We have recently been heavily engaged in our on-going “Innovation State of Play” series, where from 2015 we have been interviewing 15 global CEO’s. This “view from the C suite” follows on from 2014 where more than 260 executives and managers were surveyed across the globe.
In talking with the leaders in the industry, it became clear that they are seeing clearly a range of long term forces that will create step change in the industry over the coming decades. However, it became apparent that the challenge is not so much seeing the drivers, but is in mobilising to address them.
A current example of seeing, but failing to move, is the social pressures being applied through financiers on the funding of coal projects. The early stages of these trends have been well recognised for a decade or more by Mining executives, so why then were many in the industry caught off-guard as banks started to apply pressure in these investments in response to activism earlier in the year?
When and how to move on envisaged futures is a critical strategic question faced by businesses in every industry. But it is very hard for a range of reasons:
– It is seen as risky. A move too early can be costly both financially as capital spent and existing revenue is impacted. It is also a career risk unless the CEO is also the business owner.
– It goes against the grain of human psychology. Natural status quo biases, herd biases, abhorrence of uncertainty and other biases all work to re-enforce current direction.
– It is difficult to know what to do. The future is not clear, options are expensive, and change is difficult to sustain. That is, even if I want to move the task is complex.
But there are solutions, and successful businesses overcome the challenges. So what do they do?
– Leadership is strong, externally focused, and it “makes the space” for investment in change both internally and with investors.
– Strategy is comprehensive, where external forces, competitive advantage, and innovation are all connected seamlessly and are driving the business.
– The business is agile, both in respect of creating innovative options which are effective and low cost, and also in making change which is driven by long term goals and is flexible.
Moving to position for the future is tough, but it is also the key to business success. A business does not want to damage current outcomes by preparing for the future, but it must have embedded options, and be sufficiently agile to meet the future head on.