Navigate through Change
Today’s organizations face the unknown on a weekly basis. In this environment of constant change, I often hear that we should be agile. But what that word implies is very different depending on who you talk with. That’s one reason I was interested to talk with Leo Tilman and General Charles Jacoby, who co-wrote a new book, Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption. They define agility and offer leaders a roadmap for navigating change.
Leo Tilman is the founder of Tilman & Company, Inc. and is an expert on risk, strategy, and finance. General Charles Jacoby is a military leader whose career culminated as four-star Commander of the North American Aerospace Defense Command and U.S. Northern Command. The combination of business and military leadership experience added insight and perspective to their book.
For those who haven’t read the book yet, what is agility?
In response to the accelerating disruption and change of the Fourth Industrial Revolution, a chorus of advice to leaders is urging them to make their organizations more nimble, adaptable, flexible, dynamic and, yes, agile. But none of these terms have been rigorously defined or differentiated from one another. The absence of a cogent understanding of what’s required is causing confusion and leading to incomplete or generic prescriptions. AGILITY aims to address this urgent need.
In an effort to enable all organizations to quickly recognize threats and opportunities, shape timely responses, decisively execute, and do so consistently as environments change, we define agility as: the organizational capacity to effectively detect, assess and respond to environmental changes in ways that are purposeful, decisive and grounded in the will to win.
We demonstrate that agile organizations possess both strategic and tactical agility. Strategic agility enables entire enterprises to detect and assess major trends and environmental changes and dynamically adapt their vision, business models, human capital and strategy to the new reality. Tactical agility enables employees at all levels to take smart risks, capture opportunities, improvise and innovate as they execute a clear strategy.
Would you share an example from an organization doing it right?
In our book, we provide numerous examples of agility. In business, the digital transformations of IMAX and Western Union are exemplary: both companies detected profound environmental changes and turned potentially existential threats into transformative opportunities. Same applies to the agility exhibited by Goldman Sachs in navigating the global financial crisis of 2008-09. In emergency management, Hurricane Sandy stands out. In sharp contrast to Hurricane Katrina, the collaboration between military organizations, federal authorities, and state and local agencies during Sandy led to purposeful and decisive support to victims and infrastructure. In the military realm, we use the Battle of Normandy as an ultimate example of both strategic and tactical agility.
Encourage the Mindset of Agility
How can leaders best encourage a mindset of agility throughout the organization?
The agility mindset is not something that just emerges by itself. It is a new, more advanced way of studying environments, making decisions, building cultures, and operating on a day-to-day basis. Thus, this mindset must be deliberately developed and nurtured by senior leaders – and exemplified in their own behaviors. The capabilities of agility become ingrained in thought processes, practices and culture only if they are positioned as essential priorities and standards of excellence—and embraced as such by the whole organization.
Agility requires specific experience, knowledge, and commitment. It rests on engagement and buy-in across the organization as well as a concerted investment in capabilities, people, and processes. At the outset, the whole organization must be educated on what agility means and on what it takes for a leader, a team, or a whole company to be agile. It is through that shared understanding, training, and practice that the agility mindset is created. It is critical that agility must be also empowered throughout the organization. Otherwise, it is relegated to a buzzword and cynicism. If leaders don’t empower with authority, resources, guidance, and trust, agility holds no meaning.
For example, the agility mindset is exemplified by what we call a bias for the offense, which goes beyond the ability to seamlessly and dynamically switch between defense and offense, which is a hallmark of agility. When facing a favorable environment, agile organizations grab the initiative and keep competitors off-balance. When they are under pressure, having to fend off dangers, they make a concerted effort to pave the way to resuming the offense when the time is right.
The importance of a bias for the offense is often underappreciated in business, government, even in the military. Agile organizations take the following to heart: when, thanks to our bias for the offense, we seize the initiative, the ability of our rivals to exploit our weaknesses is diminished. When we grab an opportunity or develop new capabilities, this often creates vulnerabilities for our adversaries. On the flip side, when we are mired in inaction or indecision, we expose ourselves to new threats and don’t accomplish our mission.
What differences do you note between the most successful organizations versus the mediocre?
Agile organizations detect, assess, and respond to environmental changes effectively and consistently – across different environments and over time. In contrast, organizations that lack agility lack some or all of these capacities. For example, they many fail to detect or assess profound changes in operating landscapes, like Bear Stearns or Blockbuster did. They may not connect the dots between events, activities, and trends, as was the case of the Space Shuttle Columbia as well as the Fukushima Nuclear Disaster. In some cases, failing to come up with a viable vision and strategy for the new environment leads to mediocrity or extinction. And, of course, organizations that lack agility may fail to effectively execute due to leadership mistakes, lack of cohesion, or requisite capabilities – a lack of a critical aspect of agility we call execution dexterity.
Leadership Practices to Watch
What are a few leadership behaviors that destroy organizations by making them less agile?
When leaders do not practice what they preach, they destroy morale, loyalty, and engagement. For agility to succeed throughout the organization, the leaders must exemplify the mindset and practices of agility at all times. Only then will the entire organization do the same – and go above and beyond what’s absolutely required, which is a necessary requirement of agility. Additionally, organizational cultures – and agility – suffer from micromanagement, indecisiveness, and suppression of truth and dissent. Same applies to cases where leaders fail to create and relentlessly nurture accountability and trust up and down the hierarchy and out to the very edges of an organization.
Why do some flat organizations succeed, and others struggle?
Radical flattening of organizations is a fashionable recipe for dealing with accelerating change and uncertainty. But in practice, the definition of “flat” needs work: similar to “agility,” it is a buzzword that lacks precision and means different things to different people.
It’s a common misconception that “command-and-control” is synonymous with micromanagement. In our book, we present a command-and-control philosophy (adapted from the US military doctrine of Mission Command) specifically designed to foster agility. Its goal is to seamlessly meld centralized vision and planning with empowered decentralized execution – where everyone is encouraged to exercise disciplined initiative, improvise, innovate, and take smart risks in accomplishing a shared goal. From this perspective, it’s clear why in many cases, indiscriminate flattening of organizations is bound to fail.
In Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption, we put forth an entirely new premise: to achieve agility, the organizational design (level of decentralization) must explicitly reflected the organization’s portfolio of risks. Greater centralization and coordination are required if different parts of the organization take interconnected risks. Less centralization may be warranted if they take unrelated risks. Hence, if you try to flatten an organization in which different siloes takes interconnected risks, it’s a recipe for disaster – which is exactly what happened to many well-known companies and investors during the global financial crisis of 2008-09.
How do organizations with a culture of agility handle risk differently than others?
Risk management is now a fully-developed rich scientific discipline. Yet its traditional role is to police and react; to mitigate threats, not capture opportunities. Thus, leaders often see risk management as a compliance function or, worse yet, as an obstacle to making bold decisions. Of course, being good at risk management – mitigating threats and creating resilience – is necessary for agility. But it’s not sufficient.
We define risk intelligence as the organizational ability to think holistically about risk and uncertainty, speak a common language and effectively use forward‐looking risk concepts and tools in making better decisions, alleviating threats, capitalizing on opportunities and creating lasting value. Agile organizations make a concerted effort to cultivate risk intelligence and turn it into a proactive, practically useful corporate competence. They use risk intelligence in developing situational awareness, creating a holistic picture of risk for the entire organization in real time, and in developing and creatively executing strategy. Agile, risk-intelligence organizations aggressively look for opportunities and view risk as a powerful lever to be pulled to achieve their objectives.
You talk about the agile mindset and the CEO. What if you are in middle management and the top management isn’t fully there. What can you do to build your team?
Agility is not just for senior leaders but for managers at all levels, who can implement many of the practices with their teams and cultivate agility by adopting the relevant mindset, capabilities and leadership style. Propose a novel idea to your colleagues or the team members you lead. Take a smart risk. Empower someone and then celebrate the way they made a decision, not only the outcome. Voice a dissenting view in a meeting when something important is on the line. Agility is contagious!
What do you hope readers will take away from your book?
It is the essence of senior business leadership to think deeply about the organization’s values and standards, catalyze the buy-in, carefully assess their acceptance and practice—and exemplify them on a daily basis. None of this can be left to chance, allowed to become stale or outsourced to organizational silos and subcultures, or to outside consultants. The leadership communication is critical here because motivational pep talks that are actually directed at increasing productivity and compliance are immediately detected. If the leaders’ behaviors or communications are viewed as inauthentic, this will breed cynicism and decimate trust, motivation and performance. In the words of historian John Rhodehamel, “Noble words must become flesh.”
Leadership, culture, and morality are paramount. No physical capabilities, knowledge or special talents can compensate for the lack of courage to make hard decisions or for the mistrust that undermines our ability to act as a cohesive team.
Everyone in the organization—up and down the hierarchy and out to the very edges—must understand the strategy, their role in it, and importantly, their boundaries of disciplined initiative. They must feel empowered and accountable and trust their leaders and colleagues.
Building agile organizations starts with a choice that is followed by action and hard work. It is based on the belief that organizational agility is, in fact, achievable; that it can be taught, learned and consistently practiced via methodical inquiry, preparation and planning. With a purposeful and disciplined approach, agility can become a mindset, a way of thinking that determines how we evaluate threats and opportunities. It defines our strategic and moral True North and leads us to decisively execute when the time is right. It becomes how we operate on a day-to-day basis. When we make the choice to become agile, develop the agility mindset, equip ourselves with requisite knowledge and capabilities, embed agility into our processes and culture—and stay vigilant in continuously nurturing it throughout the organization—agility becomes an enduring state of being.
For more information, see Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption.