“Only when the tide goes out do you see who has been swimming naked.”

– Warren Buffett

Picture the scene. You're on a family holiday in a seaside resort in England. We all know it's always a gamble with the weather – will you get a week of glorious sunshine and warm temperatures, enjoying sunny days at the beach where the biggest worry is how long you'll have to queue to buy the kids ice cream? Or will you keep getting caught in deluges and spend your days huddled behind a windbreak at the beach, wrapped in towels and all the clothing you took with you while the kids race in and out of the sea before eventually getting cold?

Az grew up in a seaside town, and his first job was working in Britain's largest joke shop. For this shop, the holiday season was crucial, a time when it had the large majority of its business. Of course, just like those on holiday, the one thing this business couldn't control was the weather.

Let's go back to your family at the beach. You're huddled behind a windbreak and there are threatening grey clouds building on the horizon. Eventually, you give up and bundle the kids back to the car just as it starts to rain. You're camping, so the prospect of going back to the campsite and hiding in the tent isn't overly appealing. Instead you decide to wander into the town and browse in the shops. This is what the majority of other holidaymakers have decided to do too.

At the joke shop, business picks up dramatically when it rains. Everyone tries to find shelter and that increases footfall in the shop, which of course also increases sales. You walk in and the kids' eyes light up at the rows and rows of toys, pranks, and other props lining the shop's shelves. You can see them working out how much holiday money they have to spend here and you sigh. At least it's dry though, so if the kids want to browse for half an hour you're not going to stop them. You glance around the shop, seeing rows of whoopee cushions, hand buzzers, goo in a multitude of colours, and a range of magic tricks lining the shelves. You had hoped there might be some umbrellas tucked away somewhere, but apparently they don't hold enough comedy value.

However, the lack of umbrellas isn't due to their practical and unfunny nature. The shop that Az worked at made one crucial observation about people's shopping and browsing behaviour when it rained; the owner noticed that if he sold umbrellas people would pop in, pick up an umbrella and head back out into the rain. As a result, he stopped stocking umbrellas, so that the people who came into the store would stay longer and usually spend more money.

Even though the owner of the shop couldn't control when it was going to rain, he could control the circumstances in his store when it did.

The point is: It will rain on your parade, things will always go wrong but, as a business, the key is in how you adapt and react when things go wrong. A lot of businesses try to mitigate all of the challenges upfront and, as a result, they carry out a lot of analysis which can result in analysis paralysis.

No matter how much analysis you carry out though, there will always be things outside of your control and you can't predict everything that is going to happen. What you have to think about is how you manage or adapt around the things that are out of your control. This is where agile and adaptive organisations really come into their own because they are able to change their approach when it rains on their parade.

This principle of business adaptation really came to the fore with the COVID-19 pandemic. As Warren Buffett's quote at the beginning of this chapter points out: When the tide goes out, you can see who has been swimming naked. The tide has just gone a really long way out in the business world, and we have seen plenty of businesses that were exposed suddenly rushing to get a towel, racing back into the sea, or just standing in the shallows hoping no one notices.

Being able to adapt to your environment is crucial, but it is especially important during times of crisis. This is also when you have to play to your strengths.

A great example of adaptation to an external environment came in the final race of the 2008 Formula 1 season, when Lewis Hamilton needed a fifth-place finish to claim his first world championship title. The conditions at the Brazilian grand prix were highly changeable, with drizzle and eventually heavy rain arriving towards the end of the race.

This was when Hamilton's McLaren/Mercedes team brought him into the pit to change his tyres from dry to intermediates, as did the other frontrunners for the race. However, Toyota's Timo Glock chose to persevere on dry tyres in the drizzle. In the final lap, with Glock in fifth place and Hamilton chasing him down from sixth, the rain intensified. This gave Hamilton an opportunity to close the gap and overtake Glock on the final corner of the race to claim fifth place and just enough points to take the championship from race winner Felipe Massa.

Hamilton is renowned for being a strong driver in wet conditions, and his team knew that. The team members adapted their strategy to allow him to play to his strengths, and this decision, coupled with Hamilton's abilities, enabled him to adapt to the environment and use it to his advantage.

Flexible strategies are a necessity

We have said many times in this book that, as a business, you need to have multiple strategies. However, you also need to accept that no matter how many strategies you have, it will rain somewhere on your parade and you have to consider how you will respond to that and have the flexibility to respond when the unexpected happens.

In Formula 1, there are some tracks where the rain can be incredibly localised, in that it will be raining on one-third of the track and dry elsewhere. In this situation, the principal and race teams have to decide whether they go for the strategy that sees them do well on the two-thirds of the track that's dry, and hope that they survive on the wet third, or whether they go for the reverse.

What we're getting at is that it's not always rain or no rain. Sometimes there will be a bit of rain mixed in with dry spells and thundery showers, and all you can do is respond to those changing conditions.

If you look at Formula 1 teams in those situations, they don't all take the same strategy. Some will take a riskier strategy because they are confident they can use the adversity to get ahead of their competitors. This is another aspect of it raining on your parade: Do you drown in the floods or do use the water to float ahead?

Not all businesses are created equal

Regardless of the industry you operate in, you will be part of the same broader environment as every other business. Even though we're often in the same storm, we're not all in the same boat. This means that even though industries and the businesses within them might appear very different if you compare them, they are often experiencing similar challenges.

It can also be very easy to look at industries in terms of the threats and opportunities that they have as well as to identify the common challenges businesses operating in a specific industry are likely to face. However, there is another way that we categorise businesses outside of their standard industry verticals, which is as indirect, term, and frequent organisations. This allows us to identify those common challenges that transcend industries.

Indirect organisations are ones that don't have a direct relationship with the end customer. Normally their products or services will reach the customer through an intermediary of some sort. Businesses classed as FMCG, CPG, Media & Entertainment, and so on would fall under this category.

Term organisations are businesses that start with a single purchase moment but have a service relationship over time. Examples would be automotive, utilities, telecommunications, and so on. For these organisations, there will often be a renewal at some point so creating that long-term relationship with the customer is key.

Frequent organisations are what we describe as standard retailers, where customers make quick and frequent purchases.

These categories apply across multiple industries and, depending on which of these three categories your organisation falls under, some of your behaviours will shift accordingly. Looking at your business in this way allows you to draw comparisons in what might otherwise seem like unlikely places.

Brands that fall into the indirect category are providing a product but it is going to someone else's customer, so the brand doesn't always know who is consuming its products. As soon as you step into the term and frequent categories, it doesn't matter whose product you're selling anymore because you are selling to your customer. This is why Amazon can sell almost anything to almost anybody because it has the customer base. If your organisation is in the indirect category, you have to work much harder to know who is buying your product.

These categories look at businesses by the relationship they have with their customers rather than by industry verticals. What we've seen during the COVID-19 pandemic are businesses like Deliveroo, thinking creatively and diversifying in terms of how it produces and delivers its products, and sells to consumers.

For example, the last year has seen the trend of dark kitchens, which was already gathering momentum before the pandemic, accelerating. Dark kitchens can be located anywhere, which means there is no longer any need for expensive real estate, such as in fancy restaurants. You can produce amazing food from an industrial estate and, because so many people are now ordering in, it's how fast you get it that matters rather than where it is produced.

As well as reducing the cost of the real estate for that dark kitchen, there are reduced production and staffing costs.

One of the principles we want to get across here is that your vertical can't protect you. It is your business model that might be under threat. You can't use your industry to shelter from the expectations of your consumers.

If you're not able to link what you're doing to the outcome it's going to drive, then you are in the eye of the storm with no compass to navigate to safety through the driving rain and howling winds. However, if you have a compass (in business the ability to link what you're doing to the outcome), then the answer becomes clear and you have a clear pathway out of the metaphorical storm. This all comes back to what is discussed in Part One, where the principal sets a clear direction of travel for the organisation. From there, you move to Part Two, where there is alignment within the crew. If you have autonomous teams and you know what you are doing, then the decision is clear.

Being able to connect the dots and link the outcomes to what you're doing doesn't only apply when you are examining fears within a business, but is also important when it comes to beliefs or orthodoxies within a business. Linking the beliefs within your business to the outcomes will dictate whether those beliefs are true. If you can't link a belief to an outcome, it isn't true and you need to evaluate it.

When you are making new decisions within your business, you will feel fear, but you have to do it anyway. What guides you to the right decisions in a given situation is your purpose and clarity about what you are trying to achieve.

A constant process of evolution

One area that requires decisions to be made frequently is in technology; it is continuously changing and that has a big impact on businesses in every industry. What you, as a business, have to do is work out how you can adapt around this landscape of ever-evolving technology.

Kodak is an example of a business that completely misread the technological landscape and how it would evolve. Did you know that Kodak invented the digital camera in 1974? However, the company didn't release it because they were convinced that the concept wouldn't catch on. They were working on the belief that consumers wanted to hold physical photographs and wouldn't engage with pictures in a digital format.

This is all about adaptability, responsiveness, and continually sensing and being aware of what's going on around you. As an organisation you have to be able to respond and make quick decisions, you can't wait for someone else to tell you that it's okay to do something. You can't see the rhinos, so you have to be able to adapt and respond quickly, all while keeping an eye on the elephants so you can course correct away from them in plenty of time.

Don't turn the elephant into a rhino

The other thing to be aware of is that you can turn an elephant into a rhino. If you look at the financial services sector, traditional banks and institutions haven't evolved for decades. They saw new organisations like Monzo and Starling coming into the picture, but they didn't course correct in time and begin their transformations.

The new banks have accelerated what they're doing and now the traditional banks have accelerated what they have needed to do for years, which has brought them to the point of transformation.

In this instance, transformation is getting those traditional institutions to the point at which they can catch up. However, had they accelerated their efforts to be customer first in terms of their own outcomes, they may have been closer to keeping up with what consumers wanted and the changes that were coming down the track, and could even have preempted some of those things. All of this may have given them a head start on the rhino.

There is also an element of talent versus hard work at play here, and not only in the financial sector. Businesses, and the people within them, can become complacent or be afraid of stepping out of their comfort zones. However, people can learn new skills just as businesses can build new capabilities. What enables that to happen is the character and culture within an organisation, and this is what's important.

People often rely on what they've done before and value that experience over what they could do for the business in the future. It's the organisations and people who say “This is how we've always done it” that are most at risk of being hit by the brown rhino.

It's not only in the finance sector where this has been an issue. Just look at what happened in ecommerce in the early months of the COVID-19 pandemic. As is noted in Chapter 6, many businesses suddenly made decisions because of the crisis. What you have to learn to do is make those decisions without needing a crisis to force you to take that leap.

There was one case study from Shopify that typified that period. Lindt launched an ecommerce site in five days in 2020. If you had asked any organisation before the pandemic, it would have told you that it would take 12 months to two years, minimum, to get an ecommerce site live. This example just goes to show that if you make quick decisions, and you make the right decisions, you have the ability to evolve over time and that can make a huge difference to the success of your business.

Slipstreaming and overtaking

As a business, you need to put yourself in a position where you can make those quick decisions, even if you are trailing your competitors. The concept of slipstreaming is well-known in motorsports, where a driver is able to keep pace with the car in front by staying in its slipstream, an area just behind the moving vehicle where the air is moving at a similar rate to the vehicle itself.

In business, there are two ways to use a slipstream. One is to help you keep pace with the leader in your field and, while you might not be able to edge ahead of them just by staying in their slipstream, you will be able to keep your other competitors at bay.

The other opportunity that arises from a slipstream is to slingshot. You can see this concept in the movie Days of Thunder, where Tom Cruise's character Cole Trickle uses a slingshot manoeuvre to overtake rival driver Rowdy Burns to win his first NASCAR race. The idea of a slingshot is to use the momentum gained in the slipstream to propel your vehicle around the one you have been following.

An example of a business that used the slingshot approach was LoveFilm, an organisation that started in the slipstream of traditional movie rentals by providing unlimited postal DVD rentals to customers. It evolved its business model to online streaming and, after being acquired by Amazon, it pivoted its business model to be a competitor to Netflix by creating its own exclusive content. In two steps, it was able to slingshot from following Blockbuster to being competitive with Netflix.

This links back into what is discussed in Chapter 4 and making all your shots count. In business, when you see a competitor take a shot, you can use that as an opportunity to gauge the market and then make a better shot. You're using that competitor's momentum to propel your own organisation further forward.

Creating opportunities in a crisis

With hindsight, the General Data Protection Regulation (GDPR) has presented opportunities, but at the time it was a crisis for most businesses. We often see incredible opportunities emerging from crisis situations and, in many cases, it is taking these opportunities that allows a business to slingshot around its competitors.

When it comes to turning headwinds into tailwinds, COVID-19 provides numerous examples where businesses were able to make decisions very quickly to either turn the situation to their advantage or, at the very least, to ensure they didn't fall behind.

During the first three months of the global pandemic, the ecommerce sector experienced 10 years' worth of growth. It's quite likely that most businesses that launched ecommerce solutions in that period had proposals to do so in the pipeline, but due to internal restrictions until that point, they had been stuck. All of a sudden, the COVID-19 pandemic comes along and those proposals fly through.

The hidden benefit from such a crisis can be the realisation that businesses have not been able to make decisions at the pace required to stay ahead, and to build a muscle that can respond to change.

However, the problem is you can't rely on a crisis to make decisions, and the challenge we see many businesses facing is that they lock down their decision making process too much because they are so scared of making the wrong decision. Jeff Bezos once said, “If you think it's going to be expensive to make the wrong decision, wait until you see what it costs to make no decision.”

We saw this paralysis in the face of decision making in some businesses around the implementation of the GDPR legislation. Many companies were slow to get their GDPR compliance in order and then six months before it came into force, they entered panic mode. This was then heightened when large fines started being handed out for noncompliance. It went from being a nice-to-have to a business priority very quickly.

One of the difficulties when you're making decisions from a place of crisis, however, is that it can be easy to make the wrong decisions in your haste to make any decision. Organisations can spend a lot of time looking for a solution without ever fully understanding what the problem is or without making any effort to understand the problem.

The result of this is that they often jump on what other organisations have seen as a solution, often spending significant amounts of money on technology that is never going to add value and that is, in reality, an unwise decision.

We saw a very simple example of this with the cookie compliance statements and tracking when GDPR came into force. Due to the unknown nature of how the legislation would be enforced, the early adopters stopped tracking completely, and everyone else followed in their footsteps. However, when these organisations realised that they no longer had insights running through the business due to the huge holes this approach had created in their data, businesses started to understand that the real problem wasn't about tracking, but about the ethical use of tracking through the lens of consumer privacy. This shift in understanding resulted in businesses looking at better solutions that worked for everyone by providing the data they needed without infringing a consumer's privacy – in effect, a fair exchange because it's value for data.

In the small percentage of businesses that do start to think about the problem, rather than instantly seeking a solution, the vast majority don't stop to think about whether they are asking the right question in the first place. Those that seek to understand the problem and aren't afraid to ask very different questions are disruptors. These businesses seek to understand what their customers need, almost certainly look at what everyone else is doing, and then do what they believe is right.

Change beyond a crisis

As we said, you can't wait for a crisis to create opportunities or force transformation, but you need the capacity to adapt to a crisis when such a situation arises. We have seen some businesses fail during the COVID-19 pandemic and we have also seen some businesses change and pivot very effectively during this period of significant disruption. While some organisations won't have considered that change beyond the context of COVID, those that are adaptive will stand out because of their ability to pivot and walk that fine line between what they were doing before and what they need to do now to survive.

The challenge, particularly for well-established businesses, is that they have spent probably the last 40 or 50 years battening down the hatches around total quality management. In the West, the arguably restrictive processes many businesses developed were in response to the superior quality of the products coming out of Japan in the late 1970s and 1980s. These processes have evolved to the point where they're not designed to allow flexibility or autonomy, both of which are key attributes of an adaptive organisation.

For older organisations, therein lies the challenge. These processes have evolved over decades and it is therefore difficult to change them quickly, but there is a need to change quickly in order to continue to compete.

You can't fight modernisation

Modernisation happens, and you can choose to embrace it and evolve or fight it and become obsolete. Look at the samurai in the nineteenth century¹. They went from being elite warriors to an obsolete fighting force in a matter of decades as a result of the modernisation of warfare that was introduced by the Europeans and Americans who were attempting to colonise Japan.

The Americans, in particular, used their superior weaponry to force Japan to open its borders to trade, and this led to a period of modernisation for the samurai army and navy. They used the samurai principles and adopted western weapons to evolve. While on the one hand, you could argue this made the traditional samurai obsolete, on the other, you could describe this as an evolution of the Japanese fighting force.

What this demonstrates is that new technologies will come along, no matter how hard you try to fight against them. The Japanese closed their borders to trade with Europe and America in all but a few select ports for decades in a bid to preserve their way of life but, in the end, they were forced to modernise and evolve.

Economic upheaval: adapt or die

In the preceding example, the samurai chose to adapt, even though it meant a significant change to their way of life and how they fought. Japan also adapted to the influx of foreign trade, shifting away from its isolationist approach. While this was in the era pre-globalisation when national economies tended to function independently of one another, it was still a significant change for Japan. These days, as we know, an economic shock in one nation can ricochet around the world very quickly.

The COVID-19 pandemic was a very recent example of how the global economy can change very quickly, and businesses have to adapt just as quickly to keep up. There are countless stories from this period of businesses struggling, just as there are plenty of businesses performing exceptionally well.

We have an FMCG client that landed on the exceptional performance side of the spectrum. We had many clients who were cutting back on their marketing because they were struggling, while this client decided to cut back on its marketing because it was doing so well and couldn't fulfil orders for its stock. Baby milk was one of the core products that this client couldn't manufacture fast enough to keep up with demand. The business had to adapt to the situation and work out how it could maintain its service even if it couldn't deliver to the scale of the demand, and one of those decisions was to reduce its marketing spend.

During the pandemic, we saw restaurants turning into takeaways, offering home meal kit deliveries, and even fresh produce deliveries. A local flour mill near Rich started selling flour directly to consumers in 16 kg bags and even offered home sour dough kits. There were hundreds of amazing stories of innovation and inspired thinking where businesses rapidly pivoted and adapted to cope with a situation that no one saw coming.

Turning motion into progress

When your organisation is facing situations outside of its control, such as events that are happening within the economy, what will affect your ability to turn motion into progress is the answers to the following three questions, all of which we have explored in great detail earlier in this book:

1. Have leaders defined (principal) a very clear direction for your organisation, and do you and everybody else at your organisation know what direction that is?
2. Is your organisation empowered and functioning efficiently in terms of its teamwork (crew), and are you measuring the right outputs?
3. Are you geared up to understand how these things in the environment (season) are going to affect you? Can you mitigate for them, change them to your advantage, and respond at the pace required?

That third answer is crucial because you need to know which of the events outside of your control will affect you in order to know how and when you need to adapt. Understanding whether these things will affect your organisation comes back to measurement. If you measure what matters, as is discussed in Chapter 2, you will know whether those events are going to affect you.

If something will affect your business, feel the fear and respond because if you wait you will fall even further behind. Don't become the rabbit in the headlights that is paralysed and fails to make any decision. In many instances, it can be better to make the wrong decision and course correct later than it is to make no decision.

In his book 21 Lessons for the 21st Century,² Yuval Harari explained that, for the first time ever, the past is probably no longer a safe predictor for the future. If you consider this on a personal level, you have probably always considered your parents to be a safe haven and would go to your parents for advice because they had seen it all before and would be the voice of reason to help you make a decision for the future. However, Harari suggests that your parents are now the wrong people to ask because they haven't seen this future and they have no idea where it is going.

In business, the same concept applies. For a lot of the challenges organisations are facing, the past is no longer a precedent. Instead, as a business, you need to understand your capabilities, understand what you are trying to achieve and be clear on your purpose, know your people, and, even if you feel fearful about a decision, you have to make it anyway.

When the rain is lashing down on a Formula 1 track, the danger levels increase significantly and, no doubt, there is an element of fear amongst the team; but those who see the opportunity in this situation, and decide to adapt their race strategy to take advantage of this, are the ones who end up on the podium.

While the uncertainty over the future might create fear, it is also an incredible opportunity, particularly for organisations that have been stuck in their ways for so long, to reset. You can use some of these changes that are happening in the economy or within your industry to press the reset button, change the old ways, and really focus on what you're trying to achieve. What outcome do you want?

You have to always ask: “Does this affect the business?” If the answer to that question is “No”, you should be getting rid of it. If the answer is “Yes”, ask whether you are doing the right thing and, if you're not, set out the steps you need to take to make sure you are doing the right thing.

Where do you start?

The preceding diagram outlines an approach to find your starting point. The triangle on the left of that diagram is your current landscape and the triangle on the right is your future landscape. Where those triangles meet is where current and future landscapes are aligned. You have to accelerate anything that falls into that area and use what is completely aligned to your best advantage.

The space in the top right is where your current landscape doesn't match your future landscape and these are things that aren't going to align with your direction of travel. You have to kill these things very quickly to prevent them from holding you back. The space at the bottom left represents where your future isn't aligned to your current. This is where you need a very clear strategy to close the gap by building processes and strategies that will get you to where you want to be in the future.

The three key takeaways here are to maximise what you already have that is working towards the future you want; to kill anything that is dragging you backwards and further away from your future; and to make sure you have the processes and capabilities in place to build what you're going to need to meet your future landscape.

The challenge often is that businesses don't want to be seen to have moved in the wrong direction or to have wasted money on projects before they got off the ground, which means they persevere longer than they should. In most cases, this, of course, means they end up wasting more money. Sometimes you need to take the bold decision and kill a project early to save money in the long term.

As is noted in Chapter 2, many businesses have processes geared around starting projects, but they don't have processes geared around closing them. There is always this temptation to “just spend £1 million more”, thinking that this will be enough to complete the project, but when something is already running massively over budget and you can't measure the contribution to your goal, you have to stop and not spend a penny more.

Escaping the headlights

This all comes back to that Jeff Bezos quote we shared earlier, “If you think it's going to be expensive to make the wrong decision, wait until you see what it costs to make no decision.” However, when it comes to complex topics such as GDPR and Brexit, there are so many grey areas it is easy to see how businesses become trapped in the metaphorical headlights.

This fear of making the wrong decision is what holds back many organisations. Decisions have to be made at some point and, the longer you leave it to make a decision, the more likely you are to make a decision from a place of fear, which typically means logic goes out of the window.

You don't always need a saviour

We also have a friend who used to work as a lifeguard. One day, we saw a boat out at sea and all the people on board were waving frantically at the shore. After watching for a few moments, he decided they needed help and, instead of calling the coast guard, he decided it would be better to swim out to them. However, around halfway to the boat, he realised he hadn't accounted for the tide and therefore he got swept farther away from the boat.

We were watching this from the shore and, understandably, getting worried, so we called the coast guard, which safely collected him. The irony was that the family on the boat weren't in trouble at all, they were just enthusiastically waving to the people on the shore.

This illustrates the point that sometimes a business doesn't need a saviour to come along. You may be able to make do with what you have or make better decisions. To make better decisions, it's important to look at the bigger picture and explore the situation from the perspective of others, both in the business world and among your customers.

What's happening in the consumers' world?

As a business, you can't control the economy, but it's important to remember that what is happening within the economy affects your consumers as much as it affects your organisation. If we take the COVID-19 pandemic as an example again. One of the reasons for this trend that was identified during 2020 was an increase in stock market activity among individual investors, using platforms like Robin Hood. The reason for this trend was that lots of people in the UK were furloughed and therefore had not only the time to explore investing, but, in many cases, more disposable income than usual.

It was a similar story in the US, where many people received $1 000 stimulus cheques during the pandemic and, for those who didn't need the money immediately, investing it in the stock market was a popular option.

Elections can also have an impact on consumer behaviour. In the UK, Brexit has obviously been a challenge that businesses have had to navigate. In our organisation, we have had to consider the impact of Brexit on conversion rates across currencies as well as on our own teams and people within the business.

All of these national and international events can have an impact on both your business and your consumers, so you have to think about how you will respond to these and adapt accordingly.

You can't control your customers

While you need to be aware of how different events are impacting your customers, you also need to know your limitations in terms of what you can control. Chapter 3 talks about the concept of inbound, outbound, and unbound interactions with customers. When it comes to your customers, the only thing you can control is your interactions with them, but there will be so much more to your customers' interactions with your brand than the ones you have control over.

In terms of the season, and the elements that are outside of your control, it is the unbound interactions that are crucial. Chapter 3 discusses these in the context of a bank providing a mortgage, but having no opportunity to affect the interactions with the customer's solicitor, estate agent, surveyor, and so on.

When we consider unbound interactions from an organisational perspective, it branches into areas such as consumer trends. This could be veganism, sustainability, the push to reduce sugar in certain products. All of these trends can have a huge impact on your organisation, but they aren't necessarily things you will have foreseen or they might be trends that have gained greater momentum among consumers than you expected. You need to embrace listening to the voice of your customers and, more importantly, amplify what they say to fully understand their needs and expectations.

Expectations versus reality

As Craig notes, consumers and their expectations have shifted considerably across all demographics since the pandemic in 2020. The challenge for brands is keeping up with this change and making sure that consumer expectations are met or exceeded.

As an example where expectations don't match up to reality, you can watch the Jim Carey film Bruce Almighty. The premise of that movie is that Jim Carey's character becomes omnipotent and thinks he's going to have a wonderful time with the power of God. He does all the fun stuff, but he neglects his responsibilities and there are then consequences as a result.

Think about that experience in the context of a customers, and the amount of times customers have had an experience with a brand that hasn't met their expectations all because a brand promises to delight and then falls short. As a brand, you are always going to be benchmarked against that experience.

In an interview many years ago, Steve Jobs said that customers don't measure the quality of a product based on what they see or hear in an advert; they measure quality based on the product and its performance. He made this comment at a time when Japanese companies were known for producing quality products, but American companies weren't. He observed that the Japanese brands never mentioned quality in their advertising because they knew that customers would judge the quality based on what they received, not on what they had been told.

This is all about the experience customers have with your brand. However, how they measure that experience will be based on the expectations you have set prior to that experience or interaction. One of the reasons Az had such a “wow” moment with the iPhone is that he had low expectations, based on his experiences with other brands. That worked in Apple's favour when he used the iPhone because this made it really stand out.

As another example, Az read The Lost World: Jurassic Park before the movie was released, only to not enjoy the film because it wasn't accurate to the book. (He's vowed never again to read a book before watching a movie adaptation.) His expectations were not met by the reality. That's not to say there aren't very successful movies that have been adapted from books.

Take the Harry Potter series, which has performed phenomenally well as a movie series. One of the reasons these adaptations have been so well received is that JK Rowling was closely involved in the making of the film, which helped to align viewers' expectations with what they saw on the screen.

As a brand, you are looking to hit this sweet spot, one where your customers' needs align with what you provide.

Meeting customer needs is your best competitive advantage

The final element that is outside of your control is your competitors. You can't control what they do or don't do, but meeting your customers' needs gives you the best competitive advantage because it means you are always the most relevant at that given moment in time. Look at the example Az shared about his first iPhone experience. Apple met his needs and exceeded his expectations, which meant he became an iPhone user.

This is about the moments, experiences, and relationships you have with your customers. Each interaction is made up of many moments. Think back to the concept of the Fluid Cube that is shared in Chapter 3. Customers are not one-dimensional, any more than your interactions with them are. You have to be able to adapt to your customer's changing needs and to understand that those needs can shift within the course of an interaction or series of interactions.

If you think about this in the context of sport, you can train and analyse your opposition as much as you want, but on the day of the match or race, anything can happen. While you can mitigate as much as possible, you know that once you step onto the pitch, court, or track, you need to be able to adapt and respond to whatever your competitors throw at you.

In 1993, Jana Novotna faced Steffi Graf in the women's Wimbledon final. She lost the first set in a tiebreak, but took the second set 6–4. With Novotna 4–1 up in the final set, most people had written off Graf. However, Graf learned from what was happening, adapted her game play, and went on to win the final set, taking the title from a devastated Novotna.

Fear versus determination

“You're only as good as your second serve” is a quote that's attributed to both Agassi and Sampras. Their point is that, in tennis, the second serve is normally where players hold back, but it's those who have the courage to push forwards who are more likely to succeed.

When you are in a situation where your back is against the wall, your mindset shifts, and you either have a mindset of fear or a mindset of determination. In sports, there are many stories about people and teams coming from behind to win under unlikely circumstances, but what allows them to dig deep is their determination to win. The example we shared of Steffi Graf beating Jana Novotna is one of many.

The game is never over

We have talked about mindset in relation to sporting events when, of course, there is an end point. However, in business the game is never over. Even when it looks like an organisation may be down and out, there is often a way back if it makes bold decisions.

IBM is a classic example of this. In the early 1990s, the company was in a lot of trouble. It had lost its way, Microsoft was absolutely smashing it in the personal computer space and the predictions for its future were skeptical. This is when Lou Gerstner came in as CEO. He was a complete outsider, but he very quickly changed the dynamics of the business, got the company back on track, and put it on the path that it is still on today.

The same can be said for the Formula 1 team Mercedes AMG Petronas. Before 2014, the last championship it had won was back in the 1950s, until the arrival of Toto Wolff as director and team principal in 2013. Since then, Mercedes AMG Petronas has gone on to win seven straight Formula 1 championships. Thanks to Wolff's bold decision making and long-term vision, Mercedes' legacy has written its name into sporting history forever.

Especially as businesses grow, it's important that they find the right balance between innovation and process. In the book Loonshots,³ Safi Bahcall talks about how young businesses are full of artists who are creative. They have loads of ideas and they believe anything is possible. However, when a business reaches a certain point, they bring in the soldiers, who are there to institutionalise procedures and put processes in place. To drive growth, Bahcall illustrates the need to manage the balance between artists and soldiers, or the soldiers can stifle innovation with processes and procedures.

This ties back into Rich's golf story and this concept of changing mindsets. In sports, this is when you go from an attacking mindset to a defensive mindset. You believe you've done what you need to win and you change your strategy. In business, when the artists get taken over by the soldiers, the business changes and, in some cases, it can plateau or even go backwards.

When this happens, what is often required is a new leader who can change the dynamic of the business, like Lou Gerstner did at IBM and Toto Wolff did with Mercedes AMG Petronas. Lego is another example referenced in Loonshots of a business that plateaued but, under innovative new leadership, has gone from strength to strength.

In a successful business like Lego, it can be tempting to start to submit to processes. The mindset can become one of, “Let's lay a foundation to institutionalise what we've created, to keep this going for the next 100 years.” This is a soldier's mindset, and it doesn't allow the artists to flourish and continue to innovate. What you need is a healthy balance between the two, where there is structure and process, but also the ability to innovate and push forwards.

What about the environment?

We talked earlier about the effect that the weather can have on a Formula 1 race, and the story at the beginning of this chapter was all about how to use the weather to your advantage in business. Weather has an impact on businesses in more ways than you might initially think, and that is certainly the case with marketing.

British weather is notoriously changeable, so you can't rely on the seasons as a guarantee that you'll have hot or cold weather. A client of ours produces alcoholic beverages and, one summer, we created a marketing campaign that used data fed in from the Weather Channel. Our marketing messages would change based on that data. So, if the weather was hot, we would say, “Enjoy our product on ice.” If the weather was wet or cold, we would say, “Enjoy our product in a hot chocolate.”

We knew that we couldn't control the weather, so we adapted our strategy according to the context of what the environment was doing. There are some things that you can't affect; the sun will always rise and it will always set. What you have to do as a business is make sure that you're allowing for those elements that are completely out of your control but ever present.

It is also important to consider those factors when you are analysing your historical data. In the early 2000s, there was a fuel strike in the UK. The motorways around London and elsewhere in the country were gridlocked and no one was driving anywhere. Three years after this event, we were analysing data for a leading UK holiday resort and noticed that there was a significant blip in its village participation at this time. The reason was that no one could drive to the villages because of the fuel strike.

However, had we not had that knowledge to contextualise the data, we could have made all kinds of misleading assumptions about why the business suffered at that particular point. It was a similar story for a leading pizza restaurant chain in 2008 when the severe snow storms shut down most of the country and prevented people from going to its restaurants to eat. Its business took a hit and, looking at that a few years later, you needed the context of the snow to explain that drop in revenue.

The lesson here is that when you look at data historically, unless you have a way of also collecting and recording those external events, it can create havoc within a business. If you don't record events like these so that you have this external context to explain performance, then over time you lose visibility of them.

Highlights

There are a multitude of things outside of your control as an organisation: the pace of change, the economy, your industry, your competitors, consumer behaviour, even the weather. You might not be able to see everything coming, but you have to be able to respond no matter what does appear.

When you are an adaptive organisation, you have the confidence to pivot and change what you're doing, and you make decisions quickly. All too often, businesses make decisions from a place of fear or, worse still, become paralysed by the fear of making the wrong decision and therefore make no decision at all.

Everything we have discussed so far in this book aims to help you better understand your transformation into an adaptive organisation. To handle all of these elements that are outside of your control, you need to be confident in your abilities and to have built up your capabilities to allow you to pivot and change direction as required.

The mindset within your business, and particularly among your leaders, is crucial to enable you to take those bold decisions, continue to innovate, and in doing so drive progress. As we've seen through the various examples in this chapter, mind over matter can be a significant advantage when it's used from a place of determination, or a significant disadvantage when it's used from a place of fear.

In the final chapter of this book, we're going to bring together everything we've discussed so far and look at how, when you have transformed into an adaptive organisation, you can not only afford to go for a more daring shot, or to use a golfing term meaning three under par, the “albatross”, but also that you're more likely to get it.