The Art of Future-Proofing

It’s the time of the year when many of us peer into the proverbial crystal ball — and then try to tell everyone what the future will bring. From stock-pickers to political prognosticators, to chief executives addressing the rank-and-file, each takes a turn. Even my own calendar for early 2015 is filled with commitments to give talks on how boardrooms and businesses can best address future trends.

Future-proofing, an attempt to build a strong organisation that can predict and succeed in whatever might happen next, is something more and more organisations are eager to get right, especially since their business success might depend on it.

There are plenty of things to consider when it comes to future-proofing, including the direction of the economy, new technology and its impact, changes in regulatory environments and so on. But the most important and most fundamental thing that I’ll be discussing in my talks on the topic will be the need to build resilience into the core of our organisations and to be prepared for the unexpected.

It is something that was driven home to me a couple of weeks ago as I was skiing on my own. When I headed up the mountain on the gondola the sky was completely clear blue. But that changed by the time I got to the top. Thick clouds and fog had rolled in and I couldn’t see beyond the tips of my skis.

There was only one way down, but the thought of making it to the bottom in an area I didn’t know very well, and with very little sense of where I was, filled me with trepidation.

I bent my knees, called on everything I knew about technique and made my way down the mountain one turn at a time. I stopped occasionally where it seemed there was something that looked like a sign along the trail, and I tried to stay away from the edge of the slope to avoid falling off an unseen cliff, but otherwise I just kept on going.

Similarly, there are times for any organisation when circumstances change drastically and the clarity we thought we had is suddenly gone. Such abrupt changes can come in many forms, be it political, economic or social. They come from outside organisations or from within. Partnerships collapse, vital team members pass away or leave, a trusted team member turns out to be not as trustworthy as we thought.

Just look back over the past year: Many things happened that no one predicted in last year’s January wave of future-proofing trend articles, be it in politics with the crises in Ukraine and Iraq and Syria, or in business with Sony’s recent hacking.

Using best practice, sound technique and ingenuity, organisations can get through almost anything, including those periods when it feels like the only certainty is uncertainty. But to do that, it’s crucial that those inside an organisation have the skills to handle the challenges of the unexpected.

Creating this type of resilience is, to a significant extent, about a shift in mind set. Rather than take a defensive or apprehensive posture about unexpected challenges, we should view them as an integral part of doing business. They can be seen as opportunities to be leveraged to greater success — if we are willing and able to grasp them. With the skill to do business under challenging circumstances, any organisation can emerge from a crisis stronger.

Getting there

It might sound impossible, but it’s not. There is specific training that can prep people and make reactions to the unexpected more automatic. Regular scenario planning and risk assessment is one key way. Scenario planning prepares teams for some of the ‘expected unexpected’ and enables the organisation to fall back on previously considered responses. Some adaptation — also a key skillset for future-proofing — might be required. After all, scenarios hardly ever play out in the same way as they were planned. Nonetheless, it instils a level of confidence in people in their ability to plan and act.

The ability to conduct proper risk assessment, too, is an essential skill. Assessing risks allows organisations to see early warning signs of a crisis. It also informs scenario adaptation and thus improves crisis response.

It is also worth regularly examining how the organisation manages change, and how it learns lessons from successes and failures alike. This can help it establish clear guidelines for addressing change. It can also help identify what skills are lacking, what institutional mechanisms require improvements and what resources need to be set aside to enable the organisation to enhance the skills of its people and provide the necessary internal structures to allow them to work effectively in a crisis.

For example, are IT systems resilient to hacking, is data secure and do back-up systems function properly? Do people at critical nodes of the institution (finance, communication, stakeholder relations, HR, etc) have a proper understanding of the whole ecosystem in which the organisation operates? Do they understand the broader impact of their own actions on the organisation as a whole, its employees, suppliers, customers, investors? The right answers to these questions will give people at all levels the confidence in their skills and resources to master unexpected challenges. And asking these questions, then realising you don’t know the answers, gives you a place to start building the right abilities and skills.

Don’t overlook good will

But future-proofing goes beyond business management and even beyond the organisation. Crises are easier to manage if building good will with employees, partners, and the community is part of the day-to-day of doing business. It is imperative for everyone in an organisation to know that there is no cutting corners during times of crisis — ethics and best practice are not niceties to be ignored when the going gets tough. Strong and trustworthy relationships, loyalty, and a common vision will bear fruit in difficult times and weathering a crisis.

This, too, isn’t as hard to achieve as it might seem. It is all about hard-wiring proper corporate governance into the structures of an organisation and soft-wiring it into the way people go about their business day-by-day. Building long-term good will and trust requires proper reporting and oversight and accountability, as well as incentivising responsible behaviour rather than inappropriate risk-taking. And, of course, it’s important to communicate this kind of corporate responsibility inside and outside the organisation so that employees, business partners, consumers and investors see actions that match words and have no reason to believe that this would be any different in a crisis situation.

That day alone on the mountain, I made my way down without mishap, perhaps having had one of the best runs of my life; it certainly was one that I was prouder of than any other. I was elated. I came to the bottom and had the choice to take a right towards a fireplace and a hot chocolate — or a left towards the gondola and a ride back up. I turned left and went back up again.

This column is from Above Board with Lucy Marcus, which illuminates how boards work, the consequences when they don’t work, and how they can succeed. To receive alerts from the BBC about new Above Board with Lucy Marcus columns, please subscribe here

Date

6 January 2015

The Art of Future-Proofing

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