gas and oil has been restricted.
Supply chain resilience is just one of the challenges detailed by Simon Freakley, CEO of AlixPartners, faced by businesses today. He advocates that companies look for ways to be disruptive as a strategy for survival – “The leader of tomorrow will need the courage to break free from current and comfortable systems and methodologies, and embrace a future-first, action-oriented mindset that discards a ‘wait and see’ approach”.
A bigger challenge faced by businesses, because it makes the difference between a successful company and a so-so one and because it takes time to achieve, is building the team of people who will design, transform and run the business.
Freakley also points to the difficulty of finding and retaining skilled people – “We’re seeing more resignations and employee churn than ever before as the pandemic has presented a new outlook on life and the workforce is also becoming younger – with higher expectations.”
A pre-pandemic article in HR DIRECTOR talks about inter-generational conflict in the workplace with an emphasis on the expectations of Millennials, for example “Over half of Millennials reported that poor company culture was a source of disappointment in a new job, with 90 percent claiming that they research the culture in advance of taking an opportunity.”
Worryingly the AlixPartners Disruption Index 2022 found that 2 in 3 executives are concerned that their company’s employees will not have the necessary skills required to operate the business in the future.
Embarking on a disruptive strategy, necessarily requiring some kind of business transformation, is of course a major step, which according to Gartner and McKinsey has a 66% to 70% chance of failure. With such a high rate of failure there are many articles available on how to avoid the pitfalls of transformation.
A recent one in Raconteur describes the warning signs that a transformation project may be off track even at the outset. It quotes that “Research by Fujitsu has found a lack of leadership to be one of the four biggest problems at the planning stage of a transformation, along with a shortage of sufficiently skilled staff, a lack of funds and an undefined return on investment.” Research by the Everest Group found that internal resistance to change was a major cause of failure.
Giorgia Prestento, a behavioural scientist and independent consultant specialising in change management warns “The first signs that staff aren’t on board can be summarised as noise – the chatter by the coffee machine, the whispers in the corridors or on the online chat groups”. She suggests that leaders should try to be more observant of people’s interactions and body language, and McKinsey advocates two-way, face-to face communication to keep people on board.
In an era of hybrid working and in conjunction with the sheer scale of large organisations it is not always possible to observe people nor to communicate with them face to face but it is clear that constant monitoring and adjustment of the transformation is necessary to keep it on track.
Tensense.ai has been helping organisations manage the effects of change and transformation programs for many years. Grounded in the science of Sensemaking, the Tensense.ai diagnostic tool provides an early warning system for Leaders that surfaces unforeseen issues that sets up and gets the program back on track.
This is done by harnessing the instinct of the workforce, who see what is happening on the ground, and asking them how they feel the organisation is performing. This innovative diagnostic has been instrumental in helping large and small organisations successfully navigate change and transformation – allowing leaders to ‘read the room’ if you will. And then advise how to take action.
This extra perspective can, figuratively, help leaders to ‘see round corners’ and so be a game changer, because transformations will be disruptive, even if their goals are positive for the company. But don’t forget, despite the current intensity of change, disruption can, for those agile, forward-thinking organisations, turn out to be transformational.