Why become more adaptable?

Featuring dramatic political change, wars, and natural disasters, 2024 was a turbulent year in the world at large. It would be safe to bet that 2025 is going to be not just as turbulent, but more so.

So too in most business environments. KPMG’s Keeping us up at night 2025 report shows that executives expect the top challenges in 2025 to be:

• Digital transformation and optimisation – extracting value from it at as organisational level
• Cyber risks – protecting from and responding to them
• Cost controls in an inflationary environment
• Emerging technologies – use cases and ethical considerations for AI and other technologies
• Regulation – dealing with evolving regulatory processes

Do you see an underlying theme here?

At least four of these challenges arise from the environment outside of the organisation. Executives feel that their organisation is not sufficiently well equipped to deal with them. Not with grace and ease anyway. Otherwise it wouldn’t be a “challenge”. It wouldn’t be keeping them up at night.

That’s not the theme though. Here’s a hint… The 3-5 year outlook in the same report adds to this:

• Future markets – growing future market segments and innovating for growth
• Flexibility – “the need for greater agility and flexibility in your organisation to meet opportunities and challenges”

Consider that last one: Flexibility. Most of these challenges require a capacity for organisations to be flexible. Let’s look at 6 of the 7 challenges again, this time highlighting some keywords.

• Digital transformation and optimisation – extracting value from it at as organisational level
• Cyber risks – protecting from and responding to them
• Emerging technologies – use cases and ethical considerations for AI and other technologies
• Future markets – growing future market segments and innovating for growth
• Flexibility – “the need for greater agility and flexibility in your organisation to meet opportunities and challenges”

Organisations need an increasingly high capacity for flexibility to optimise, respond, deal with emerging technologies and future markets.

• Flexibility to change business processes to extract more value from digital transformation. This may require shifting from relatively rigid projects that focus on “delivery” to long-lived development with adaptive steering focused on benefits realisation.
• Flexibility to respond to security advisories, patch systems and respond to cyber incidents more promptly and reliably. This may require shifting from costly manual testing and release of patches to fully automated testing and release.
• Flexibility to learn about AI and respond promptly to a rapidly changing landscape of competition and opportunities. This may require capacity freed up to experiment and learn. Also to transfer learning to colleagues across various organisational boundaries.
• Flexibility to experiment with safe-fail probes in unfamiliar and immature market segments to find out what works.

So what’s the problem?

Let me tell you a story.

At the start of the pandemic, my wife bought a spin bike. I’d only taken a couple of spin classes in my life prior to that, but I quickly became addicted to the streamed encouragement and challenge, often doing 2-3 rides per week at a high level of output. My thigh muscles have been bulging so much that I’ve ripped several pairs of shorts!

More recently, I’ve tried to swim laps of a 50-metre pool. My arm and chest muscles are aching with a handful of laps and I have to pull up well before my distance goal. Worst still when I try even a few minutes of high-intensity full-body workout including burpees and pull-ups. The last time I attempted that, my core and arm muscles were hurting for a week!

I had optimised so heavily at building up my leg muscles that I was hopeless at anything that involved the upper body.

The reason that I’m telling you this is that our organisations have also been optimising for what is now the wrong thing. And it’s only getting wronger in the current business environment.

Our organisations have big efficiency muscles, but relatively small flexibility muscles for substantial changes in direction.

Most of today’s organisations have spent years optimising for something very different from flexibility. They’ve been optimising for efficiency. Efficiency may be a smart choice of optimisation to exploit mature offerings… but only in a relatively stable environment. The environment for many businesses is no longer stable and is only getting less stable.

The type of efficiency most organisations have spent years working up is resource efficiency. This aims to get the most out of people by maximising their utilisation. Unfortunately, doing so often results lots of queues and long wait times. This is the opposite of rapid response and optimising for flow of value to customers. For more on that see The Kingman Law (3:03 video). To be faster at responding to cyber risks, organisations will need to perform a 180-degree change from resource efficiency to flow efficiency.

The other deeply problematic aspect of optimising for resource efficiency is that it keeps people busy executing, executing, executing without time being available for learning and experimenting with ways to work smarter. Sawing the wood with no time to sharpen the blunt saw. To out-learn, or even keep up with the competition on AI, organisations will need to perform a 180 degree change from pushing known execution tasks to fill up future timelines to pulling in work as capacity becomes available. Including in this a healthy and unpressured mix of experimentation and learning activities.

But what about cost containment?

You might have noticed that I skipped over connecting this with flexibility earlier. You might argue that flexibility is needed to shift to cheaper tools (e.g. open source) and infrastructure (e.g. W.F.H. with less rented office space). I agree. This has happened in many organisations.

Then there’s letting go of employees and moving to flexible employment arrangements to reduce cost when demand is low. One of the many difficulties with this in knowledge work is the loss of knowledge when such people leave. Before we go to firing people, I’d suggest cutting costs relative to value by eliminating waste.

Every time I start investigating a new client organisation, I find an enormous amount of non-value added a.k.a. waste. A few examples are: avoidable defects, context switching due to multi-tasking, loss of context leading to rework after handing off tasks (also a form of waste). If bespoke software is involved, research repeatedly show that the majority of the features are seldom or never used.

By eliminating waste, organisations can achieve more from the current employees whilst freeing up some of their capacity to learn how to work smarter at dealing with the other challenges. Capacity could even be redirected to discovering how to succeed in an emerging market or opportunity. That increases not only revenue but the capacity of the organisation to capitalise on more such opportunities into the future.

The difficulty is that, unless they are well practised at Lean management, most managers are not skilled at even the first step – seeing waste. That’s where we can help.

Perhaps more insidious is when people are implicitly incentivised to keep forms of waste to keep themselves employed. Sometimes this is hidden as a weakness in the organisation’s design that people are compensating for by doing unnecessary activities – even full-time roles. This is where we can help executives to redesign incentives and lead a cultural shift to see the elimination of waste and unnecessary bureaucracy as a persistent reward rather than a threat.

Adaptability = Flexibility + willingness

The Cambridge English dictionary defines flexibility as…

flexibility (n): the ability to change or be changed easily according to the situation

That’s great, however “be changed easily” is a dynamic of submitting to outside provocation – potentially force. We’re looking for an attitude of willingness to change. Perhaps even being proactive about it.

The Cambridge dictionary defines adaptability as…

adaptability (n): an ability or willingness to change in order to suit different conditions.

Funnily enough, that dictionary’s first example usage is:

Adaptability is a necessary quality in an ever-changing work environment.

We completely agree! This is why we’ve rebranded to include the “Adapt” from “Adaptability” in our brand.

Our mission is to partner with leaders who want game-changing shifts in adaptability implemented in a way that is coherent, effective and sustainable.

If you’re a leader looking for such a shift to better adapt to what’s coming, let’s talk! Simply book an informal video call via TidyCal.

_{Feature image generated by Rowan Bunning using Midjourney.}