Having the growth mindset as your corporate culture is key in a TUNA world
I work as a corporate consultant and invariably my job gets hampered not by the work itself, but by the corporate culture. Some companies, though large, are still run on a centralised structure where the person at the top makes all the decisions, and nothing gets done until the decision is made. One wonders how much more the company can deliver if certain decision-making responsibilities are devolved.
"You see that car? That tells me I am a successful businessman. So why would I need to transform my business?"
Other organisations I work with are stuck in the past. While they want to refresh and reinvent their processes and business models, they are stuck in the old ways of doing things. When I was previously CEO SCALA, I acknowledged that industry transformation cannot take place by selling the transformation idea to the boss; he (invariably it is a "he") will point to his Maserati or Ferrari and say, "You see that car? That tells me I am a successful businessman. So why would I need to transform my business?" But they fail to see that there are newer and better ways of getting business results, and no matter what I try to tell them, they will not be able to see that. So, I chose a different tack. Working with the Singapore government to provide grants to reskill and pay the salaries of new hires, we trained them in a curriculum where they would have to implement these new business models, applying tools like customer management, design thinking and strategic innovation. More than 50% of the company bosses reported to me at the end of the 9-month programme that they had built new revenue as a result of this. While they are not going to dismantle their old ways of doing things, they are now in the position to incorporate the new ways into their model.
From VUCA to TUNA
Organisation leaders need to realise that the world is evolving much faster than they can catch up to. The road ahead is now so murky - Covid19 is a case in point - that many leaders are unable to plan for next year, much less for the next 3 years! Assumptions keep on getting busted as one incident happens after another. The Soleimani incident in January almost threw the Middle East into a proxy war with the US; and no sooner did that abate, the Covid pandemic hit. This threw the world into another tailspin, triggering a global recession. The US elections coming soon will certainly throw up another big uncertainty, and if the wrong person is elected, another 4 years of nationalistic sentiment will keep the world in recession. Indeed, the term VUCA (volatile, uncertain, complex and ambiguous) which was used to describe such a business environment has evolved into TUNA - turbulent, uncertain, novel and ambiguous. The two key terms that were replaced - volatile to turbulent, and complex to novel - seem to suggest that the "new normal" rages on at a much greater pace than in the 1990s when VUCA was first coined by the US military. This means that organisations must learn to deal with changes in lightning quick fashion, that everything is a work-in-progress, and we must adjust the way we use our financial resources. Status quo is now constant change, a contradiction of ideas. The time has come for us to learn how to deal with TUNA, not with AI and other "hard sciences" (AI is unable to offer any reliable insights in a turbulent environment) but with resilient, malleable mindset. It is time to equip all our people with the means to react to turbulence with the growth mindset.
The time has come for us to learn how to deal with TUNA, not with AI and other "hard sciences" but with resilient, malleable mindset.
How the growth mindset works for organisations
Our research has uncovered the 5 Dimensions of the growth mindset. These are the behavioural drivers that push one's tendencies towards, or away from, the growth mindset. While many people attribute the growth mindset to students and excelling in school, it is equally - if not more so - important in business because our exams are in the real world, and people's livelihoods are at stake. Doing nothing in a turbulent economy is akin to waiting for the end of the world. However, anything we attempt may also fail. This seems to be a rock-and-a-hard-place situation. There is a need to approach such turbulence with a velvet glove - to go in, but not all in. There are no "Hail Mary passes" in TUNA, simply because each step needs to be a calibrated learning launch.
The 5 Dimensions of the growth mindset are:
Learning. It is important for us to constantly form a hypothesis of where the economy is headed and chart the course to meet it. Hence, we must constantly be testing the waters, seeing new developments, adopting new behaviours. By constantly challenging the dominant logic, uncovering what is working and not, and testing those ideas, we will be able to at least not be overwhelmed by the turbulence. Hence, it is key to approach any novel environment with an eye to understanding the underlying drivers.
Bounce Back. This is the organisation's ability to recover from a mistake. Indeed, in a turbulent environment, there are going to be many mistakes. As such, we cannot make any mistake fatal. We have to adopt a "fail fast, fail cheap" mentality that does not break the bank, yet gives us invaluable intelligence of where the economy is heading. This includes understanding what type of government resources we can tap, what type of capital we can secure, to manage the downside of any trial, since every action we take is just a trial in a turbulent environment.
Risk Taking. If the intent is to find out where the economy is heading, then there is a need to back the intelligence gathering (aka learning) process. It is almost a certainty that many of your bets will be wrong. Hence, you must be comfortable to take those risks in order to find out what is going on, where your customers have moved to, what they need now. Global supply chains may have to be dismantled in favour of local or regional ones, and this will be more costly, and of course, risky. This risk needs to be taken, but under the guise of "fail fast, fail cheap". Hence, you must be able to manage the downside of any learning launch by bolstering your Bounce Back ability. In other words, when you build up your Bounce Back ability, you also increase your ability to take risks - but of course, to a certain extent. We certainly do not recommend hubris on the back of a strong Bounce Back position.
The best way to deal with turbulence is not to resist it, but to go with the flow, just as good surfers will tell you.
Forward. Standing by and waiting for the economy to impact on your business is foolhardy. You will find yourself spending massive amounts of money just defending your untenable position. In the end, you will still go under. The best way to deal with turbulence is not to resist it, but to go with the flow, just as good surfers will tell you. Even world champion surfers will tell you that they wipeout more times than they ride the waves to shore. Wipeout will happen when they overthink the way, trying to control the environment. The key is just the opposite. The more they learn to go with the flow, the more successful they become. That behaviour is extremely important in a turbulent environment, since we are unable to tell in advance where we will be heading. Adopting a flexible approach to moving ahead is therefore extremely important. Planning every single step of the way, ensuring that the path is clear and smooth, before taking that first step is doomed to failure in a turbulent environment. The important thing is to use your Learning, Bounce Back and Risk Taking strengths to propel you forward.
Pride. By pride, we do not mean arrogance (although some organisation leaders have that in spades). This is the behaviour that keeps us stuck in the past, of relying on one's successes to push the organisation forward. This was the condition that afflicted William Smithberg, then Chairman of Quaker in the 1990s, who was very successful in acquiring Gatorade, and thought he could do the same with Snapple. Applying the same thinking that had gotten them successful in the past, Quaker acquired Snapple for $1billion above what it was worth. Within 3 years, they had to divest the acquisition, losing $1.4billion in the process! By relative standards, the 1990s is much less volatile than today, and yet we still see people making corporate decisions based on their past successes. However, in today's valuations, we might even see tens of billions of losses for decisions based on pride. In a turbulent environment, what worked yesterday is no longer valid today, much less your past successes! And if your organisation is filled with people who are fixed in their Pride dimension, you should be wary.
Start your company on the way to growth
TUNA will likely be the new normal for your business. You will probably not be able to plan a sustained effort for growth. Each quarter, each year, will see you adopting something new, trying out a novel idea. Revenue will be choppy, and contribution margins will be thin throughout your product range. This means we need to build a mindset throughout our organisation that we cannot rest on our laurels, and that change will be a constant. Embedding change into the mindset will then ensure that you do not have to do some big, expensive change effort every two years. The TUNA environment will eat such organisations for breakfast. Instead, you need to embed adaptability and flexibility into your organisation. Every person must be responsible for managing the change within his/her scope. Senior management must support all the different learning launches that are being conducted, just like a venture capitalist. And as VCs, they know that 5 out of 10 of their launches will fail, 2-4 of them will breakeven, and only 1-2 of them can make money. But every now and then, 1 out of 30 learning launches will hit the ball out of the park for a home-run. Hence, it is now a portfolio game, one that relies heavily on the growth mindset to be successful.
The old functional barriers and silos must come down, replaced by a flexible, adaptable organisation, driven by earnest co-workers who put the organisation's success before one's own.
Everyone in the organisation should now be responsible for his/her learning launches. The old functional barriers and silos must come down, replaced by a flexible, adaptable organisation, driven by earnest co-workers who put the organisation's success before one's own. Then coming together to pitch an idea to build new revenue to Senior Management, getting the endorsement for the "fail fast fail cheap" way to learn, the organisation will grow in an exponential manner in TUNA.
All this begins with understanding the 5 Dimensions of the growth mindset, and making that the core organisation competency.
Click here if you want to uncover the growth mindset of the staff in your organisation.