Australian business has been very lucky with the resources boom fuelling a prosperous, fast growing economy combined with debt-fuelled spending. An unintended consequence of these prolonged ‘good times’ is that many managers have become complacent in their thinking. If sheer momentum keeps business keeps growing no matter what you do or decide, your ability to make sound decisions inevitably declines because the feedback loop is inaccurate.
You may protest that surely we have been busier than ever over the last decade and subjected to enormous pressures in the business environment and we would agree. Yet to us it seems that most of this comes down to an exponential increase in distractions – email, social networks, smartphones, SMS etc. – and ‘noise’.
Noise is anything that doesn’t really impact the performance of employees and the organisation. Most meetings constitute noise, especially meetings without an objective or agenda – which happen far too often.
We are finding more and more managers, and employees in general, feel busy because they are distracted by noise. As coaches and consultants we find more of our time is needed to help managers cut through this noise. Not only do we see people constantly working on symptoms while completely missing the root cause, but too often real business opportunities are being missed because attention is diverted on to irrelevant detail.
Now that the mining boom is on the wane and growth is poised to decline we can’t afford to ignore these distractions any longer. When we look around the world the Eurozone and US have already been in this situation for the last 5 years and with China moving from a focus on infrastructure spending to domestic consumption it is very unlikely that we will be saved from a slowdown a second time (after the GFC).
Now is the time to refocus on the stuff that really matters and for businesses to get innovative. To be able to do this organisations needs to develop their leaders to deal with:
V – Volatility
U – Uncertainty
C – Complexity and
A – Ambiguity
This acronym indicates the opposite of easy growth and predictable sales increases year in year out. It has been a topic in European business schools for some years now, but will only hit the consciousness of Australian managers in the next few years as business conditions continue to get more difficult.
The need to deal with VUCA creates different demands on managers than what we have been used to over the last 20 years – the need to reflect, deeply analyse markets and opportunities, to make tough decisions and to promote innovation internally. The history of business shows that it is during downturns that the next generation of market dominating companies arises.
In Australia there is an additional problem that could derail this shift before it even starts. Given the strong focus on relationship that underpins our society, organisations generally have an avoidance culture that discourages robust and rigorous conversations. Yet without those conversations it will not be possible to achieve a culture that can deal with VUCA.
Organisations which recognise the opportunity inherent in the change of external environment will be required to invest heavily in leadership maturity. Skills like the ability to negotiate, influence, collaborate and make joint decisions are equally critical as the ability to recognise and set the noise aside; and to deeply reflect on the current situation of the business and the market it operates in. From our experience, few leaders and managers we meet have acquired those skills yet.
When working with leadership teams, even at executive level, we often have to point out:
- How they get distracted by noise and operational minutia
- Where they have skirted around a critical issues and avoided any resolution
- Where they have just missed a business opportunity or potential competitive risk
- How they are keeping discussions and decisions at a sufficiently low level so that they don’t encroach on each others patch
It would appear to us that even senior managers have been conditioned throughout the boom to not question, not rock the boat and get on with running the day-to-day instead of focussing on strategy, innovation, creating opportunities and boosting productivity. Whilst plenty of lip service has been paid to the latter, few improvement projects have actually received the necessary focus and commitment to transform business practices.
The result has not only been a lack of requisite skills to deal with VUCA, but also a distinct lack of resilience. This is easy to observe in immature knee-jerk reactions to adverse events and poorly thought-through decisions with wide-ranging implications for employees or customers.
We are now at the start of a long, hard journey in evolving a new crop of more mature leaders who have the professional capabilities and emotional resilience to cut through noise, focus on what’s truly important and take the time to arrive at decisions that will result in big pay-offs down the track.
Because of the level of complexity and ambiguity involved, this change doesn’t mirror the business reengineering leaders of the 80s. Businesses don’t carry excessive amounts of ‘fat’ that can easily be cut or assets that can be flogged off and replaced with debt. This time around transformations will require complex thinking and collaboration at all management levels.
The starting point will be to shift focus away from noise and distractions to taking a step back and analysing the true state of the business and its environment. We hear plenty of managers complaining about the noise and distractions, but too few organisations have actually taken action and started to eliminate some of them.
The evidence shows that this process of elimination does not work as an individual decision – I can’t decide on my own to no longer go to meetings I consider irrelevant or no longer to reply to emails I consider distractions. There would be repercussions for anyone making such choices in isolation. What is required is a team based decision making process to reduce noise and distractions. This needs robust conversations between staff, managers and executives, starting with the shared acknowledgement that the current state is unsatisfactory.
We have been facilitating those discussions in a number of organisations, with pretty much immediate buy-in from managers at all levels who have obviously just been waiting for some catalyst to enable them to create the necessary changes.
On a larger scale, because we still seem to value ‘busyness’ more than innovation, a shift is not imminent. In business what’s measured is what gets done and we have yet to come across are enough managers who are already measured on productivity and innovation.
The consequence is complacency and lack of preparation, which will likely mean anxiety as business conditions continue to get tougher. Most businesses still have the means to invest, but will they recognise the need and opportunity?