The root cause of the collapse of Silicon Valley Bank continues to dominate headlines. But, regardless of whether it was caused by poor management, deregulation, or some combination, the broader question is – what are the lessons that have been learned for organizations and leaders in general to best move forward?
The pace of change today has accelerated dramatically. In just the last two years there has been a worldwide pandemic, disruption in global supply chains, war in Ukraine, systemic labor shortage, runaway inflation, rising interest rates, a looming recession, and now a crisis of confidence in the banking system. Organizations and their leaders are struggling to keep up with this dramatic increase in both the pace and magnitude of change. Yet, many continue to operate the same way they have for the last decade if not longer. Why?
The modern organizational framework with its traditional hierarchical structure was designed to allow organizations to scale dramatically and to deal with global complexity. This management construct promotes stability, predictability, consistency and much of what is needed to keep operations running smoothly. What traditional hierarchies were not designed for – and are not very good at — are attributes like speed, agility, nimbleness. Traditional hierarchies do not see “around the corner” very well and struggle to react quickly and effectively when confronted with repeated, complex change. “Let’s cover this during next month’s leadership meeting” is no longer cutting it. Who was anticipating a few weeks ago that the latest challenge for many organizations would be their treasury function and how to ensure liquidity and access to cash deposits to continue to run the business effectively? Probably not many.
Given this, leaders and their organizations should consider the following three actions, because the next change is coming, followed by the one after that, and the one after that:
Implement a “dual operating system”: Given recent advancements in technology and the proliferation of social media, much has been studied about the power of a network. In a 2012 Harvard Business Review article, “Accelerate,” written by colleague Dr. John Kotter, the idea of combining the strengths of the hierarchy and the innovation of a network to create a “dual operating system” of leadership is introduced. This is a great example of where 1+1=3 … a hierarchy to run the business day-to-day combined with a well-organized network of leaders across silos to evolve the organization nimbly and quickly in response to the rapidly changing “environmental” challenges and conditions which have become our “new normal”.
Clearly articulate a “North Star”: In a chapter of his 2014 book, “XLR8”, Kotter articulates the importance of a “Big Opportunity”, defined as “a window into a winning future that is realistic, emotionally compelling, and memorable.” The US Military Academy at West Point teaches a similar concept known as “Commander’s Intent”, described in para. 2-90 of the Department of the Army FM 5-0 as “a clear, concise statement of what the force must do and the conditions the force must establish … that represent the desired end state.” The point of both is the same – make leadership’s vision so clear that everyone in the organization can make decisions and behave in a manner consistent with the organization’s objectives, even when top management does not have the bandwidth nor time to direct everyone – like when a sudden “tornado” appears.
Rethink the strategic planning process: Budgeting and planning continue to be essential tools for running any organization. However, the idea of a 3-5-year plan is obsolete in an environment which is changing rapidly. Instead, consider establishing clear goals and objectives and an array of alternatives for how to achieve them. Use data to support each alternative and be clear about inherent assumptions. In this way, when conditions change rapidly, the alternatives can be re-evaluated and reworked, if necessary, based on newly available facts. Adapt your planning process to be as fluid as the environment it aims to predict.
It’s hard to imagine that change will intensify, but all signs point to it doing just that. The demand will increase for new leadership skills and behaviors to both “survive” challenges and threats, but more importantly to “thrive” by identifying and taking advantage of the opportunities which change always presents.