Our world is becoming more volatile, not less. Covid, Kabul, floods and fires are just this year’s examples. That’s why it’s so important to increase employee awareness of the external environment and its impact on your operations.
This is the first in a series of reports on resilience best practices that that you can teach your team today. It is the result of dozens of interviews with leaders in companies that turned Covid to their advantage, like J. P Morgan, Facebook and LinkedIn, for my book.
Historically, companies have disproportionately focused learning and development investments on improving the reliability of operational and financial decision making — internal processes that are comparatively easy to control. This turns out to be a mistake.
In research we did while I was at HP, we discovered that, over the past two decades, nearly 3/4 of sustained decreases in firm value were caused by exogenous events. If you believe, as indicators suggest, that we are moving into a more volatile decade, the need to increase awareness of external change will only grow.
Strategic and external change are typically the purview of senior management, while the rank and file focus on the day-to-day. The consensus view in interviews with Learning and Development leaders is that, as the world continues to become more complex and volatile, people lower in organizations need a broader contextual understanding of external change and its impact on strategy.
Focusing people on what is going on outside of the organization is a priority at LinkedIn. Kevin Delaney, VP of Learning & Development said, “It’s vital to break that wall. We do it by empowering every individual to: stay on top of current trends, have their voice heard, and get everybody connected to a network outside of their fishbowl.”
Things might move along fine when in smooth seas, but the real test of an organization is how it turns instability into opportunity. When disruptions hit, when the industrial structure breaks down, that’s an opening for the prepared, as companies like Amazon and Zoom proved this year.
What can you do to enhance organizational awareness of your external environment today?
3 Actions to Focus Your People for the Future:
1. Share the key take aways from your Annual Report.
As a leader, one step you can take today is to walk your people through your annual report, not just the highlights. Share how you thought through writing it, with a particular focus on the organizational risks.
2. Share the exogenous risks you face and the executive sponsors for each.
If you are an employee of a publicly held company, you can look up your company’s 10-K proxy disclosure here by filling out the search box like in the image below. The SEC provides a good overview of how to read it. Pay particular attention to sections 1a and 7a, which focus on risks. Typically, there is an executive sponsor responsible for each of these challenges—and the board is breathing down their neck about them. Showing your people the challenges you are attempting to resolve will cue them into where you need to improve resilience. When they make decisions, this knowledge will help them better balance your future needs and the day-to-day.
3. Have your team explore the impact of historical shocks if they occurred today.
Ask your people to consider how you might respond to a rogue wave, an unmanageable change caused by the collision of multiple manageable trends, and what you need to do to be resilient to them. One place to start is by sharing this video. It identifies nearly 400 major business shocks in the 20th Century, including pandemics. Covid was a shock, but it is similar to shocks that businesses have repeatedly faced in the past—just not the past several years. Understanding the larger history of business disruption will help your people make decisions about what they don’t know (the future is always an unknown) instead of what they know.
It’s too easy for organizations to try to armor themselves against volatility, rogue waves are a major source of opportunity for the companies that know how to surf them. Teach your people to ride the wave. In this wet and wild world, you can’t avoid getting wet.
