Business is vulnerable to hazardous, high impact, hard to predict and unpredictable events that are beyond the realm of normal expectation. What we call step change events.
Business may recognise its need to prevent these events by attempting change, innovation or transformation, often through silo based thinking or a lack of understanding of the ‘whole business’.
Managing change, innovation or true transformation is not necessarily a core competency for business.
In change management, applying ‘’right medicine at the right time” can possibly achieve the desired, sustainable results.
In true transformation, understanding the ‘whole business’ and then applying ‘’right medicine at the right time” will deliver desired, sustainable results.
However, if the organisation doesn’t identify where it is in the business cycle, it is very vulnerable to applying unsuitable and ineffective transformation techniques to its business.
In many cases the businesses apply individual change programmes or attempt innovation which has an over 80% risk of failure or even worse, causes damage within the system.
As a result, these attempts only create noise and distraction within the business and do little to enhance shareholder value. Individual silo based programmes kill business if applied at the wrong time in the business cycle perpetuating the problem by squeezing more and more to get less and less.
blackswan is a unique partner business…An outlier.
We operate with domain experts across all silos. We understand the behaviour, art and science of transformation which allows us to predict and exploit positive blackswan events and build robustness against negative ones. We understand the psychological biases that make businesses individually and collectively blind to uncertainty and completely unaware of the impact and devastation of the rare black swan event. We apply free, unconstrained thinking on a blank canvas away from the noise and distraction within the business.
We deliver bespoke, measurable outcomes that enhance shareholder value.
We are a transformation greenhouse for business.
Ten principles for a black swan enlightened world
Nassim Nicholas Taleb published 10 principles for the financial markets in April 2009. We have adapted these insightful principles after studying black swan events in organisations and the disruptive force they can bring. We, at blackswan, using these studies and the robust analytics of our 3.2 million data points collected over the past 16 years, as well as input from our 1145 blackbelts on people, process and innovation, feel these are 10 rules for a black swan proof organisational world.
1. What is fragile should break early while it is still small.
Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest. The sigmoid curve is a perfect example of sitting on our laurels when opportunity is all around, but complacency or greed dissuades us that now is the time to break, change, future proof or be aware of potential negative black swan events. The Voice of DNA Transformation links functions, people, systems and customers into more natural forms that add flexibility, innovation, rapid response, humanity and fun into getting work done more efficiently and effectively. We need to drive for more second tier thinking which is the power of the DNA paradigm to constantly understand the whole whilst expertly transforming the parts and aligning customers, systems, processes, leaders and people.
2. There is no real crystal ball that predicts the future.
Be more aware of what you don't know, than what you know. Knowledge supports semantic alignment about resources. However, set a clear direction with fuzzy edges. Be very clear about what is allowable within the strategy and, just as importantly, what is not allowed. The strategy is always for growth but must also allow you to grow and adapt rapidly to both internal and external developments. Do not cross-subsidise underperformance. Apply true analytical data transformation and implement a recovery or exiting strategy with rigid structure and metrics. Do not admire underperformance too long. Human nature insists on a definition for everything. Strategy today can be tactics tomorrow. Most importantly, adapt a clear and fuzzy strategy, with an intended course, allowing for a stream of actions, building an ideology, individual thinking and a personality to be the aggressive pacemakers and creating the market by the simple, yet smart, deployment of resources.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. Too much energy is spent admiring the problem. Too much time is given to non-performance. Identify your top 25% and work really, really hard to free them, develop and engage them. Find the smart people whose hands are clean. Have leadership not leaders. This bias creates a cult-like culture which does not say there is no room for charismatic leaders, only that the work is done as a cohesive group. Look to continually improve/align through self organising, self regulating, and optimisation of the value chain.
4. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in leadership and organisations. It’s funny, but as people go up in an organisation they tend to want to prove how clever they are by making things more complex. Simplicity is the key to greatness. Balance everything by brutal facts where the truth is always ousted. Value creation does not flow from complexity. A pattern of matter, energy or information has economic value if the following three conditions are jointly met.
1. Irresistibility which states that all value creating transformation and transactions are thermodynamically irreversible.
2. Entropy, where all value creating economic transformation and transaction reduce entropy locally within an economic system while increasing entropy globally.
3. Fitness, where all value creating economic transformation and transactions produce artefacts and/or actions that are fit for human purpose.
5. Do not give children sticks of dynamite, even if they come with a warning. The culture and climate need to be fed with positivity, freedom, simplicity, diversity and an appreciation of trust and authenticity. The best change programme you can implement is to sack all the leaders. Poor or dangerous leaders kill, inhibit or just downright block success. Build a consistent system with clear constraints, allowing freedom within a framework where you manage the system not the people.
6. Leaders should never need to “restore confidence”. Leaders need to be able to put a helmet on and get down in the trenches when necessary. True individuals who are genuine not generous and who want to be leaders; who are hungry for change, able to harness the power of culture, are innovative beyond imagination, desperate to rewrite both the written and unwritten rule, are globally wired, are disruptive by nature, able to change at breakneck speed, with sustainability in thinking, able to apply the use of different situational thinking styles and have toughness and relentlessness as part of their inner core.
7. Be human - look at the system, examine your DNA. Analytical insights into how the system woks forms. Historic or current flaws must be recognised, eliminated, bypassed, neutralised or reframed. You must understand both current and future model performance and the energy necessary to shift from one state to the other. Common and consistent language, communication and the relentless pursuit of excellence must be aligned with a discipline of execution and a bias for action.
8. Embrace contradictions and use the power of solving contradictions wisely. Cleverness is knowing the right answers. Wisdom is knowing the right questions. Go to the balcony, observe patterns, listen to the signals not noise, and move constantly between the balcony and the dance floor. Constantly indentify an adaptive challenge with no ready made answers, mix contradictions where you regulate the distress, maintain disciplined attention, heat and pace and ensure all voices are respected. All this to achieve outcomes that are synthesised, not optimised, and which will allow breakthrough performance and creativity.
9. Do not give an addict more drugs if he has withdrawal pains. Too often we allow events to develop or watch with inertia whilst problems occur because its easy. Feeding non-performance creates a discipline of non-performance. You cannot have enough of the right people; one wrong one is a drag and a drain on your team. Substitute them immediately.
10. Make an omelette with the broken eggs. This crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. Change may not occur until the boat rocks. Turbulence may be necessary to create an environment for change. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Then we will see an economic life closer to our biological environment: smarter companies, richer ecology, no leverage. In other words, a place more resistant to black swans.
The blackswan Strategic Transformation Process® consists of five distinct steps that will take the transformation through to shareholder value.
Step 1: Exploration. Systematically explore all permutations of change that bring opportunities to your organisation. Working together we will identify the most significant changes and proceed to convert these into concepts for performance improvement, business transformation, new products, new customers, new markets, new initiatives, new processes and new skills.
Step 2: Examination. We will then examine these opportunities to determine their degree of attractiveness for the business. These will be judged on the basis of cost implications, benefit to the business, degree of strategic fit and level of difficulty with their implementation.
Step 3: Expansion. We will now take the opportunities that will have emerged as being the most attractive and expand them further by assessing the ratio of risk to anticipated reward. We will consider the best case outcome from each significant opportunity against the worst case outcome from each significant opportunity.
Step 4: Exploitation. Finally we will construct individual and detailed implementation plans to exploit each of the very best opportunities by ensuring that the factors that will promote the best case scenarios are exploited and the factors that will cause the worst case scenarios are avoided.
Step 5: Evaluation. We will lastly evaluatethe success factors of the implementation programme to ensure that the best case scenarios are delivering the agreed ROI and correct/innovate any variations that have emerged which will provide the jump change required.
