We are in the midst not of an emergency but of a crisis. In an emergency, the house is burning, but you can put out the fire. In a crisis, the house has burned to the ground. The present crisis arises from economic distress, energy and water issues, climate change, almost daily technology transformations, changing demographics, globalization, and an unstable world order. Leaders must be prepared to survive and thrive in a future in which they will never have all the information they want to make decisions. Unpredictable twists and turns will be routine. Under these conditions, the most essential skill will be the ability to adapt.
To think about what makes adaptation so challenging and how it applies to corporate and civic leadership, it is appropriate to turn to Charles Darwin, in this, the 150th anniversary of the publication of On the Origin of Species. Plants and animals adapt by random mutation. We hope humans and human organizations adapt more thoughtfully, but the process is similar: stepping out of a familiar mode of existence that had been working, without knowing for sure whether the new mode will succeed.
Not all adaptations succeed in the long run. Many fail, and many organizations die off, some because they never tried to adapt and others because their adaptations did not work. But every adaptation, whether it works or not, requires giving something up, some part of the organization’s DNA that it relied on in the past. You cannot make progress if you are unwilling to sacrifice something in order to adapt to the unknown future.
At a tactical level, there are three lessons from Darwin that might be useful in today’s corporate world.
Distinguish between the Essential and the Expendable
Darwin noted that the process of evolution relied on finding small variations that create advantage. In today’s environment, that translates to “distinguish between the essential and the expendable.”
More than 96 percent of our DNA is identical to that of a chimpanzee. A change of less than 4 percent of our genetic code was all it took to become human. Similarly, Southwest Airlines does only a few distinct things differently from other airlines, yet it has been profitable for 36 straight years in a treacherous industry. Your challenge, as you adapt to meet the future, is to make the tough decisions about what 4 percent of your organization’s DNA is expendable, and to involve people at all levels of the organization in the process.
Run Experiments, Don’t Just Solve Problems
Darwin would advocate creating multiple micro-adaptations. In current organizational parlance: Run lots of experiments.
When it comes to reproduction, cloning is simpler, but it creates no variations. Sexual reproduction creates endless micro-adaptations that serve as small but essential experiments. In times like these, cloning a business model when you enter new or changing markets will not be as effective a strategy as creating multiple deliberate micro-adaptations to meet idiosyncratic conditions, such as local customs, preferences, economic circumstances, and cultural norms.
Best Buy’s success was a combination of decreeing broad principles and norms for all of its stores, yet allowing each of them to create individualized displays and product offerings to fit local customers’ interests and needs. The stores ran small experiments one year to learn what should be done full-scale the next. The stores were not clones; they were micro- adaptations, each doing its own experiments.
Get on the Balcony for a Distanced View
Darwin understood there was no such thing as change for change’s sake. He would urge finding the right ecological niche. And that requires you to be very good at diagnosis, able to see what is going on with a cool, realistic eye. We call this “Getting on the Balcony,” being able to look from a distance even when you are in the midst of action. Your organization must have a critical mix of diagnostic and matchmaking skills. The ability to read your internal capabilities and the external marketplace and to match them to products and services is essential.
Someone at Sony might well have had the idea of developing a digital music player. But Sony wasn’t a hospitable host for such a new product, perhaps because it was too immersed in Walkmans and Discmans. Apple’s iPod was created in the more fertile environment of a new-generation company ready to tap into a younger consumer base.
Those were internal capabilities problems. On the external side, Rheingold came out with a light beer called Gablinger’s in 1967. It was a total flop because Rheingold failed to understand that its mostly male market wanted a light beer that emphasized flavor, not calorie reduction. Nearly a decade later, Miller learned the lesson and used virtually the same brewing recipe but with a marketing emphasis on taste. The rest is enormously profitable history.
The challenge of enabling organizations to adapt is hardly new. But adapting to today’s rapidly changing, unpredictable future is completely new. Following Darwin’s lessons won’t make the situation any less risky, but it will improve the chance that your business will be around to prosper in the future, whatever that future brings.