How a Growth Mind-Set Can Help Business Respond to Rapid Change
If, as the ancient Greek philosophers say, the only true constant is change, then the environment businesses have to deal with takes that idea a step further: Change is not only constant but also accelerating at an ever-increasing pace.
For a start, globalization has opened up markets so that not only can you set up shop in a country on the other side of the world, but you also face international competition at home. Shifting demographics – such as aging populations and more generations in the workforce than ever before – have far-reaching implications for how a company is staffed and led. On top of that, there are evolving regulations and shifting political and economic climates. And technology is playing an increasingly influential role in all of these factors. Advances in innovation have sped up communication with new trends, products and industries arising, seemingly overnight.
When faced with such change, there isn’t a simple answer. Mike O’Connor, CEO of Aon Risk Solutions, explains: “Organizations are managing through all of these challenges to ensure that they are positioned for future success.”
And when it comes to preparing for future success, Eric Andersen, CEO of Aon Benfield, underscores the importance of the customer. Increasingly, changing consumer preferences are the underlying reason behind innovation and staying ahead of the competition. “Businesses must work directly with customers to understand not only today’s needs but help anticipate tomorrow’s.”
So how can leaders ensure that they are best-positioned to deal with change? The secret might lie in embracing a growth mind-set – seeing opportunity amid change and mobilizing the organization to seize the opportunities.
The rapid rate of change is threatening to overtake organizations’ ability to adapt and survive. According to research by Innosight, the average tenure of a company on the Fortune 500 is predicted to drop from 20 years in 1996 to 14 years by 2026. Amid continued innovation, organizations are realizing that their traditional modes of operation are ill-suited to keep up. A combination of three factors is reshaping companies:
Rise of the On-Demand Economy
From ride-sharing to insurtech, “new” industries focused on meeting the customer’s need for a service or product when and where they want it, have seemed to pop up overnight. While start-ups tend to push the boundaries of what’s possible, more traditional companies are beginning to adopt this type of agile thinking. Whether investing in long-term digitization of an organization or prioritizing data and analytics to develop new product offerings and engagement strategies, it’s clearer that the focus is on anticipating customer needs and how to best serve them in both the short and long term.
O’Connor emphasizes that this shift has business leaders focused on creating more value for customers. “Increasingly, we are learning from the past to continue to improve how things have historically been done – including doing new things.” Keeping pace with changing consumer preferences is more critical than ever.
Technology Forcing Innovation
The Internet of Things (IoT) is generating huge volumes of data and enabling connectivity among machines in industrial, commercial, and residential settings. At the same time, artificial intelligence and related applications such as machine and deep learning are in the process of transforming whole industries and reshaping the workforce.
Cyber crime is upending established business models in industries from insurance to retail and professional services. “Technology is changing the way business is done. We’re seeing old business models evolve into completely new ones,” states Andersen.
Understanding External Risks
In Aon’s 2017 Global Risk Management Survey, six of the top 10 risks cited by executives were “external” – forces beyond the organization’s control. Regulatory changes and cyber risk were among the top 5 in both 2017 and 2020.
Andersen notes, “External threats are sometimes unpredictable, and many industries are put to the test. These types of events stress the need for teams to be agile in order to limit the damage.”
How Organizations Can Respond to Change
Leading companies are taking the crucial step of creating operations and culture infused with responsiveness and agility. The concept of the “growth mind-set” – the belief by individuals that they can develop their talents through perseverance, sound strategies, and feedback and mentorship from others – was popularized by Stanford Professor Carol Dweck. This outlook can be vital for organizations seeking to be better prepared for and learn from unforeseen challenges.
Companies can embed a growth mind-set in their organization by focusing on several areas.
Attract and retain the right talent
In the 2017 Global Risk Management Survey, the ability to attract and retain talent ranked seventh among the top risks, and with good reason. A workforce that avoids collaboration and is entrenched in its problem-solving approach will be less able to change gears when facing issues.
“Whether you’re going through organizational change or reshaping your portfolio to better serve tomorrow’s consumer, leaders are asking themselves if they have the talent in place to get them to the next level,” says O’Connor.
Encourage Innovation and exploration
Among investors in Silicon Valley, the mantra of “fail fast” has become synonymous with innovative organizations. In such companies, rapid cycles of iteration help employees to learn from their mistakes in the hopes that breakthroughs will follow.
Given the rapid evolution of technology, organizations that are content with incremental progress often find themselves falling behind the competition. As O’Connor stresses, “If you want to stay relevant, you’ve got to innovate, so focusing on the right outcomes will be essential to survival.”
Data-driven decision making
Thanks in part to technology, many companies have access to huge volumes of data – on not just global operations and supply chains, but also interaction with external partners and vendors. It is through using data and analytics that companies can gain a more accurate picture of the risks they are facing.
Adopting new business models creates new risks, including increased vulnerability to cyber attacks and reputational damage due to the actions of vendors and suppliers. “Continuing investments into data and analytics can help people better understand risks as well as opportunities, including how to act on them,” says Andersen.
Embedding a Growth Mind-Set
Business leaders understand that embedding a different mind-set in the organization takes a sustained commitment. But as each day brings more change and potential disruption, the companies with the resilience and agility to change course will have the greatest chance of survival over the long term.
“Companies most likely to be successful in making change work to their advantage are the ones that no longer view change as a discrete event to be managed, but as a constant opportunity to evolve the business.” – Torben Rick, Managing Director, Verdo A/S
“If an organization wants to pursue this [growth] mind-set, it is up to top-level management and the leaders to drive this type of change and incorporate it through the promotion of continual learning, acceptance of mistakes, and an overall focus on ‘maximizing employees’ potential.'” – Shirley Tan, Director of Product Support & Growth, Yahoo
World’s Most Innovative Growth Companies 2017 – Forbes, May 17, 2017
How Companies Can Profit from a “Growth Mindset” – HBR, November 2014
Using Talent Management to Create Value – McKinsey & Company, January 2017
4 Steps to Cultivating an Innovation Mindset in Your Organization – Enterpreneur, February 17, 2017