The One Factor That Will Determine Long-Term Business Success More Than Any Other

May 18, 2021
Peter High
BY Peter High Founder and President of Metis Strategy
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The pace of change is faster than it has ever been, and yet it is the slowest it will be from this point forward. There is a quotation that is often mis-attributed to Charles Darwin that states, “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.” The father of evolution may not have said this, but it is an important point that applies to companies as much as it applies to species.

As you think about once successful companies like Circuit City, Blockbuster and A&P, each leaders in industries that they played in that no longer exist, each failed to adapt to changes, even though each could have pivoted to where the industry or customers’ tastes were going.

In 1955, the average time a company on the S&P 500 would remain on the index was 61 years. Fast forward to today, and it is closer to 15 years. Since 2005, 52% of the companies on that index have fallen off of it entirely. This is a remarkable tale of creative destruction, but is also is tale of innovation at a pace and scale that we have not seen before as rapidly scaling organizations take the places of the old stalwarts.

To quote Dow’s Chief Information and Digital Officer Melanie Kalmar, “What separates successful companies from those that have faded? Nimbleness.” She is not alone in this focus. When Shamim Mohammad, the Chief Information Officer and Chief Technology Officer of CarMax, was asked about the trends that excited him most looking three or four years out, he responded, “I do not know how the world is going to be in three or four years. It is hard to predict. What I am trying to do…is position [CarMax] so that we are ready to take those changes and be nimble, agile, and responsive: an organization that can move quickly. That is what I do because I cannot predict what is going to happen. I have to position [CarMax] to be that nimble company.”

In my new book, Getting to Nimble: How to Transform Your Company into a Digital Leader, I highlight five themes that are essential to harness to foster nimbleness:

  • People
  • Process
  • Technology
  • Ecosystems
  • Strategy

Relative to people, you can do worse than to emulate the great practices of Rob Alexander, who has, for 14 years, been the Chief Information Officer of Capital One. He recognized early the changes that the digital age were foisting upon companies born in an earlier era. He posed a difficult question to himself and his team: “How do you become a great technology organization if you do not start as one?” Alexander set the goal to develop an engineering-centric technology division that would be oriented toward building technology rather than simply buying it and managing it. He wanted the organization to be oriented around a digital-first mentality.

Alexander and his team started by recruiting a core group of engineers who would form a software center of excellence. These people were recruited based on a pioneering spirit that each possessed. They would be the proselytizers for others.

Alexander and his team developed a curriculum to train existing employees on the technologies of the future, noting that learning agility was another key ingredient to cultural nimbleness. Finally, the company developed the gold standard of intern programs, regularly being ranked as number one on Vault.com’s list for internships. By giving great engineering and computer science students meaningful work to do in an innovative environment, the company began to compete with the stalwarts of Silicon Valley for talent, and the intern program allowed the company to get to know a wide swath of would-be employees deeply before handing out full-time offers. The yield on those offers rose, and the best among those new employees were given opportunities to rise quickly through the ranks of Capital One. The company’s nimbleness gave it a reputation as a talent factory that many wanted to join.

Relative to processes, retired four-star general, Stanley McChrystal, has become a guru to CEOs and other leaders on how to foster nimbleness. He recognized that the pace of change was such that if the American military did not modernize, it would not be successful in its critical missions around the world. The military had been silo’d by design, but McChrystal fostered collaboration across the traditional silos, bringing elite members from multiple branches of the military together.

He now counsels companies to do the same, pushing them to foster innovation through better collaboration. Process changes such as agile development, DevOps and the product orientation that many technology and digital organizations have instituted require non-traditional collaboration across silos and ownership of ideas from cradle to grave to a greater extent. Many companies have seen rapid increases in their ideation, throughput, and innovation success as a result.

Relative to technology, Rob Carter, Chief Information Officer of FedEx recognized that the crown jewels of the company were aging to the point where they might be the source of the company’s downfall if a new path forward were not forged. He had the humility to recognize that his team’s work for which they were rightly so proud had to be changed dramatically. His pathway to nimbleness revolved around five steps: first leveraging enterprise architecture to get a full accounting of ones technology portfolio, warts and all. Modernization only begins when a full documentation has been concluded. Second, he established a cloud-first strategy. The clouds flexibility, allowing an organization to scale up and back as necessary was sacrosanct. Third, Carter and his team focused on loosely coupled technology so that changes to one platform would not necessarily require changes to others. The use of microservices and application programming interfaces (APIs) also had many security benefits to boot. Lastly, he focused on standardizing the technology wherever possible. This is easier said than done in a company that is part airline, part trucking company, part logistics organization, part office services enterprise, and more. That said, he pushed for a common core of technologies to set standards to achieve greater simplification while de-risking the organization through minimized complexity.

Competition today is less company-to-company. Rather, it is ecosystem-to-ecosystem. Angela Yochem, the Chief Transformation and Digital Officer of Novant Health has been a model of building ecosystems to marshal innovation at levels beyond what one’s team alone might accomplish. Yochem has an unusual ability to meet an entrepreneur, learn about his or her company and make rapid judgements about potential mutual value that might derive from partnership. An example is Zipline International, the world’s only on-demand drone logistics service. Along with other technology and digital executives, she met with the company’s founder and CEO Keller Rinaudo to hear the story of the company’s genesis and its mission, at the time primarily helping deliver medical supplies to people in need in countries that suffered from road infrastructure issues, for example. Yochem translated what she heard to Novant Health’s business and saw an opportunity especially in light of the pandemic. She and her team became the first organization in the U.S. to be granted a Part 107 waiver by the U.S. Federal Aviation Administration (FAA) to use drones for distribution of medical supplies for Covid-19 pandemic response. The vision is growing, as over the next two years, the partnership plans to expand beyond emergency operations in the Charlotte area, where Novant Health is headquartered, to regular commercial operations to serve health facilities and, ultimately, patients’ homes across North Carolina. Nimble leaders and organizations recognize great ideas, translate their relevance to one’s own company, and build the partnerships that can make a difference rapidly.

Finally, during a time of such rapid change, one might think that strategy is becoming less relevant. There is an African proverb that says, “If you want to go fast, go alone. If you want to go far, go together.” One might add to those important words, “and take a map.” The company’s strategy is the map. Especially during times of great change, having a strategy at the enterprise level translated to the divisions and functional areas and to the technology and digital team through to data strategy is even more important. Granted, changes in the economy, the competitive landscape, and one’s own company, to name three of many factors, will require modifications to those plans as the assumptions behind the plans require changes, but having the well-articulated plans is essential.

Shailesh Prakash, the Chief Information and Product Officer of the Washington Post underscores this need. A decade ago, when he joined the company, it was languishing: ad revenues and subscribers were decreasing at an alarming rate. Prakash helped set the strategy that would bring the traditional print and digital sides of the house closer together. In so doing, he set the Post on a path to a better experience for readers and for the company’s reporters and columnists. He discovered through his collaboration with his colleagues that the company’s publishing platform was antiquated and a source of frustration. Prakash set a strategy to improve the platform. In so doing, he leapfrogged the industry to such a dramatic degree that it occurred to him and to his team that the platform, itself, could be a business for the Washington Post. Arc Publishing was born, and it is now on a path to being a $100 million business annually for the Post. Nimble leaders set bold and well-articulated strategies that rally one’s team to drive new value to one’s company.

Please note the examples given: a financial services company, the American military, a courier conglomerate, a healthcare company, and a media organization. None of these are traditional technology companies. They are not digital native companies with built in advantages of a recent founding. These are likely companies yours, each in challenging environments. Each drove change rather than being driven by it. This is essential in a time when change is coming so rapidly. Only the nimble will survive and thrive. Emulate the lessons of these great leaders.

Peter High is President of  Metis Strategy, a business and IT advisory firm. He has written two bestselling books, and his third, Getting to Nimble, is out this month. He also moderates the Technovation podcast series and speaks at conferences around the world. Follow him on Twitter @PeterAHigh.

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