Nature is an expert in adapting to threats and opportunities. We are all familiar with common natural adaptations like camouflaging and migration as a means for some animals to survive in
different ecosystems. There is also common understanding that when species don’t adapt to threatening conditions they don’t survive and unfortunately face extinction; this is known as natural selection.
Darwin of course is renowned for his work on natural selection. He is quoted as saying ‘It is not the strongest of the species that survives, nor the most intelligent that survives, it is the one that is most adaptable to change”.
This is now true for corporate survival; adapt the way you adapt, or die.
Today there are more businesses than ever before; increasing technology and global trade has made it possible for many people to take an idea they have and turn it into a business. But at the same time, businesses today are under pressure from more stakeholders than ever before. Fast just keeps getting faster leaving less time for traditional strategy planning sessions. While opportunities for business have never been so abundant, the mortality of businesses has never been higher. Martin and Reeves report that “Companies don’t just die younger; they are also more likely to perish at any point in time. Today, almost one-tenth of all public companies fail each year, a fourfold increase since 1965. The five-year exit risk for public companies traded in the US now stands at 32 percent, compared with the 5 percent risk they would have faced 50 years ago”.
It is more important than ever that companies be aware of threats and take advantage of opportunities. Although companies may believe they are on top of their game today, advances in technology are happening so fast, disruption can come quickly leaving companies blindsided.
The Passenger Pigeon is a natural example of a species whose conditions drastically changed quickly and weren’t able to adapt in time. Initially the Passenger Pigeons numbered in the billions, in fact, it is said that at one point their population constituted 25 to 40 percent of the total bird population of the United States. But, when Europeans settled into North America the pigeon became an easy target for a protein source.
The birds appeared to be so plentiful settlers couldn’t imagine their populations dwindling. Their abundant nature led many early explorers and settlers to frequently mentioned passenger pigeons in their writings. Samuel de Champlain in 1605 reported “countless numbers,” Gabriel Sagard-Theodat wrote of “infinite multitudes,” and Cotton Mather described a flight as being about a mile in width and taking several hours to pass overhead.
As a result of the pigeons’ need to be in large flocks, they were very easy to catch and their populations dwindled quickly. Unfortunately, by the time settlers adapted their hunting behaviors and tried implementing conservation efforts, it was too late to save the wild flocks. Although captive efforts were put in place to try to preserve the species in zoos, the pigeons didn’t adapt to captivity or to solitary nature; being in large groups and flying long distances was essential to their survival. The once abundant species officially became extinct in 1914 when the last known Passenger Pigeon died in the Cincinnati zoo according to The Smithsonian.
In the corporate world it’s not hard to find evidence of businesses that were once successful but failed to adapt and did not survive. Some examples of this include:
On the other hand there are a handful of companies that have proven to be good at adapting. These companies were on the S&P 500 index in 1955 and are still there today and include:
* General Motors
*Procter and Gamble
This is a rare accomplishment for these companies. AEI cites that “since 1960 the average lifespan on the S&P 500 has fallen from 60 years to less than 20.” Comparing the Fortune 500 companies in 1955 to the Fortune 500 in 2014, there are only 61 companies that appear in both lists. In other words, only 12.2% of the Fortune 500 companies in 1955 were still on the list 59 years later in 2014, and almost 88% of the companies from 1955 have either gone bankrupt, merged, or still exist but have fallen from the top Fortune 500 companies (ranked by total revenues).
Most of the companies on the list in 1955 are unrecognizable, forgotten companies today. For example:
*Pacific Vegetable Oil
According to Innosight, this means that the 61-year tenure for the average firm in 1958 had narrowed to 25 years in 1980 to 18 years currently. At the current churn rate, 75% of the S&P 500 will be replaced by 2027.
So how do seemingly corporate giants adapt to today’s rate of change and not go the way of the Passenger Pigeon? One way companies can learn how to adapt in this fast paced world, is to understand how their employees see their world with their individual ‘frame mindset’. The individual’s collective mindsets help form the company’s frame. According to Sull, their frame helps answers questions like ‘what business are we in’, how do we create value, who are our competitors? Which customers are crucial, and which ones can we safely ignore?. As time goes on, these frames get nailed down and become more rigid making it harder to think outside the box. It constricts the peripheral vision and creates blind spots from noticing new threats and opportunities.
Especially in times of prosperity, when team members are happy, investors are happy and sales targets are being met, it’s hard to see the potential or need to adapt. However, as Rita McGrath points out, today companies can be easily disrupted outside of their vertical market, causing major problems quickly and unexpectedly. For example, taxi companies likely weren’t looking to be disrupted outside their vertical by a technology company.
When your frame is aligned with your business environment you can easily see your threats and opportunities (Figure 1). However when your frame gets stuck, and misaligned with your business environment, disruptive factors come in to play and creates blind spots. Just like when you’re driving; you may think you are the only one travelling on the open road, but if you don’t check your blind spots you never know who is coming up beside you, on the verge of taking the lead.
Unfortunately, organizations don’t realize their frame is misaligned until they start feeling the symptoms of this misalignment. These symptoms can include:
*Slow to Close New Business
*Difficulty Launching New Product
*Internal Disagreement Regarding Priorities
Companies feeling these symptoms can develop coping mechanisms to appease the stress which include:
*Inability to React
*Complacency to the Status Quo
*Using the Strategy Du Jour
They need a way to see outside their current frame, something that will shed light on the blind spots and establish a new shared understanding.
Donald Sull highlights the lack of adaptation ability for Firestone tires when they were caught off guard when Michelin tires came to the US market. Previous to that they had enjoyed 70 years of uninterrupted profits, so they didn’t see a need to think outside their frame. Then, when they unexpectedly had to react, Firestone’s frame was so well nailed down they couldn’t bend and react quick enough. They quickly invested $400 million into trying to innovate to stay afloat, but failed, and in 1979 they found themselves in deep trouble and were finally acquired in 1988.
So how can companies re-align their frame when faced with unforeseen changes? Perspective taking, when done right, can help make better business choices and identify blind spots. Looking at a challenge from a different point of view gives participants a better vantage point with fresh eyes and helps them think outside their frame. By doing this, opportunities can be maximized, threats can be minimized, and organizations can realize their full potential.
There is no denying that today’s rate of change is fast, and will keep getting faster. How your organization reacts will determine your survival. This is your opportunity to be innovative with your reaction frame to the pressures around you and maximize your chance for survival if you are open to seeing outside your organization’s frame. Taking advantage of opportunities demands that you are able to adapt what you do, how you do it, how your people think and feel about it. Becoming adaptive is a real opportunity for organizations to quickly solve problems and react appropriately to the increasing number of threats in this accelerating, unpredictable business climate.