The Law Of Adapting
By Glenn A. Williams
There is an ancient Chinese proverb that says: “When the wind of change blows, some people build walls, others build windmills.”
Change can cause people to become frightened, impairing their ability to reason. Emotionally, they want to stay with what’s known and familiar, even when it becomes obsolete. Life and business teach us that the only real constant is change.
We make changes all the time, some big and some small. The significant changes may be particularly frightening because they mean that things will never be exactly the same again.
Change itself is not the problem – it is a natural and necessary part of life. The answer, it turns out, is that success changes. Fundamentally, leadership is about helping people move across a threhold, from the known into the unknown.
Adapting, not changing, is the key to success, health, happiness and high performance. That’s why change management is not the answer to responding to change, but adapting is.
AdaptAbility is a powerful capacity. It allows you as an individual and as a leader to evolve and to continually create a better version of yourself and your business. This capacity enables you to maintain success, no matter how your environment or the corporate world that surrounds you changes. Your ability to adapt to any given situation and to use this to your advantage, comes directly from your understanding and application of The Law of Adapting.
The Law Of Adapting Explained
For those of you who don’t know, a law is a statement of fact, deduced from observation. As a result, a particular natural or scientific phenomenon always occurs if certain conditions are present.
Simply put, The Law Of Adapting states that the rate of ‘adapting’ must be greater than or equal to the rate of ‘change’. Thus, the formula for the law is:
Adapting ≥ Change
or when abbreviated
A ≥ C
In elementary terms, success exists when and where A ≥ C.
Now, while this sounds profound, how do you know that this formula is correct? Well, if you turn your attention towards the statistics of business failure, and then consider why these businesses struggle, you’ll be able to visualise the formula in action.
Statistically speaking, small and corporate businesses in Australia encounter difficulties. In fact, according to the Australian Bureau of Statistics (ABS) some 60% of small businesses fail within 3-years of the start of operation. The Australian Securities and Investments Commission (ASIC) also state that some 9,465 corporate insolvencies occurred during the 2015-16 fiscal year. Over this budget year, some 2,171,544 businesses were actively trading according to the Australian Bureau of Statistics (ABS). Of this number, just under 790,000 were corporations (non-financial and financial). Therefore, 1.2% of corporations experienced insolvency during 2015-16.
The main reasons for these business and corporate failures, and many others, according to a recent Reserve Bank of Australia (RBA) report are:
1. Weak organisational structure
2. Poor business strategy
3. Technological change
4. Changes in economic conditions
However, if you look at these factors critically, a common theme appears – adapting was less than change. For instance, the RBA report suggests that poor strategic management caused company failure. Therefore, if you apply the law of adapting to this issue, then you’ll deduce that the ‘internal structure’ of these companies were unable to adapt because they were not greater than or equal to the rate of change that occurred in each of the businesses. Thus, failure resulted.
Understanding Why A (The Rate Of Adapting) Must Be Greater Than Or Equal To C (The Rate Of Change)
As you saw in the earlier example, if the rate of adapting is not equal to or does not exceed the rate of change, then an adverse outcome is the result. As a business or corporate group, avoiding negative consequences is what leads to success. Thus, by continually adapting to change, you effectively create positive outcomes.
But, when adapting is less than the rate of change, then one or more negative outcomes occur. In a business or corporate sense these present as:
- Boredom / Under Performance / Under Promotion
Copperart, which rebranded itself to become Homeart, under performed in a rapidly changing retail landscape. Consequently, the business folded in 2014.
- Stress / Feeling Overwhelmed / Diminished Resilience / Illness
Steve Jobs, Apple’s former CEO, found out he had pancreatic cancer in 2003. As a result, Apple’s share price fell. Jobs continued to work until he passed away in 2011. Though, many question if the company could have done better over this time. Since Tim Cook took over as CEO, Apple revenue has jumped from around $30 billion to just under $80 billion.
- Slowed Revenue Growth
Pumpkin Patch, an iconic children’s fashion label once valued at $790 million in 2007, did not respond to changes in fashion trends, which resulted in a $15.5 million loss in June 2016. “Failed children's clothing retailer Pumpkin Patch has returned from the dead” subsequently read the headlines of ABC News in December 2017. But the catch is it will be an online store only — a far-cry from its glory days when the children's fashion chain had over 100 bricks and mortar stores across Australia. Online retailer, the Catch Group, came to the rescue after Pumpkin Patch went into voluntary administration and closed all its stores after 27-years in business.
- Declining Profit
Dick Smith, an electronic giant, had outstanding sales performance, but the company eroded its earnings by expanding too fast. Kogan purchased Dick Smith's online business and customer list after it collapsed in 2016.
- Loss Of Market Share / Declined Competitive Advantage / Reduced Industry Influence / Decreased Market Power
Masters Hardware, owned by Woolworths, cost billions to establish, but failed because it was unable to compete with Bunnings.
- Diminished Shareholder Dividends Making It Harder To Attract Capital
One of Australia’s largest retail stores Myer is collapsing, dropping the company’s share price to 54 cents. In 2009 the share listing sat at $4.10.
- Regression / Obsolescence / Disruption
Technological changes eroded Kodak’s 35mm film business. So, their size and scale reduced when digital cameras came into existence.
- Premature Death / Extinction
Heavy Haulage Australia (HHA), a $40 million heavy machinery trucking empire, collapsed in 2015 with the fall in iron ore prices and decline in Australian mining.
In all these cases, each of these businesses failed to adapt to change. As a result, they did not preserve their core, or the heart of their operation. They also neglected to stimulate growth. Let us explore the core and growth stimulation in greater detail.
The Importance Of Preserving The Core And Stimulating Growth
The core of an entity consists of its purpose and values. These factors, according to the Harvard Business Review, define an organisation’s character – with purpose being a company’s reason for existence, and values being principles that guide the business. For instance, Walt Disney’s core is to stimulate creativity, dreams, and imagination (purpose) and make people happy and feel good (values). Thus, the core is the identity of someone or something.
Stimulating growth, on the other hand, gives an organisation the opportunity to express its identity productively so that it adds value as a business to the ecosystem that it operates within. The same principle applies, at an individual level, to the people within an organisation.
For example, let’s say a marketing manager gains a promotion, moving to the CEO position within a company. This new CEO is the same person that they were as the manager. They have the same purpose and values. However, they can now also develop and adapt to their new role, which is very different to being a marketing manager. If the promotion is a good fit for them and adapting successfully occurs, the role of CEO – with more responsibility, power, and influence – will be more rewarding, both personally and professionally.
The Law of Adapting – A Case Study
Apple computers, founded in 1976, began in a garage when three friends put their heads together. Over the years since, Apple has adapted to change, while preserving their core to stimulate growth.
The company Apple have stayed true to their core – design beautiful and powerful products for the way we live and work (purpose) so people can work more simply and productively by solving problems creatively (values).
Apple, today, is worth $750 billion, according to CNN Money. However, Macworld says that back when Apple began, Ronald Wayne, the third friend in the garage, sold his share of the company to Steve Jobs and Steve Wozniak for $500.
The Advantage Of Adapting:
By preserving their core and stimulating growth, Apple has continually adapted as technology has developed. The company have done this by challenging the status quo through simple and beautiful design – while expanding their core business (personal computers) into other areas including music and video (iTunes), phones (iPhone) and watches (Apple Watch).
Successful adapting - for an individual or organisation - occurs when that entity responds intelligently to change by preserving their core (purpose + values) whilst stimulating growth. Thus, by following the Law of Adapting an entity keeps their original identity – their intention, philosophy, character, attitude, style, personality, brand promise, reputation and proposition – while successfully expanding and developing that core over time without compromising its essence. This is a dynamics process that involves simultaneously resisting some change whilst embracing other change.
The Development Of The Law Of Adapting
The origin of The Law Of Adapting stems from Revan’s Axiom, referenced in books like “The Fish Rots From The Head,” a handbook on governance for board directors written by Professor Bob Garratt. The excerpt below is from page 48 of the 2010 edition. Although, Revan’s Axiom states that Learning ≥ Change – abbreviated as L ≥ C.
“For organizations to survive and grow, their rate of learning has to be equal to, or greater than, the rate of change in their environment. Revan’s axiom - L ≥ C – is an essential of organizational ecology. It is easy to state, easy to agree with, but difficult to implement unless built into the organizational culture consciously at all levels and reinforced frequently over time. Yet it must be implemented if the enterprise is to continue to exist and develop.”
Now, while the Axiom makes sense, it also has two shortcomings:
- Learning is only one of three kinds of adapting
We associate learning with changing behaviour – one of three kinds of adapting (previously explored in another post – just click on the link) these being:
- Structural: Features adapt to increase chances of existence.
- Physiological: Processes adapt to aid sustainability.
- Behavioural: Responses adapt to help survival.
So, when I discovered Revan’s Axiom, I recognised that L ≥ C is an unintentional over simplification, which linked to Revan not understanding these three distinct kinds of adapting.
- Relating the rate of learning to the rate of change in the environment of an organisation is also an over simplification
Most people will automatically associate “environment” with the external world an organisation exists within, by default. However, we need to think about the environment both in terms of the internal and external conditions an organisation inhabits, in particular its people, and its components. Adapting to internal, as well as external changes, is critical to the survival and growth of an organisation. The (internal) culture of an organisation has a significant impact on its capacity to grow and flourish by adapting to change.
An excellent business tool that allows management to assess and monitor internal and external change to enable greater adaptation, is a SWOT analysis, an acronym for analysing:
A SWOT analysis recognises that strengths and weaknesses emanate from within an organisation, while opportunities and threats refer to things happening externally. The process of matching strengths to opportunities and mitigating weaknesses and threats, for example, improves and enhances strategic fit.
So, what exactly is strategic fit and how does this relate to The Law of Adapting? Let’s delve deeper.
How Business Can Apply The Law Of Adapting
To fully grasp how to apply The Law of Adapting, you need to turn your attention towards the management theory of business strategy. According to the Strategic Management Journal the concept of strategic fit is the ability of an entity to match its means (skills and resources) with opportunities that exist externally. As such, this matching application becomes achievable via strategic planning. Thus, it’s vital that an entity has the necessary means to carry out and aid the approach.
The concept of “fit” also applies to the functional areas of a business - marketing, sales, operations, finance, HR, and IT. For example, from a marketing perspective, an organisation needs to achieve and support a suitable and correct match between its portfolio of products and services and the current and changing (future) needs and aspirations of its target market. To achieve this fit, the business needs to both sense and predict customer needs and preferences.
“It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them.”
— Steve Jobs
Naturalist and biologist, Charles Darwin best known for his theory of evolution and natural selection also spoke about the concept of “fit” or “fitness”. According to his concept, a species continually engages in a competitive struggle for existence; much like a business.
Thus, because all businesses exist in a world that is constantly changing (and evidence suggests the rate of change is even accelerating), companies need to sense and respond to change – both to ensure their survival and to provide themselves with an opportunity to flourish. Undoubtedly, a business can achieve this by understanding consumers’ needs and wants even better than consumers understand those things themselves.
Indeed, the CEO and Board have the most opportunity to influence the way in which an organisation adapts because their horizon of focus affects the longevity of their decision making:
- Board: 3-5 years (and ideally longer-term)
- CEO: 1-3 years
- Executive Team: Quarterly to 1.5 years
- Middle Management: Monthly to quarterly
- Junior Managers: Daily to weekly
- Frontline Workers: Interaction to interaction or hour to hour
The Benefits Of Understanding The Law Of Adapting
Regardless of where you sit in an organisation, anyone can put The Law of Adapting into action, whether it relates to business practices or is on a more personal level. You can apply the law to your home life, your working life or even your recreational pursuits - as anyone can think and act like the CEO of their own life.
However, if executives are to be successful in their careers, they must first gain a clear understanding of their primary role: adapting the organisation they govern. This process involves achieving and maintaining a “strategic fit,” between an organisation and its environment. Similarly, it involves achieving and keeping a “fit” between themselves and the different domains of their life – outside of work. Most executives are not well adapted to meet the changing demands on them – they feel stressed, tired, and even pressured to perform in their professional roles. However, by understanding The Law of Adapting they can more easily make strategic changes and regain control in the workplace and their life.
Mastering The Law Of Adapting
The pathway towards mastering the law involves committing to a small number of pursuits – both personally and professionally – over the long-term. This is a concept George Leonard explains in greater detail in his book “Mastery: The Keys to Success and Long-Term Fulfillment”. Drawing on Zen philosophy and his expertise in the martial art of Aikido, Leonard shows how the process of mastery can help us attain a higher level of excellence and a deeper sense of satisfaction and fulfillment in our daily lives through the dedicated pursuit of less rather than more.
Therefore, it’s essential for you, and the person next to you, to be able to assess your strengths and weaknesses to determine:
1. Which field to position yourself in; and
2. Which position within the team to play.
For example, it’s rare to find short people on a basketball team. So, if you’re short, then maybe playing hockey would be a sport better suited to your innate strengths.
In my case, I started out pursuing a career in science via under graduate studies, guided by my success in consecutively winning the prize in my final two years of high school as the best student in the biology class. However, over the course of my studies, I found that I was interested in and capable of developing people, from a management and leadership perspective. This realisation led me to then pursue my Master of Business Administration degree.
Fast forwarding to my mid-twenties, I received a promotion to a middle level management role. Although, one day I mused that my ideal job would involve simply listening and talking. Slowly I was starting to realise that I had effective communication rather than research and analytical skills.
After a career in management consulting and several CEO roles, I launched nLIVEn, a management consulting and leadership coaching firm. Kicking off in 2000, this enterprise specialises in business executive coaching. nLIVEn provided the opportunity to intersect my three special talents:
1. Deep listening
2. Clear thinking
3. Simple speaking
The challenge – how do I pursue mastery (keep doing the same thing) while continuing to grow (stimulating myself)?
The solution - this has occurred in a handful of different ways:
- Using my 1-1 coaching skills to develop my group facilitating skills, including serving as the Chair of a range of board of directors.
- Progressively working with larger, more complex organisations as clients, to provide team-on-team organisation development interventions.
- Using my communication skills to write articles, essays, reports, and books.
You too can master The Law of Adapting. Firstly, use The Law Of Adapting to guide the process of strategic planning within your organisation, and secondly as the basis for strategic life planning in the broader context of your life (as revealed in my book Visioning).
In upcoming articles, I’ll be discussing in greater detail how you can translate The Law Of Adapting into a dynamic process for embedding strategic thinking, planning and execution into the DNA of your organisation in ways that fundamentally enhance your AdaptAbility.