“When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.”

– Warren Buffett

We're jumping back to 2011 and a very rainy Montreal in Canada. It's the day of the Canadian Grand Prix and, after 40 of the 70 laps, Jenson Button is in last place. By this stage of the race, the safety car has been on the track three times and there has been a two-hour suspension due to the rain.

Button has collided with McLaren teammate Lewis Hamilton and, on lap 37, with Ferrari's Fernando Alonso. At the restart after the third outing for the safety car on lap 40, Button is in an unenviable position at the back of the pack. However, his team made one crucial decision earlier in the race: he was the first leading driver to switch from wet to intermediate tyres.

As the conditions improve, and Button is moving up the pack as other drivers pit, his team again takes a bold decision to switch from intermediate to dry-weather slick tyres. Button still has a lot to do as he enters the final six laps of the race, despite having made it back to the leading group. He's in fourth, with Schumacher, Webber, and Vettel still ahead of him.

On lap 65, Button overtakes both Schumacher and Webber to jump to second place, with Vettel now in his sights. As the cars zoom around the track on the next four laps, Button increases the pressure on race leader Vettel. On the final lap, Vettel allows his wheel to drift just wide of the dry line, sending his car into a half-spin. Button doesn't need a second chance and takes the lead, flying across the finish line to see the chequered flag fall and claiming a remarkable win.

Jenson Button came from last place to win that race, but he didn't have to overtake 20 cars on the open track to do that. His team took the correct strategic decisions that allowed him to leapfrog many of the other drivers when they were forced to pit to change their tyres.

As much as this is about making sure that you take the opportunities that are presented to you, it's also important to ensure your organisation is in a position to maximise those opportunities, which comes back to what we have discussed in Parts One and Two of this book: setting a clear vision and driving alignment around that vision across every level of your enterprise. Another element to consider is how your enterprise is organised internally because, as we have already explained, a disconnect between departments often creates friction. While far from ideal, these are headwinds that you have control over.

How high are your walls?

In his book Rethinking the Corporation: The Architecture of Change,¹ Robert Tomasko uses the analogy of trying to throw a tennis ball over a wall when it comes to navigating across the multiple silos that exist in many organisations. Each department has a wall, and the more senior the people you're trying to reach, the higher the wall that surrounds them. That means you'll need more attempts to get the ball over that wall.

His point is that it's tiring to throw the ball over those walls, and the more walls you have to throw your ball over to reach the other side, the more tiring it is. In building these metaphorical walls between your departments, you're creating headwinds within your organisation that both your teams and your customers have to navigate.

The more adaptive your organisation is, the fewer the walls between your departments and the easier it is to collaborate. Developing autonomy within your teams, as is discussed in Chapter 5, is important for reducing those walls, but in order to have autonomy that drives progress, you need to start with alignment to a common goal, which may be closer than you think.

Flicking the switch

There is a principle within kinetic particle theory called Brownian motion, which refers to the way in which particles move in all different directions and in a random pattern when they are suspended in water or gas. There is a type of smart glass that includes a thin layer of liquid between the panes of glass based on this principle.

These suspended particles are organised randomly and, if you shine a light on them, the way in which they are spread out prevents that light from getting through, making the glass appear opaque. However, if you flick a switch and apply voltage to the glass, the particles align and the glass becomes transparent, allowing you to see through it.

When all the particles are moving in random directions, it looks like chaos, but in actual fact it often doesn't take that much to align them and deliver clarity. In our experience, many organisations are not that far away from their switch; they are simply struggling to find it.

Creating this alignment is what allows you to turn a headwind into a tailwind. Instead of having to fight your way forwards, you begin to drive forwards easily and build up positive momentum.

Lowering the walls

Businesses are designed to mitigate risks and that often means they lock things down, whether that's in terms of spending through the finance department or restrictions imposed by legal and so on. These restrictions, whether they're legal contracts or spending limits, are all in place for good reasons; however, they can create these high walls in businesses and that, in turn, create friction.

In the context of each of those individual departments, what each is doing makes sense; however, when viewed in the context of the overall business, it becomes a headwind. You're putting up bigger walls and that makes it harder to throw your balls over them. This is where the concepts of alignment and autonomy become so important.

Rather than seeing these parts of the business as nonfoundational in terms of what you do as a brand, the key is to make them more ingrained as part of the process. The best way to do this is take them out of their silos and embed them into multidisciplinary teams where their measures drive connected behaviours.

Reducing the headwinds within your business, like Aviva has done, will not only make you more productive, but it will also allow you to capitalise on opportunities you might otherwise have missed out on. Being able to recognise when you not only have these metaphorical walls, but when they are too high, is part of the challenge, but one that can be solved when you step back and look at the big picture.

Finding the balance

In his 1997 novel Dark Nature, Lyall Watson explores “the invisible order that preserves the delicate balance between civilised society and anarchy.” He suggests that all of us have a dark side and this is only kept at bay by the thought of consequence.

If you're a parent, you have probably wrestled with the relationship between actions and consequence.

On a broader societal level, you can see this concept at work in that the majority of people are law-abiding citizens because they fear the consequences of breaking the law. However, when you think about the number of people in the UK compared to the number of police, you can quickly see that law enforcement wouldn't be able to maintain order if everyone rose up against the law.

We're not suggesting that fear of consequence should exist in business, but proper governance still requires a healthy regard for measures and alignment. In a business context, this is all about finding the balance between departments and organisational functions. A classic example that we frequently come across is global versus local. A global organisation has to balance this desire for consistency with the need for flexibility within local markets to allow for different cultures, languages, and so on.

There is a similar balance to be struck between flexibility and repeatability. To make something repeatable in business, organisations will often create a framework that should be repeated across all markets, but in doing so there is zero flexibility. The key is in finding the right balance between the two.

Within the business itself, there are decisions around how to set up teams – such as whether you want a federated model with lots of small teams or a centralised model with one large team – that you also have to balance. All of these elements become important decision points for businesses on their way to becoming adaptive organisations.

To make the right decisions in these areas, you need clear principles to be ingrained in the business moving forwards because if you don't strike the right balance, you will lean too far one way or the other, neither of which will help you to make progress in the long run.

Finding the right balance across your organisation stems from all people across the entire business understanding what they are doing in the context of working to achieve the business' goals. The final piece of the puzzle is the season you find yourself in. When you have these other elements in place, it is much easier for everyone in your organisation to adapt to changing external circumstances.

The blinking business

The discipline of physical cosmology has a theory called the “Big Bounce”, which proposes that the universe will at some stage rapidly collapse to the state where it began and then initiate another Big Bang, and so in this way the universe would last forever, but would pass through phases of expansion (Big Bang) and contraction (Big Crunch).

The theory has been described as if the universe is going “blink-blink” with every big bang and big crunch: the blinking universe.

In the world of business, many organisations have their own version of “blink-blink.” They go from being centralised to decentralised and back again, always struggling to make either end of the scale work. They give autonomy and then take it away, outsource and then insource. The reality for the majority of these enterprises is that the optimum is somewhere in between. There is no clear measure for where on this scale a business should set because this will very much depend on the business in question.

However, when your organisation has its North Star, you can set clear measures against the blink-blink to help you find that optimum point between efficiency and effectiveness, local market and global market, centralised and decentralised, in-housing and outsourcing, and so on. This is a continuous balancing act, and having that North Star will help you find the middle ground that works for your organisation.

Understanding that business isn't a Boolean option, where it is either this or that, but a fluid, sliding scale can really help you find that balance. Where on the scale your organisation sits will depend on what the need is and what you are trying to achieve. This also ties in with what we talked about in Part One in relation to businesses in the modern world requiring multiple strategies to survive.

This is about more than simply having options; it's about a constant process of testing, learning, evolving, and course correcting to chart the best course for the future. You might start with five strategies, but discover three of them have undesirable outcomes, and therefore you only move forwards with two. The key is to never stop that process of testing, learning, and evolving, and having the flexibility to adjust your structure and models accordingly to have a headless transformation mindset.

Because there is a great deal of grey in the modern business environment, businesses need to make decisions after assessing what's available to them and what they are trying to achieve rather than by planting their flag firmly in one camp and only seeing what's happening from that perspective.

There is a story that before employing any senior member of staff, Henry Ford would go for lunch and, if the candidate put salt on the food without tasting it first, he wouldn't employ them. The reason being that this person would be prone to making decisions without all the facts.

Before the era of LinkedIn, one government organisation was receiving so many job applications at one point (this was obviously before the days of emails) that they would separate them by colour, and every application that arrived in a brown envelope instead of a white envelope would just be binned without even being opened. The logic for the recruiters at that time (and we're talking many years ago because this clearly wouldn't fly in an inclusive workplace today) was that the white envelopes were better quality, so they used this as one of their qualification criteria to reduce the number of applications they looked at.

Of course, the flip side to this is that if you have to have all the facts before you make a decision, you may procrastinate and never take any risks at all. As with the other examples we've shared so far, the best option lies somewhere in between, in that grey area. When you find your best option, you can use it to create the right kind of environment at your organisation.

Creating an environment where your business can flourish

While there will always be circumstances and situations that are beyond your control as a business, you can take certain steps to create an environment within your organisation to allow it to flourish. The concept is best explained with the following diagram.

The diagram shows that you have to balance the things that you have with what you do with them. A big part of that is creating an environment where your tools and capabilities can flourish, and where your teams have the right level of autonomy to do the same, as is discussed in Chapter 5.

The top right in that grid is where you want to be, where you have all the tools you need, and you're doing a lot with them. However, it is preferable to have fewer tools, but better to be doing a lot with what you have available to you than it is to have all the tools and not be doing much with them. We're sure you've encountered organisations that have the equivalent of the highest spec car that has all the latest gadgets, yet they don't have anyone on their team who knows how to drive it.

For those who have watched the reality TV shows Dragons' Den or Shark Tank, you'll often see the investors talk about being focused. Entrepreneurs often get excited about having lots of products; however, this increases choice and dilutes focus.

A classic example of this in a business setting is jumping from one new technology to the next without giving each a chance to bed in. If you are in a business that has a tendency to buy more and more new tools, but that does very little with them (so you're sitting in the bottom right of that grid), your focus has to be on agility. You have to find a way of doing things more quickly because you have all the things you need, but you'll fall behind if you're not using them to maximum effect.

Going back to our preceding diagram, if you're in the top left of that grid, so you don't have all the best tools, then you need to evolve what you have and make it better. You have to adapt so that you can compete. In Formula 1, not all teams are created equal. Some have a much larger budget than others and are able to afford the best tools and personnel. Others have to make do with what they have and find ways to get the most out of what's available to them. A great example of this was the relatively new Formula 1 team Sahara Force India (now known as Racing Point after a takeover) that finished fourth place in the world championships in 2016 and 2017, beating its rivals with a fraction of the budget. The team made the most of the resources available and successfully created one of the biggest upsets in Formula 1.

If you're sitting in the bottom left of that grid, you need to focus on transforming because you have fallen completely behind in that you don't have any of the tools and you're doing very little with what you do have. If you're in this situation, you will have to change the organisation, how it works, and buy all the tools; otherwise, you will never become adaptive.

Look at Meta, Google and Amazon: they are all in the top right of the diagram. They are adaptive organisations and that is where you want to be. The way to get there is to create the right enterprise environment to enable that to happen, which encompasses everything we've talked about so far in this book.

Finding your starting point

If you are reading this book and wondering where to start when it comes to transforming into an adaptive enterprise, we have no definitive answer for you. There is no perfect way to go about this. However, there is a framework you can use that will provide a good starting point.

On the right, you can see all the elements we have already covered. You have alignment, which is discussed in Part One. Then you have autonomy and efficiency, which is explored in Part Two. The idea is to make sure everyone is aligned to a common purpose, then use that common purpose to give people autonomy to do the best that they can with what they have control over in order to achieve that purpose. The alignment to the purpose gives you a measurement to keep them on track.

Finally, you have to create an efficient framework within which all of this can take place. Remember the data science example from the previous chapter? There is no point in having highly trained, expensive people if 90% of their time is spent assimilating the data before they can do what you actually need them to, which is the 10% of time spent mining it. Efficiency is therefore about the enterprise providing a fertile environment in which autonomy and alignment can function.

This diagram provides a model for how we believe you can make that happen. In addition to those three elements down the right-hand side, there are three key principles to embrace. The first (at the bottom) is moving away from looking at the world through products and channels, and instead looking at the world through the customer.

Step No. 1 is therefore to pivot towards your customer. This is actually a significant shift for many businesses, which typically approach the world from the perspective of having a product and then thinking about whom they are going to sell it to and what channels they are going to use. Instead, start with the customer and build from there. This is the evolution discussed in Chapter 3, where you shift from next best offer and next best action to delivering next best experience for your customers.

Step No. 2 is to create access and ensure there are no bottlenecks to the progress that you are driving in your organisation by delivering efficiency. This is all about lowering the metaphorical walls between the various departments in your organisation, through creating multidisciplinary agile teams.

You have to view the shared business services that have to collaborate as potential hurdles to autonomy because if you don't lower the walls between areas like procurement, finance, legal, HR, and so on, you will never achieve autonomy and you won't have the efficiency you need to drive progress.

When it comes to shared services, one of the ways to drive efficiency is making sure that skilled people, such as statisticians, copywriters, designers, and so on, are set up within centres of excellence, where their skills can be drawn on by any of the autonomous teams within the business. What we see all too often is these skilled roles being duplicated across multiple silos, markets, and brands within the business. They provide the same services, but in a very compartmentalised manner. The aim is to use these skilled people as shared resources across the business, because when you are able to do that, the autonomy and alignment we have talked about earlier in the book can start to happen.

Finally, you need to make sure everyone is aligned behind the business' leadership and strategy, which all comes from the principal as we is discussed in Part One. Leaders have to consider how to communicate their vision and strategy to their crew to create the alignment necessary to drive autonomy and efficiency across every part of the organisation.

This is a philosophy that many businesses are looking to embrace and, while this model gives you an overview of what you're aiming for, there will be nuances and challenges within each organisation that need to be addressed.

People make the business

When it comes to processes within organisations changing, it is always worth remembering that every organisation is made of people, and each of these people can respond very differently to certain situations and challenges. It is certainly important to consider how your people can help turn those headwinds into tailwinds, and also to recognise when people might become the headwinds you have to overcome.

Netflix, for example, has the philosophy that it won't tolerate brilliant jerks. That is written into its value statement, which means that it doesn't matter how brilliant you are at what you do, if you don't fit within the organisation and work well with everyone else in that culture, Netflix will objectively support your departure. It is that simple, and this is an important philosophy because it enables the business to stay focused on its purpose and ensure that crucial alignment.

As a team leader, you more than likely have seen how an approach you used in the past with one group of people fell completely flat with a different team. We have to adapt our approach as leaders to a certain degree, and that is all part of playing a role within an adaptive organisation.

In addition to remembering that businesses are made of people, you also have to remember that how those people work and respond in different situations will be out of your control to a certain degree. You haven't been involved in every step of their personal development, so you have to accept that they might do things differently than you do. This circles back around to the concept of autonomy, and highlights why it's so important that each person on a team has some degree of freedom in how she approaches her work.

If we bring this all the way back to the fact that you want to develop human-centric relationships and behaviours for your customers, you have to start with people, and that actually means starting with the people within your business. As Richard Branson said, “You can't do a good business with a bad person. Find the right people to work with and you can't go wrong.”

Highlights

Businesses operate across multiple shades of grey in the modern world. Just as there is no single “right” strategy, there is also no perfect way of building and developing an adaptive organisation. There are, however, certain traits that you will see across all adaptive organisations; namely, alignment at every level with the overall vision and purpose of the organisation, autonomy within teams that allows people to work to the best of their abilities, and efficiency at every level of a business.

All businesses will encounter headwinds at certain times, and the key is to find a way to use what you have to turn those headwinds into tailwinds that propel you forwards rather than pushing you back. As we have seen through the COVID-19 pandemic, crises can present great opportunities for organisations that are able to pivot, adapt, and embrace change.

The concept of headwinds and tailwinds is one that is very familiar in Formula 1, where teams experience literal headwinds as their respective car is physically ploughing through a wall of resistance. One of the ways the teams deal with this is through the aerodynamics of the car to neutralise the forward flow of air and thereby minimise the drag and maximise momentum. Simply reducing forward resistance can help with the direction of travel and give a team the edge over its competitors. If you can get close enough to the car ahead (on the straight), then you have less work to do to overcome this resistance and you effectively turn that headwind into a tailwind. This is called the slipstream, and if you can turn resistance into slipstream, swap a headwind for a tailwind, then you're on course for the chequered flag.