How to Think Like a Futurist
Why Power is Everyone’s Business
Creativity in the Virtual Age
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PAGE 26
PAGE 60
The Magazine of the Rotman School of Management UNIVERSITY OF TORONTO
FALL 2021
THE SOCIALLY-CONSCIOUS BUSINESS PAGES 6, 32, 108
MANAGEMENT
Now What?
QUESTIONS FOR Nadya Zhexembayeva, Reinvention Expert, Author and Educator
Q &A
The woman dubbed a Reinvention Guru by Venture magazine explains how to avoid Titanic Syndrome and thrive amid chaos. Interview by Karen Christensen
132 / Rotman Management Fall 2021
You have said the global pandemic teaches us that “change is not a project with a beginning and an end”. What is it, then?
If you look back at the 20th century, change was relatively rare. We had some massive shakeups in the forms of wars and economic recessions, but on average, that only happened once in a generation. As a result of the relatively steady environment, we got to a place where the lifecycle for an average business was 75 years. I could graduate from the University of Toronto, go to work for a company, retire from that company and never see one true reinvention in my lifetime. I would see incremental improvements along the way, but no true turnarounds. Today, things are very different. We completed our Global Reinvention Survey in September of 2020, and it showed that the average lifecycle for a business is now six years. This indicates that we are now in a state of constant change, and as a result, the idea that we can treat transformative change as something that happens once in a generation is no longer valid, helpful — or safe, because it doesn’t allow you to protect your career or your business. We now have to look at change as a continuous cycle that we must engage in proactively rather than waiting until a crisis happens and being reactive. Here’s an analogy I like to make: When the incidence of significant change is rare, you can view reinvention as a one-time event — like a wedding: Once in a lifetime (hopefully), many people hold
We now have to look at change as a continuous cycle that we must engage in proactively.
this big celebratory event, and since it only happens once, they don’t need to learn all the skills and mindsets involved in producing the wedding. They can outsource the various tasks and expertise to consultants and others. Then they can move on and never have to prepare for another wedding. Today the demand for reinvention is more like your nightly family dinner: you have to prepare for it ahead of time and do this on a regular basis. That is the difference between change as a project versus change as a process. What is Titanic Syndrome, and how common is it?
A few years ago, I left academia to start my own business, and I immediately noticed that many of my clients were struggling due to disruptive innovations in their industries. I wanted to understand what was going on, so I started studying companies that had survived a major disruption versus those that did not — and I found that there are some important similarities in the ones that did not survive. First, these were companies that essentially brought about their own demise because of tacit or explicit arrogance. The feeling was, ‘We’re too big to fail’ or ‘We’re too good to fail.’ Second, there was an extreme attachment to the status quo, and widespread resistance to change inside the company. And third, there was an inability to spot and adapt to new and emerging realities. These findings led me to recall a wonderful lecture I attended years ago, where the professor used the movie Titanic to explore some of the shortcomings of leadership. I started researching the Titanic story with my team: the historic evidence, recordings of the radio operations — anything we could find. We discovered that the scenario was eerily similar to what I was seeing in the companies I was studying.
That’s how I coined the term ‘Titanic Syndrome’. I define it as a corporate (and sometimes individual) disease whereby companies bring about their own collapse due to arrogance, an attachment to past success and an inability to spot incoming threats and adapt quickly. How do you define the Reinvention Mindset?
When people view change as a painful, rare event, they develop a resistance mindset. Whereas the reinvention mindset entails seeing change as a totally normal part of life, a regular occurrence — and an opportunity. It is a part of life in the same way that gravity is a part of life. Once a company makes this shift, resistance to new ideas goes down, whether it’s a disruptive innovation or a relatively small, incremental improvement effort. Sadly, change resistance is still sinking most efforts for companies to transform: Research from the Boston Consulting Group shows that 75 per cent of all transformation efforts fail. Embracing the reinvention mindset is one way to bring that number down. You believe the secret to true sustainability for a business is actually quite simple. Please share it.
True sustainability for a business demands reinvention. If you look at nature — the most sustainable system on planet — it doesn’t hold on to things when the seasons change. Trees don’t stand there clinging to their leaves, refusing to let them go. It’s a cycle of continuous renewal. Sustainability in this sense is not about keeping yourself in the past, but finding a way to let go of the things that no longer serve you and only holding on to the things that serve you well — and finding new and better ways to use them. rotmanmagazine.ca / 133
The Reinvention Mindset 1. Embracing change by reimagining and remaking something so it manifests new and improved attributes, qualities and results. 2. Enabling a systematic approach to thriving in chaos that includes ongoing anticipation, design and implementation of change via continuous sense-making, anticipatory and emergent learning and synthesis of cross-boundary, crossdisciplinary and cross-functional knowledge. 3. Fostering the sustainability of systems by dynamically harmonizing continuity and change. 4. Building an immune system designed to ensure systematic health for individuals and organizations. 5. Making structured and deliberate efforts to engage in healthy cycles of planned renewal, building on the past to ensure current and future viability.
What are some of the best ways to keep track of new and emergent realities?
I am a big advocate for the power of our youth to spot trends. Just about every company in the world has a high school, college or university right in their backyard. These are amazing but under-used intellectual hubs that can help you spot trends if you find a way to make it easy and interesting for young people. For example, you could work with instructors to embed a project involving your company into a course’s curriculum, giving students an opportunity to work with a real world problem. There has been a significant reduction of internship and other real-world practice opportunities. This approach is a win for the students and the teachers, because they’re able to work with real-life problems rather than abstract assignments. And it’s definitely a win for the company. In your research you found that companies need to reinvent themselves on a continuum, from every six to 10 years to every year or less. Tell us more about this continuum.
Industries that are very close to consumers have to reinvent themselves much faster because the needs and expectations of consumers are changing so fast. These are mostly high-tech products and services that consumers interact 134 / Rotman Management Fall 2021
with on a daily, if not hourly basis, like apps and other digital services. These things have to change much more often than, say, a mining and metals company or an automotiveparts company that is far removed from consumers. In the middle, we have companies that need to reinvent themselves every two to three years. These are mostly services and a lot of suppliers. You have found that the majority of companies need to reinvent themselves every three to five years. Tell us more.
That finding was surprising for us, because the results changed between our 2018 and 2020 research. In 2018, less than half of companies had to reinvent super quickly, but now it is more than half: 60 per cent have to reinvent every three years. To achieve this, it is important to think in terms of a ‘reinvention portfolio’ rather than focusing on one type of reinvention. In the book I describe the idea of a ‘portfolio canvas’, which includes nine types of reinvention ranging from incremental to intermediate to radical. It also addresses reinventions that deal with some aspects of your system. For a car manufacturer, that might mean reinventing the transmission system. Complete reinvention would entail transforming the concept of a car or reinventing the entire ecosystem — how we power cars, how charging stations work, etc. Now is the time to think about this in terms of a portfolio of efforts.
Please summarize the main pillars of your Reinvention Framework.
This is very much a work in progress. The book has been tested and co-created by over 3,000 practitioners around the world. This particular framework has been evolving on a regular basis, but right now, six pillars are crucial. The first three are for cases where immediate action is required. What do you need to reinvent in a moment of disruption like COVID-19, for example? And the second set are about how to prepare to be ready for the next disruption. The first three Pillars are Anticipating Change, Designing Change, Implementing Change. We often think that ideas are so important, and implementation will happen on its own once the idea is there, but that is simply not true. Implementation today is actually one of the greatest challenges.
The Tomorrow Today (TOTO) Matrix Succeeding Today
FIREFIGHTING
Solving today while building up tomorrow
1. Reactive and defensive response to change that leads to chronic exhaustion
1. Proactive, deliberate, and embracing approach to change
2. One-off unsystematic efforts with littleto-no alignment: love of shiny objects, hot topics and burning platforms
2. Balanced practical action to preserve the best of the old while fostering the new
3. Bias against anticipation and reflection Jeopardizing Tomorrow
REINVENTION
Short-term, long term pain
TITANIC SYNDROME
We only see the disaster when it hits us 1. Arrogance or overconfidence: “Too big or too good to fail” 2. Trust in past success “We’ve always done it this way” 3. Inability to anticipate and adapt to change
3. Focus on building a system for timely reinvention
BLIND IDEALISM
Thriving Tomorrow
Wishing for tomorrow while destroying today 1. Disconnected from present reality and pressing needs 2. Wishful thinking 3. Bias against implementation, heavy focus on strategy, often impractical and untested Failing Today
At the same time, you need to invest in your overall future capacity to reinvent. That involves embracing the reinvention mindset in your culture and creating reinventionready systems, such as how your budgeting process works. You might have the best reinvention mindset and the best design and readiness to implement, but if your budgeting process is stuck in the past and everyone is still working with an annual budget, you simply can’t move as fast as you will need to.
acceptance of woman’s bodies and anti-bullying — it is one of the most reinventive companies out there. If you start looking out for it, you will see that reinvention is all around us. There is plenty of inspiration out there, and the time to embrace this mindset is now.
What does a healthy reinvention portfolio look like? Are there companies doing this well?
There are lots of companies doing it well. The evolution of Google saw it morph into Alphabet, which is essentially a portfolio company that practices reinvention in diverse areas. Phillips has moved from producing consumer electronics to creating offerings in healthcare, IT and data collection. Dove has embraced reinvention for years. If you think about all the work they’ve done around rethinking the
Nadya Zhexembayeva is the author of How to Thrive in Chaos:
The Chief Reinvention Officer Handbook (2021), along with a network of 3,000+ innovators worldwide. She is the founder and Chief Reinvention Officer at the Reinvention Academy and a Visiting Professor at CEDEP Executive Development in Fontainebleau, France. She previously held a chaired professorship at the IEDC Bled School of Management in Vienna, Austria. rotmanmagazine.ca / 135
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