The balancing act

Creating an ambidextrous company that can perform in the now and thrive in the next.
Companies can create an adaptive and disruptive mindset by practising certain disciplines. Image: Shutterstock

The world is at an inflection point, similar to that experienced in the three years between 1989 and 1992. In a short space of time, the world experienced significant change events – the fall of the Berlin Wall, the events at Tiananmen Square, and the Indian economic collapse.

Abdullah Verachia, global strategist and senior faculty member at the University of Pretoria’s Gordon Institute of Business Science (GIBS), argues that though these events might have seemed unrelated at the time, in hindsight, they conjoined to influence the trajectory of the world for at least the next three decades.

“We are at a similar inflection point today, and that is why the word ‘unprecedented’ is used so often,” he says.

“It accurately describes where we are, without a doubt. For me, however, the most important question is the ‘so what’ and the ‘now what’.

“How does our current reality impact countries and companies, leaders and individuals, and what can you do to thrive in this environment of new opportunities?”

With the Covid-19 pandemic forcing various economies into cycles of lockdown, and with uncertainty remaining rife, an argument of ample opportunity may be a difficult one to accept. Not for Verachia. His book Disruption Amplified (Tracey McDonald Publishers, October 2020) reflects on the global shock of events in 2020 and unpacks how companies, sectors and industries need to press the reset button and then rewire for the future.

“Despite what people are saying, we are already in a post-pandemic boom,” he says.

“We are seeing numbers coming through from the US showing projected GDP growth of near 6% for 2021. For France above 5%. Who would have thought?”

The global savings rate is also at an all-time high. According to S&P Global Market Intelligence, household savings in the US surged to 25.8% of income in the second quarter of 2020 (from 7.3% at the end of 2019). In the UK it was 27.4%.

“Savings comes from fear and the inability to purchase, and now, as the economy opens up, we will see pent-up demand, along with these unprecedented savings, unleashing a wave of capital in many markets,” says Verachia. In a word: opportunity.

But how does a company move out of the paralysis and shock of the last year and into dynamic action to capitalise on these opportunities?

Become ambidextrous, says Verachia.

Feet firmly in the now, eyes and mindset in the next

Being able to perform in the current reality while already building for what lies ahead sounds straightforward in theory, but Verachia argues that it is much more difficult in practice.

This, he says, is because most companies put in place KPIs (key performance indicators) and incentivisation schemes that only look at the present and not at rewarding future thinkers.

One tool that can be used to put the theory into practice is the Innovation Ambition Matrix first featured in Harvard Business Review in May 2012.

It helps organisations to craft strategies for growth around three levels: core, adjacent and transformational.

“For example, how do you make sure that you spend 65% of your time on what your core business is, leaving 20% for adjacencies and 15% for disruptive and transformational development?” asks Verachia.

A company’s core business ensures that what it is already offering gets to its target market – the things it should be busy with within the next six months to one year. Adjacent business means adjusting existing products and services to meet changing demand in the next one to three years. Transformational time should be spent on creating products and services that are currently non-existent.

Suppose you can create a company culture where the adjacent seamlessly flows into the core, and the transformational becomes the focus. That is when your company will thrive, Verachia says.

Purpose-driven leaders and companies with well-exercised disruption muscles

What the world needs now is purpose-driven leadership. Not mission and vision, but leaders answering the fundamental ‘What is your why?’ question.

These are the types of leaders who are not pushed off course by whatever lies in wait because their underlying purpose remains firm.

“This is true leadership. We will always face disruptions. Today it’s Covid-19, I promise you, tomorrow there will be something else. It is important to know how to build this adaptive muscle,” says Verachia.

The equivalent of weight training for this specific “muscle”, as Verachia calls it, is firstly to understand your ‘Dynamic capabilities’ – a concept developed by David Teece, Gary Pisano and Amy Shuen referring to a company’s “ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments”.

Secondly, companies and organisations must be aware of their environment, far more in-depth than just looking at their own sector. They should be able to visualise different scenarios and how they will impact their business. Verachia uses the analogy of artwork – it is essential to know what the canvas on which the future will be painted looks like.

Next, staying with the analogy, companies have to check their art supplies – do they even have the right colours to paint within this new world?

“It is asking whether you can reimagine your business. Using the different scenarios, what does this mean for your value chain – and where are the places where you can create or capture value?” he asks.

Lastly, leaders have to create or build a culture that amplifies innovation. Companies have to enable innovation by putting systems in place and creating environments where employees can step into the learning zone, not permanently remain in the performance zone.

Practising these disciplines, says Verachia, will create an adaptive and disruptive mindset that will help companies perform in the current reality and excel in an uncertain future.

“No president, prime minister, CEO, business school professor or journalist has the answer on where this world is going. It is unknown territory.

“What we can do,” says Verachia, “is to make sure that the absence of certainty does not immobilise us.”

Brought to you by the Gordon Institute of Business Science (GIBS).

Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.


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