Ask any New Zealand chief executive, and they’ll likely say that the business competitive landscape is changing rapidly. Fast-changing technology, competition from start-ups and small players, the advent of territorialism and other factors that weren’t causes of concern just years ago are now palpable threats to business as usual.
This is the sentiment echoed by 26% of New Zealand CEOs surveyed as part of the 2018 KPMG CEO Outlook Survey, where CEOs across 11 sectors contributed their views about the future and direction of business. In the midst of unknown waters, it’s daunting to move forward, but leaders have no choice – it’s either sink or swim.
In the current environment, legacy companies are struggling to compete with new, entrepreneurial start-ups. Why is it that large companies, with all the resources at their disposal, are having difficulty playing in this bigger, more complex environment?
It’s because they don’t know how to fail.
No more business as usual
The winners in the marketplace right now are the small entrepreneurial start-ups. The rise of Uber caused a dent in the traditional taxi industry. Xero’s move to cloud-based software that streamlines the customer’s product experience is turning the accounting industry on its head. Start-ups are carving out unexplored territory, getting closer to the customer and breaking new ground with nothing to lose.
Meanwhile, massively successful companies with age-old strategies are finding that the strategies that made them successful in the first place are crumbling in this new and rapidly evolving landscape. It’s comparable to the ’90s mobile game Snake, where the snake’s length, built from continuous successes, eventually becomes its own obstacle.
So what’s a legacy company to do?
It’s one thing to accept that the strategies that used to work are now futile and must be adapted. The challenge is in building a senior leadership team with the courage, experience and flexibility to drive an appropriate response. Oftentimes, C-suite executives in a legacy company have never experienced uncertainty and failure themselves, and have entered the company to take over the reins and keep the rhythm going. A third of the CEOs surveyed by KPMG didn’t think they had the right leadership team to oversee transformation. What they’re missing is the ability to fail and to learn from failures, which builds agility and resilience – the key skills for navigating disruption and the unknown.
Learning to fail
How do you learn failure and teach agility? The only way is personal experience. It’s hard for executives in established companies to feel confident about experimenting when there’s so much at stake. That’s why it’s so important for leaders to incorporate into their daily lives a safe, experimental space for testing their ideas and practising the art of failure. Cultivating the entrepreneurial mind set is all about trying, failing, and building agility and resilience.
A leader who knows how to experiment, fail and pick themselves back up is the type of leader who will survive through waves of disruption. It’s why start-ups are doing so well. Playing in the now means that they’re able to try different things out and are simultaneously learning how to recover quickly when things don’t quite go to plan. It’s important to remember that legacy companies also started from scratch once upon a time and that the key to their reinvigoration might just be in looking back to those early days of trial and error.
The experts say the trick to winning the seemingly unbeatable Snake game is to move in unexpected ways (like wiggling and sticking to the edges), practice, practice, practice and never give up. Just as in business, the game isn’t over until you stop playing.
Heather Connolly (PhD, PgDip Strat Mgt (Dist), BMS (Hons), PgCert Tert Teaching) is the Academic Director for Executive Education at Waikato Management School. Her role includes academic oversight of the Waikato MBA, PgDip (MgtSt) and also a number of corporate programmes. An experienced management, risk management, compliance and assurance consultant with clients ranging from large listed companies and government agencies to SMEs, Heather is a regular speaker at academic, industry and sector-related conferences in Canada, Europe, Australia and New Zealand.