Whenever I have a conversation about strategy, it’s one of the most common quotes that comes up. Firm leaders want to be like Wayne Gretzky and “Skate to where the puck is going, not where it has been.” But in business, there isn’t just one puck, and rather than following a straight trajectory, it’s bouncing around in a thousand directions at all at once. We now live in a world where change is constant and unpredictable. Faced with that reality, I actually prefer a quote from Jeff Bezos:
“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time.
Rather than trying to anticipate where the world is going, great firms focus on building two capabilities directly into their firms: resilience, the ability to bounce back after a sudden disturbance, and adaptability, the capacity to change and take action in the face of changing circumstances.
What Makes a Firm Resilient?
There are always going to be shocks that disorient your practice. Regulatory changes can create and destroy practice areas overnight. Critical team members decide to move on, or staff turnover at a client leaves a new executive bringing in new outside advisers. The question isn’t whether or not these things will happen, but how firms will react when they do. And that’s where resilience comes into play.
There are two things that make firms resilient: process and attitude. Process scripts the steps so that during a period of duress, people can spend more time taking action and less time figuring out what actions to take. That could mean standardizing knowledge management so that it’s easier to transition accounts, or cross-training professionals so that there’s redundant capacity without overhead.
Resilience is also an attitude embodied in the way firm leaders think and communicate about the practice. It’s easy to look out and get fixated on external factors and get discouraged. You can’t change clients, the market, or the rules of the game. But you can change your situation by taking action. Resilient leaders help the firm focus on the things that are within their control rather than getting stymied by things outside of it. When someone leaves, they find the opportunity for junior employees to step up. When a big client changes direction, they double down on new business.
What Makes a Firm Adaptable?
If resilience is a firm’s ability to respond to shocks, adaptability is its ability to take advantage of opportunities. Adaptable firms can shift direction quickly because they’ve got a solid, well-understood platform and a willingness to experiment quickly with minimal costs in order to get feedback about what works and what doesn’t. As BCG partners Martin Reeves and Mike Deimler put it, “Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.”
Instead of constantly trying to transform their firm every time the environment shifts, adaptable firms have a solid understanding of who they are and what they stand for. They build a variety of new offerings, practice areas, or client projects on top of a common platform that makes it easier for them incorporate new approaches, communicate across projects, and adjust their offering.
At the same time, instead of conducting intensive research and making huge bets, adaptable firms make lots of small experiments and share the results. For instance, they might try out a new approach with a trusting client before standardizing it and scaling it across the firm. Or they’ll make a few lateral hires in a new practice area and see if they’re able to cross-sell their work to new clients. Because they have a solid platform in place, successful experiments are then easily replicable across the firm.
Does this matter for your practice?
What’s interesting is that these attributes scale at every level. They’re important whether you’re looking at your own personal practice or you’re managing a firm with thousands of professionals. Throughout your career, you’re going to face situations that require resilience and adaptability. And in such a dynamic environment, every firm is going to face shocks and be presented with new opportunities. In an era of so much uncertainty, you’ll never predict the future, but you can build attributes into your practice that will make it ready no matter what happens.