Sometimes success breeds anxiety, and the business leaders we serve worldwide are expressing both. On the success side, the U.S. is still enjoying the record-breaking stock market bull run that began in 2009, and most of our clients have profited from it.
But they’re worried about what’s coming next. The bull market was fueled by radical changes in technology. Many of those radical changes disrupted or completely reinvented entire industries. Others created new industries. The business leaders we know focus on strategic growth, which means they are always trying to position their organization for future success.
They worry that they can’t really anticipate their market because, over the past decade, change has been so dramatic and unexpected. Their fears fall into three broad categories. Let’s take a look at each one and find a way to overcome worry by turning it into strategic direction.
Fear #1: The Black Swan
Nassim Nicholas Taleb introduced this term in 2007 with his book of the same title. Since then, it’s become the elephant in the room during every strategic planning meeting held by innovative leaders.
A “black swan” is an unexpected competitor or an improbable market shift. Sometimes these shifts demand quick action. Other times, they require a steady hand. Part of the anxiety is not knowing which is happening to you in your industry.
The taxi industry was blindsided by Uber and Lyft, for example, because of a loophole no one thought was significant. The upstarts’ existence depended upon the fact that only taxis can legally offer someone an unplanned trip. That’s still true today. Only a taxi can pull over and pick you up when you wave at them. What Uber and Lyft did was focus on the “unplanned” aspect of the taxi’s legal rights.
They didn’t need to compete directly. In fact, they let taxis keep the unplanned trips. They came up with a different approach: trips on Uber and Lyft are, technically, planned. True, they’re planned in a phone app moments before they begin, but that’s enough for the trip to escape the legal definition of a taxi ride.
No one else saw that opportunity, which is why Uber and Lyft are “Black Swans.” The taxi industry responded lethargically and they mostly complained to government for more protection. We can now see that they should have responded energetically and as quickly as possible. Instead, taxis have been marginalized, and the upstarts are changing the transportation industry completely.
Many leaders today scour their market and their competitors looking for something similar that’s about to happen to them. That’s wise. According to a McKinsey report, the U.S. “economy as a whole is realizing only 18% of its digital potential.” They see a multi-trillion-dollar opportunity, but of course they don’t know the particulars.
The CEOs we serve know that technology is going to impact their business and their market. It’s the lack of particulars that causes anxiety. Where’s the loophole that matters to them? Where’s the unseen opportunity? The truth, according to Taleb, is that Black Swans are few and far between. Most of the time, well-informed leaders can see change coming – that’s the whole point behind a quarterly strategic reviews.
Most of the time, the real challenge will be to identify which technological change, out of several, will really matter. And, more importantly, the challenge will be deciding when that change will become important.
When drones first came out, for example, many photographers and engineering companies scrambled to get one. They could see the competitive value and they expected that early adopters would be the “Black Swans” that would profit the most. So they spent thousands of dollars on large, cumbersome machines with steep learning curves.
Doing so was not really a strategic move. They were correct to see that there would be a market for drone videos. But they jumped on the technology before they really understood what drones were for, and long before the legal status of a drone had been established.
The strategic move would have been to ask their clients and partners how drone video would help them, and to select equipment that would meet those needs. A photographer doing that would have discovered that drone video of the inside of buildings, with the drone occasionally flying out a window or door to dramatize a view, was going to be their biggest market. Engineers would have discovered that inspection was going to be a much bigger market than surveying.
This is the flipside of the Black Swan fear: what looked like a possible Uber-level shift in the imaging industry didn’t happen. Early adopters spent too much and ended up with drones that were hard to use. By the time the market had generated some demand, the legal status of drones had been severely limited, which contained their possible uses. And in that same timeframe, the drone industry produced high-quality machines that you could pilot with your smartphone.
So the Black Swan fear either causes you to respond fast and hard, or warns you to wait and see. How can you tell which it should be? How can you tell what’s really going on? How can you get this right? The solution arises from the the next fear.
Fear #2: Losing Top Talent
Your best employees are also taking their measure of the market. But they have a different perspective. For them, it’s not about choosing a strategic direction for your business; it’s about choosing a strategic direction for their own career.
The current economic strength in the U.S. and most other developed nations makes it really easy for top talent to move to a different company. If your best people think that your competitor has a better strategy, they can get a job there. If they think you’ve missed a Black Swan moment, they can go work for an upstart.
Top leaders, and especially the ones we work with, confront this fear aggressively. As the Harvard Business Review reports, “There has been a revolution in how companies create value—from business processes, marketing, and governance—and, especially, their
approach to innovation….[combining] technology and industrial assets will produce a true revolution in productivity in many industries.”
That’s because, fortunately, there’s only one solution to this fear: you need to make sure that your strategic business direction aligns with your top employees’ strategic career direction.
To make that happen, you need to bring them into your strategic planning. Invite them to influence your business’ future, and they will see their own future at your business. This requires some transparency on your part. You will have to admit that you don’t have a crystal ball, but that won’t surprise anyone. You will need to express your own concerns about the future of your industry, and that might take some effort. It’s hard to seem confident while you’re questioning what you’ve created.
But the payoff can be extreme. Involving more people in your search for Black Swans increases the chances that you’ll either see one coming or, better yet, become the Black Swan yourself. Employees who see their future at your business are far more adept at this than ones who are looking out the door.
But how do you create a culture like that? How do you generate that level of buy-in? The solution to this fear arises from the next one.
Fear #3: Failure to Grow
A rising tide lifts all boats, and many top CEOs today worry that their boat has been rising with the tide, and nothing more. To be open to a Black Swan opportunity, and to keep the top talent that would make it possible to profit from one, your management needs to create a culture of success. The same openness that enables you to get strategic insights from your best people will enable you to get those productivity gains that HBR talked about.
As the inimitable Richard Branson wrote recently, “The mark of a good leader is being able to...empower people to be the best that they can be...If you’ve emboldened your staff they will be more productive and creative. They will feel motivated to take on the challenges of your business.”
If you invite them to think strategically, and to feel like they have power over the company's direction, they're more likely to feel that their career is doing well under your leadership. It makes it more likely your best people will stay with you to meet the Black Swan challenge. And, at the time, it makes it far more likely that you’ll get productivity gains within your current budget.
Technology plays a role here, too. In today’s culture, one of the very best ways to convince your top people that you’re serious about strategy, transparency, productivity and a culture of innovation is to give your team technology that will facilitate your success at all of those things. McKinsey reported that the leaders they talked to had experienced “...a wake-up call to use their digital transformation to reinvent every process...”
That's how today's top CEOs overcome these fears. If that includes you, too, then now is the time to act. The first step might be to look at the way you manage your top talent, and to establish an organized, open, and effective way to enlist their creativity in your strategic vision.