Article: Forbes Reviews Rogue Waves
Rogue Waves, And How They Drive Both Peril And Profit by Steve Wunker
On the high seas, 64% of ship sinkings are due to a single phenomenon. They’re not caused by mechanical defects, nor crew error, but by “rogue waves.” These monsters, which can tower over 100 feet tall, form under certain nautical conditions and when large waves combine to magnify their strength. They can swamp even large container vessels, although prepared captains know when the seas are ripe for the danger.
In business, rogue waves are forming with increasing frequency. They stem from technological and economic forces, geopolitical changes, and even pandemics. When waves of change combine, they can obliterate intricately-plotted strategies that were based on presumptions of gradual market evolution. Yet – in a big difference from fates on the open ocean – commercial rogue waves also offer high potential to upend industries’ established orders and generate tremendous company growth, fast. The trick is to be able to understand their likelihood and prepare your organization for resilience when they hit.
Jonathan Brill, recently the global futurist at HP (who is also a Forbes contributor), helped lay that company’s strategy for resilient growth, and it profited during the pandemic while many others struggled. I’ve had an advance read of his coming book, Rogue Waves, which will be published in August. In this piece and several ones upcoming, I’ll share some of the highlights from his rigorous, wide-ranging, and actionable research.
Brill lays out three key requirements for success as rogue waves hit harder and more often. They underpin resilient strategy. These are:
Awareness: What trends may drive radical change? When is the earliest and latest that you can respond successfully? What are the opportunities and threats they hold? What indicators do you need to stay on the lookout for?
Behavior Change: What specific steps can you take to better understand your environment? How can you generate potential futures for your organization? What steps can you take to maximize your options for an uncertain future? How do you create a winning portfolio of wagers about the ways that the markets will change?
Culture: How do you take these competencies beyond strategic planning and into the operations of the organization, so that line managers embrace intelligent risk taking and adapt fast to changing contexts?
There’s a lot in those lists, and we’ll unpack them in future pieces. At a high-level, you can think about your readiness in five categories:
Governance: Do your governance systems encourage clear-eyed assessment of risks, including relatively low-probability events that could have high impact? Do they enable speedy responses as conditions shift? Do they encourage people to create options to grow in new ways?
Need finding: Do you look beyond what customers say they want, to more underlying motivations that can fuel tectonic change?
Value creation: Every business needs to keep its lights on through normal business practice, but it should do so in ways that embrace resilience rather than ignore risks. One needs only look at the automakers now desperately short of parts to see how strategies which seemed economically efficient in the short run caused these firms to miss huge opportunities now.
Performance measurement: New growth options don’t create big wins every year. Sometimes, the world really does evolve slowly. But does your performance measurement system incent managers to lay the foundations for fast shifts when the circumstances call for them?
Risk taking: Is risk solely something you try to avoid? How do you spot the upside in potential events and take small, intelligent risks which enable big wins in the right situations?
There are few real certainties in business. Rogue waves – and smaller ones too – can foil plans that presume you truly know your business’ future. How do you position yourself to deal with the unknown? Are you a sharp card player, knowing the odds and placing smart bets? Or, better yet, are you the casino, which has created a system to handle a broad range of uncertainties? The sharp card player may win an individual hand, but it’s the casino that almost always wins the night.
To be the casino, start to consider your system along those five dimensions. This is how you deal with rogue waves – by accepting a bit of risk, being resilient when the seas change, and using these events to rise far above your swamped rivals below.