Positioning Companies to Face the Future Confidently
With most companies and industries facing uncertainty when looking to the future, there arises the question of how confident organizations are in executing their strategies successfully. More specifically, how can executive management and the board of directors assist the organizations they oversee with facing the future confidently?
Confidence is neither a cliché nor an assertion of mere optimism, but rather a quality of the human spirit that drives leaders and their organizations forward. Given the importance of confidence in human endeavors, especially in a rapidly changing environment, we explore the attributes of confidence that executives and directors can use to assess and advance their organizations along the journey to realize their organizations’ respective vision.
Key Considerations
Confidence is “the state of feeling certain about the truth of something” and “a feeling of self-assurance arising from one’s appreciation of one’s own abilities or qualities.” This definition focuses on management’s and the board’s appreciation of the collective capabilities of the organization, with the “something” representing the organization’s vision. Therefore, from an organizational perspective, sustainable confidence in facing the future suggests mature capabilities in which competent people with high mutuality of interests and accountability for results are engaged in the pursuit of a common purpose. This definition raises three fundamental questions vital to facing the future confidently:
- Directionally, do we as an organization know where we’re going and why? Are our people devoted to achieving a common future-state vision? Is the vision well-articulated, meaningful, aspirational and ethical?
- Are we prepared for the journey we are undertaking? Do we have a plan with a clear roadmap? Does the organization have the capabilities and infrastructure to execute the plan and navigate the roadmap?
- Do we possess the ability, the will and discipline to cope with change along the way? Do we have the mental toughness to stay on course? Is our organization agile and adaptive enough to recognize market opportunities and emerging risks over time and capitalize on, endure or overcome them with timely adjustments to our strategy and infrastructure?
We believe that definitive, positive responses to the above questions – responses that senior management and the board know are correct – enable organizational confidence in facing the future.
Why is confidence in facing the future so important in business? Due to the breathless pace of change, organizations need to be proactive, poised and ready to navigate constant and even disruptive change. Looking back on our collective experiences in working with clients, looking forward to expected challenges in the future, and knowing there will be unexpected and even disruptive change, we can postulate several important characteristics of organizations that have demonstrated confidence in facing the future.
The first three attributes lay the foundation for confidence:
Confident Organizations Share Commitment to a Long-term Vision
Confidence is maximized if there is a commitment to the organization’s long-term vision, which provides its people a shared “future pull” perspective that is both inspiring and motivating – fueling enterprisewide focus and energy to learn, encouraging participation, and spawning an altruistic camaraderie. In such organizations, people at all levels recognize that the enterprise’s success and their personal success are inextricably linked.
Confident Organizations Seek Clarity From and are in Touch With, the Environment
The more thorough the understanding of the business environment and the more reliable the information for decision-making, the more informed an organization will be at the outset of its journey and along the way. A confident organization constantly “reality tests” its market understanding. For example, it implements processes that facilitate listening to customers, suppliers, employees and other stakeholders as sources of new learning and systemic thinking, and it distills and acts on feedback received to drive continuous improvement. An open, sharing culture encourages people to say what they think without fear of repercussions. Formal and informal continuous feedback loops flatten the organization and foster a preparedness mindset.
Confident Organizations Organize Their Capabilities
It is a never-ending priority for confident organizations to ensure that capabilities needed to achieve differentiation and execute strategies successfully are in place. For example, differentiating capabilities include an organization’s superior know-how, innovative processes, proprietary systems, distinctive brands, collaborative cultures, and exclusive supplier and customer relationships. Given the company’s strategy, the appropriate policies, processes and organization must be in place.
In addition, the necessary reporting, systems and data are needed. These capabilities complement each other. Performance expectations and metrics at the organizational, process and people levels must be aligned so that everyone is able to understand their respective contribution to the organization’s overall success. Alignment breeds confidence because leaders know it is a huge enabler to their organization’s strategic execution.
The base level of confidence achieved by the above three attributes, however, is not enough to ensure success in a changing business environment. Astute business leaders know that the ability, will and discipline to cope with change are also needed to advance their journey. These must be driven from within and require resilient and creative people and processes. The following attributes that deliver these qualities complete the profile of confident organizations.
Confident Organizations are Risk Savvy
The confident organization routinely identifies the risks arising from, as well as the risks to, executing the strategy to ensure that the most critical exposures are managed effectively. For high-impact, low-likelihood risks with high velocity and high persistence, the organization ensures effective response plans and teams are in place to minimize reputation damage should a risk event actually occur, in addition to implementing policies and processes to reduce the likelihood of the event’s occurrence to an acceptable level. Confident organizations understand the critical strategic assumptions and develop scenarios or alternative futures that can negate these assumptions so that forward-looking metrics and contingency response plans can be developed.
Confident Organizations Cultivate an Aggressive Learning Environment
In today’s rapidly changing environment, it is the collective genius of the organization that really matters. A positive learning culture embraces and encourages open-mindedness, critical thinking and fresh ideas. It also promotes quality feedback loops regarding experiences with customers, suppliers, regulators and other outside parties that maximize employee participation.
Built on a foundation of formal and on-the-job training, systems thinking and a continuous process improvement discipline, the learning environment is enabled by outward-looking behavior with a strong performance discipline and a transparent environment of ongoing knowledge sharing, networking, collaboration and team learning, in which learning from errors is encouraged and viewed as a strength. The learning environment breeds confident organizations by facilitating the pursuit of opportunities and the undertaking of risks and all that entails, including converting lessons learned from mistakes into process improvements.
Confident Organizations Place a Premium on Creativity
Companies committed to innovation are confident in facing the future because they know the market and are passionate about focusing on the customer; therefore, they know their customers, suppliers and channels. Innovation is a strategic imperative, thus these organizations empower and reward employees to test new ideas and take the appropriate risks to make those ideas a reality without encumbering them with the fear of repercussions if they are not successful.
In short, executive management gets it. They know success is not final, failure is not fatal, and it is the courage to continue through testing and trial and error that counts. Innovation is an integral part of the confident organization’s DNA and is evidenced by setting accountability for results with innovation-related metrics at the organizational, process and individual levels to encourage and reward creativity.
Confident Organizations are Unwaveringly Resilient
In a business context, confident organizations seek to attain and practice organizational resiliency, which is the ability and discipline to act decisively on revisions to strategic plans in response to changing market realities. These organizations have adaptive processes supported by a strong decision-making discipline and commitment to adapt to continuous and disruptive change as an early mover.
For example, the strategy includes triggers for alternative contingency plans management has decided to implement if certain predetermined events occur or conditions arise. Resilient organizations foster an organizational culture that encourages managerial intuition and ingenuity to translate information regarding altered strategic assumptions into actionable revisions to established strategic and business plans.
In summary, confident executives build a confident organization. Likewise, confident organizations breed confident employees. It’s one thing to have a confident CEO, but if the people within the organization lack confidence, the organization itself may not have the creativity and resiliency needed to sustain a winning strategy. Therefore, it is recommended that senior executives and boards of directors consider the following question in view of the nature of the organization’s operations:
- How does the organization rate against the seven attributes introduced above, and the behaviors they represent, for facing the future with confidence?
- Based on this assessment, are there changes the organization needs to make to prepare its “readiness” for the journey that lies ahead toward realizing its long-term vision?
