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Dynamic Capabilities Part 4: Leadership & Uncertainty

In highly dynamic markets, there is a need for a very different kind of leadership than that which we’ve grown accustomed to in more stable environments. The key difference is that the as the speed and magnitude of change increases, less and less of the full reality is known or even knowable. The best guide that I have found for how to lead in times of uncertainty doesn’t show up on any top ten business book lists; It’s a short little book that I’ve read and reread several times in my life – Alan Watts’ The Wisdom of Insecurity. This week’s post will explore some of the most ideas from Chapter 1 that seemed most relevant to leadership in dynamic situations.

Today’s Reason Limits Tomorrow’s Possibility

Science has explained so much of the phenomena we witness every day, but the price has been a loss of what is possible beyond the limits of today’s reason.”

Leaders must be able to see beyond the current day thinking. Not that data and analysis don’t have their place – they are very important tools for understanding the current reality. However, overreliance on them (especially in highly dynamic situations) can be dangerous. First of all, data - by its nature - is measurable information about a past state and not necessarily a predictor of some future state. Second, no level of analysis can provide 100% certainty. It can help one understand probability of outcomes, but there is always some chance of an unpredictable outcome especially in dynamic environments. Third, relying too heavily on today’s thinking can cause leadership to stop short of what is truly possible. As Tony Robbins has said: “If you do what you've always done, you'll get what you've always gotten”.

A leader’s job is to “know” beyond today’s knowing. Data and analysis are critical to making informed decisions, however, leaders in dynamic markets must be able to see past today and infer from patterns and trends where the market is going. In some cases, an organization’s bold action can actually create the market change that the leader foresaw. It is in that place beyond what is “certain” or “knowable”, that real leadership sets its sights.

Dissolving Structures

As the years go by, there seem to be fewer and fewer rocks to which we can hold, fewer things which we can regard as absolutely right and true, and fixed for all time. To some this is a welcomed release… to others it is a dangerous and terrifying breach with reason and sanity… to most, perhaps, the immediate sense of release has given a brief exhilaration, to be followed by the deepest anxiety.”

We’ve built structures to help us – to provide some commonality, some consistency, some efficiency. However, once created, these structures are static – they are manifestations of the thinking during a particular point in time – a paradigm that may no longer be relevant in an ever-changing world. As the environment changes more rapidly and dramatically, there are fewer and fewer structures that maintain their relevance.

As organizational and departmental lines blur, roles become more fluid, and processes constantly morph, the traditional structure of “how” we do things keeps dissolving. However, in order for us to function collaboratively and effectively, it becomes even more important for us to understand “why” we do things. The “why” (i.e. the underlying purpose, overarching values, or fundamental reason) is what keeps us focused, provides our grounding, and gives us clear direction.

The role of the dynamic leader is to provide something for the organization to hold onto in times of change without weighing it down. Today’s leaders must be able to constantly cut away at the foundation that has been built over the past decades until only the strongest and important piers of that foundation remain. Behind specific tools and processes there are key behaviors that an organization is trying to encourage. By clearly identifying and communicating those key behaviors and core values, leaders can ensure that no matter what new processes and tools emerge from the dynamic environment, that the organization will not lose it’s grounding or vision.

Mistaking the Symbol for the Reality

The common error of ordinary [religious] practice is to mistake the symbol for the reality – look at the finger pointing the way and then suck it for comfort rather than follow it.”

In the earlier paragraphs, we discussed how it is important to not confuse any tool or process for the sustainable competitive advantage itself. Instead, it is the behaviors that those tools/processes enable and the core values that those behaviors reflect that make the difference. While it is leadership’s job to identify the right values and determine how best to guide the organization in a direction that loves those values and also results in success, this can be very difficult to concretely articulate for the masses. In dynamic environments, there is a philosophical “leap” that leadership must make based on their intuition of where the environment is going and what the organization is capable of. This is not something that the masses of the organization can or should understand (otherwise the leaders are not truly leading). That being said, if it is not possible for the organization to fully understand the strategy from a purely rational perspective, then they must believe in it or have faith in it at some other level.

There is a subtle, yet important, distinction to make between belief and faith. As Alan Watts put it: “belief clings, faith lets go”. Belief is taking something (even if it can’t be fully proven) and then holding onto it unquestioningly and uncompromisingly. This often means that individuals have set ideas about what it should look, feel like, and how it should play out. When reality differs from those set ideas, belief ignores it, denies it, or fights it - closed to alternative possibilities. Faith, on the other hand, has no preconceived notion about what is the right or wrong way to go about something, but rather clearly articulates the vision and general direction. No matter what is happening along the way, faith interprets temporary outcomes as important lessons that are necessary to drive toward the ultimate goal. Faith is open and inclusive of all possibilities and aware that the best means of realizing the goal may not fully be known ahead of time.

The role of leadership it to enable faith and constantly challenge belief – to constantly strengthen the foundation and clarify the compelling vision while also increasing the organization’s vitality and openness. There are a couple of key points in this statement:

  • Strong Foundation: Strong foundations don’t come from strict process or structure, but rather from empowering the organization’s people. By increasing people’s awareness, building their knowledge base, exposing them to new and differing ideas, and giving them freedom (with responsibility), leaders are essentially making every member of the organization an extremely desirable entity that competitors would love to hire. However, despite their marketability, employees stay with the company because they feel valued, empowered, and hopefully inspired and passionately committed organization’s vision.

  • Compelling Vision: Leaders need to present a simple, yet compelling vision that is substantive and bold enough to inspire, but simple and enduring enough to permeate every aspect of how the organization functions. Doing this effectively is truly an art.

  • Vitality: When everyone in the company is excited, enthusiastic, and focused on the same vision, the vitality is palpable. People are excited to work, eager to share, motivated to strengthen the organization – they often go well out of their way to perform beyond expectations. This is the best kind of energy; the key is not to restrain it and direct it toward productive outlets.

  • Openness: Having such empowered, vital, and committed people within an organization creates significant openness which itself is a very valuable strength. Openness allows an organization to become much more quickly aware of disturbances within the organization and in the environment surrounding the organization so that opportunities for improvement can be identifying and leveraged as soon as possible.

These four points are the essence of what leaders in dynamic environments needs to create within their organization. Process and structure alone won’t achieve much and may actually be limiting in the long term. One of the key measures of an organization’s ability to thrive in an ever-changing world is their leaders’ ability to lead wisely under conditions of growing uncertainty.

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