Companies in many industries must deal with turbulent environments in which speed, disruptiveness, and the unpredictability of change threaten long-standing business models and recipes for success. And as the world digests the longer-term effects of the recent pandemic, we need to prepare for a new normal that will continue to be turbulent. That means learning to minimise the threats of turbulence, while shaping and grasping opportunities to derive new sources of competitive advantage.
For many organisations, such strategic flexibility is not an easy endeavour. Strategic flexibility requires striking a balance between not changing enough – the well-known inertia trap – and changing too much, with the risk of losing focus or alienating the organisation in the process.
As Professor of Strategy and Director of our Strategy in Action Platform, Carine Peeters has been conducting research on companies’ adaptive capabilities since 2008. Based on data on over 400 organisations across industries and geographies, our research shows that adaptive organisations achieve this balance thanks to a system of five key capabilities that they proactively build and nurture. They are not only aware of evolutions in their external environment but also understand the implications of these evolutions. They experiment with alternative courses of action and are not afraid to partner inside and outside to co-create solutions. They innovate at the same time as they exploit their core business; and they can decide and act in a timely manner.
In this white paper, we share the findings of this research by taking you through the five adaptive capabilities, explaining what they are and discussing how organisations can foster them.