How equipped is your organization to be co-adaptive?

Strategies are crafted to focus an organization’s ongoing operations and development initiatives to stay competitive. Traditionally, this is done once every three or five years, maybe even once a year. When strategic choices don’t seem to work out in a desired way, or the operating environment changes, a pre-designed plan B or an all-new strategy is needed. A challenging situation – but validating the relevance and effectiveness of the current strategy when there are no obstacles or obvious changes in the horizon can be an even more demanding task. Not to adapt is also a choice.

The world is never going to change as slowly as today. We have to get used to volatility and learn to live with it. Organizations hoping to stay relevant need to craft and execute strategies at a radically new pace – not to mention developing new capabilities.

By a co-adaptive approach, we are referring to a data-enabled and co-created strategy process that is all about having constant dialogue, experimenting, and scaling what works, and running strategy formulation and execution in a constant loop rather than separately. We call this approach co-adaptive because a constant stream of data alone isn’t enough to adapt – you’ll also need collaboration and engagement.

If you haven't read the previous article about co-adaptive strategy yet, you can find it here.

Adaptation is fueled by faster learning. To gauge your capabilities, consider whether you are able to get almost real-time feedback about the effectiveness of your current strategy, and implement changes without wavering?

An adaptive approach to strategy will be easier for some companies and industries than others. Large, established enterprises with hierarchical command-and-control cultures typically struggle more with organization-wide adaptability. The co-adaptive strategy process is strongly connected to organizational culture and day-to-day operations.

There are six core capabilities that enable organizations to be co-adaptive:

1. Data-enabled decision making
2. Foresight skills
3. Growth mindset
4. Engagement
5. Balancing alignment and innovation
6. Rapid implementation

We’ll cover these in more detail next, and right after the descriptions, you can take a capability test that gives you an idea of where your organization is today.

1. Data-enabled decision making

In order to get the big picture with data, you need to use a variety of different sources of information – both about your external and internal environment – and even so, the picture will never be completely full. Too much information is a problem for the human brain – the overload makes us blind. Using only machines to gather and analyze data can create outputs that are difficult to communicate or make no sense. That’s why combining machine- and human-based data analytics is crucial. This helps avoid bias both in algorithms and conclusions.

Think about the areas where your business strategy and its execution need to be adaptive. What are the business-critical things that need to be illuminated with (almost) real-time data? In an optimal world, what information do people need to make good decisions in their everyday jobs? What kind of leading vs. lagging indicators could be identified based on alternative external data? Some areas will always lack data or require too much effort to research with scientific methods – in these cases, creating hypotheses, and then testing and validating them is a solid way of gathering information.

We all make hundreds of decisions of varying size each day. But what do we base those decisions on? Data literacy is needed across the entire organisation. Co-adaptive strategic and operational decision making calls for structures, roles and ways of working that enable you to react fast when the data shows a need for adaptation. Transparency, the availability of data, and strategic thinking are necessary for better decision-making at all levels.

Think about decision making in your organization. What kind of system creates timely, good decisions that lead to a great customer and employee experience, competitive advantage, and economic success? What kind of data systems are needed to provide a fast feedback loop to validate strategic and operational choices?

2. Foresight skills

Foresight skills are critical in order for organizations to anticipate and respond to changes in their business environment. To look ahead and prepare for the future, we need to imagine possible development paths. Thinking about possible futures can be supported with data-led forecast tools, but that alone is not enough. Provide space and nourishment for creative minds.

Adaptivity is not about jumping onto a new path each week. Data is used to enrich scenarios built on futures thinking, and to evaluate which ones are most likely to happen. Dialogue is needed to make conclusions on whether a change signal is just a temporary variation or a sign of a permanent phenomenon. When forming hypotheses, it’s important to differentiate between information and beliefs. Bets are made to focus development efforts – and constantly validated. This is called the DIBB framework – short for data-insight-belief-bet.

Focusing too much on data runs the risk of people becoming fixed into a problem solving mindset, which can become a strong bias in and of itself. A problem mindset turns people to look for root causes and guilty parties, thinking in black and white terms, being protective, and strengthening silos. That makes it difficult to think about positive scenarios and be innovative.

3. Growth mindset

A core development area for many organizations is to overcome the fear of failure.

Quality and speed can rarely be reached at the same time. The aim for a faster response time goes hand in hand with the risk of a wrong decision. Rapid prototypes don’t always work, and changing shared ways of working also runs the risk of failure. With a growth mindset, all these are turned into faster learning.

A growth mindset can lead to greater innovation, resilience, and adaptivity. It can encourage employees to take on a new challenge and view failures as opportunities for learning and growth.

We can all help each other apply a growth mindset by encouraging people to learn constantly and explore new perspectives. Praise and support efforts, not just short term outcomes. Ask for and give constructive feedback about specific actions that could be improved.

Learning is about experimentation, iterative development, sharing experiences and reflecting together what worked, what didn’t, and why. It’s strongly connected to positive attitudes, reward systems and leadership style. All these will foster psychological safety, which is widely recognized as one the core elements of successful teams.

4. Engagement

Co-adaptive strategy is about connecting data and people. Engaging people in a suitable way is crucial. But why?

First and foremost, the value of data is created by dialogue around it. It’s important to combine data with people’s experiences and feelings, making tacit knowledge visible.

Good dialogue is about encountering one another, being curious about other people’s point of view, trying to understand first and only then trying to be understood by others. Dialogue creates shared understanding and focus.

Secondly, engagement is needed to create motivation and commitment. Adaptivity requires that people understand their shared direction, are empowered to make data-enabled decisions in their daily work, and they are motivated and committed to taking the necessary action. Engaged people will become advocates for your strategy, and pull other people along with them. This is crucial for faster strategy execution.

There are many different ways to enhance engagement – I call these levels of participation. Effective organizations use a suitable level in each situation, it’s an elemental part of their leadership culture and ways of working together.

5. Balancing alignment and innovation

The human mind likes patterns and unity. We desire to execute strategy so that everyone walks toward the same goal in unison, at all levels. We talk about aligning our actions, going from local variations towards centralized planning and a globally productized offering. It is important to consider the level at which alignment is needed, and how strong it should be.

It is both a matter of organizational culture as well as business model: are we optimizing products to fit the needs of a wider customer base, just doing light customization, or should our offering be unique for each customer. Even in service business that consists of unique projects, there are similarities that can form modules of products. These can be implemented repeatedly with greater efficiency if best practices are shared, well documented and used over and over again. Alignment enables efficiency, but at the same time, too much alignment tends to blur the complex nature of large projects or ecosystems – only having a hammer at hand makes you see nothing but nails around you.

Innovation stems from individuals breaking the rules. When people don’t behave as before, they create variations or create something new, sowing the seeds for fruitful innovation. Think about how to make that more systematic. How to help people spot and share insights about new customer needs? How to turn single variations into systematic testing of what works and what new services and products there could be?

Adaptive organizations are able to balance alignment and innovation. Keep your shared focus clear and give as much autonomy as you can. Build a culture of honest communication, trust, transparency and constant dialogue so that people connect with each other and don’t self-direct to chaos. You’ll need practices that guide all the flocks toward the same destination. You can always use technology to track the level of alignment, but it won’t replace dialogue.

6. Rapid implementation

Successful adaptation is about timely implementation of decisions.

In strategy work, the implementation part is often seen as the most difficult one. “It takes two years before we can get the message through,” said the strategy director of one large Finnish corporation. With the abovementioned co-adaptive capabilities, you can speed up the implementation of new change initiatives, projects, and ideas.

Some people are action-oriented, some people focus on creating and fine-tuning ideas, and others can’t move ahead before they are sure that the right problem is being addressed. We all have experiences of talking about great improvements, but then it takes forever before any concrete changes are made, if ever.

Several actions can be taken to enhance rapid implementation, such as:

• Ensuring that the purpose and goals of your organization are clear for everyone
• Allocating necessary resources
• Breaking large actions into smaller pieces
• Developing functional decision-making systems
• Supporting cross-functional collaboration
• Having consistent processes and effective ways of working
• Encouraging people to build prototypes and test hypotheses with real customers as soon as possible
• Building feedback loops to learn what works and what doesn’t

I believe that co-adaptive organizations are able to attract employees that think entrepreneurially, tolerate uncertainty and enjoy the ride together.

Organizations that apply these six co-adaptive capabilities are human-centric and innovative, in a constant state of renewal. People are trusted and empowered, which makes them take responsibility. New challenges are seen as learning opportunities, which makes the job itself interesting and rewarding for people.

At Futurice, we are on a constant learning journey to become better at being co-adaptive. I’m really proud of what I have experienced so far. How I’ve seen us apply these six capabilities is a story of its own.

We can help your organization become more adaptive by co-creating ways of working, operating models, and data systems that enable you to connect data and people in a fruitful way. It’s always possible to start with a small pilot – there’s no need to dive into the deep end straight away. Let’s get in touch to discuss the specifics of what that could mean in practice for your organization, write to me at piritta.vanderbeek@futurice.com