“Start at the beginning. Move one step in the direction of your goal. Remember that you can change direction to maneuver around obstacles. You don’t need a plan; you need a vector.”
— Homeland, by Cory Doctorow
Time and time again, leaders try to future-proof their organizations with detailed strategic maps that lay out where their organizations are headed.
But the inability to accurately predict future events can make even the most painstakingly thought-out plans impossible to execute. It is 100% certain that a major disruption will happen in the next two years. These disruptions, for most of us, are now nowhere on our horizons. They will have a huge effect for some, whereas for others, the impact may be minimal. Depending on the event, the roles may switch.
It is almost impossible to predict all disruptions and their effects. Every year, at the end of the year, The Economist magazine publishes a review of predictions made and how well they did. The success rate is not much better than 50%. Could we do better with a five-year horizon? Nearly 125 years ago, in 1900, in a now legendary article titled “What may happen in the next hundred years,” John Elfreth Watkins Jr., listed predictions for the year 2000. The success rate — better 50% — was remarkably good given the 100-year horizon. Prediction is an art.
In spite of this, people and organizations still develop five-year strategic plans. Why?
Strategic planning, sold as a process through which business leaders could map out their vision for their organization’s growth and how they’re going to get there, arrived on the scene in the mid-1960s. And with it came an industry of consultants and experts on producing mission and vision statements, short and long-term goals, plans of action, yearly objectives, and implementations.
Criticisms started early. Peter Drucker, whose writings contributed to the philosophical and practical foundations of modern management theory, made observations that are worth repeating today: Planning should focus on opportunities rather than just problems, and strategic planning should be seen as an ongoing process of revising strategies and objectives based on changing circumstances, rather than being a one-time exercise.
A crucial observation, in my view, was the concept of planned abandonment; Drucker noted that organizations often struggle to abandon outdated products, services, or practices to free up resources for new opportunities. The same thing can be said about abandoning outdated strategic plans. Academia provides a good number of examples. I have seen how ideas that emerge from a single retreat can become fossilized and preclude progress. At higher levels, ideas, especially if they resulted from a long planning process, can become even harder to kill.
There are plenty of articles that point out the limitations of strategic plans. Why do leaders still create them? It could well be that launching a strategic plan is a way for new leaders to learn about the organization or give a sense of continuity to employees. It is, after all, a fault-proof decision, a way to rally the troops. And it may also be therapeutic — for both the organization and the leader. But the fact remains that strategic plans are based on assumptions about the external environment. Will the world hold still while the plan is being implemented?
Crises and disruptions that happened and did not happen
There are plenty of examples of events or developments that seemed to come out of nowhere and had a significant impact, either because they happened or because in the end, they did not happen.
In the realm of disruptions that happened: the COVID-19 pandemic, the rise of social media in the early 2000s, the launch of the iPhone in 2007, the new sharing economy (Uber and Airbnb) in the late 2000s. The emergence of the sustainability movement, now affecting every market in every geography, caught many organizations off guard.
And then there are disruptions that did not happen: heavily hyped technologies or business practices that failed to live up to advance expectations. The ESG movement is a case on the business practice side. It was a culture that did not last — in early June 2024, investors pulled $40 billion in stocks from ESG funds. Technology provides plenty of examples. The Metaverse, spearheaded by companies like Meta (Facebook), has been slower and smaller than initially anticipated; MOOCs (Massive Open Online Courses), touted as a disruptor higher education, gained some traction, but did not revolutionize education as predicted.
Blockchain technology was supposed to transform industries like supply chain, healthcare, and real estate with its secure, decentralized ledger. However, its adoption and impact beyond cryptocurrencies have been limited so far. And the value of cryptocurrencies is far from clear, looking more like a solution looking for a question.
Hydrogen fuel cell vehicles, touted as a clean alternative to gasoline vehicles, have made little headway due to infrastructure and cost challenges. One may place 3D printing in this category as well. While useful for prototyping, it has not yet disrupted large-scale manufacturing as some expected it would.
What is the biggest disruption now? Artificial intelligence (A.I.) in all its forms. A few experts knew this was brewing, but ChatGPT appeared seemingly overnight. We still cannot yet see which businesses will be affected, which ones will benefit, and which ones may disappear.
How can you manage disruptions? Create the right team.
How can organizations remain agile and adaptable in an ever-changing business, social, technological, and political landscape?
It is hard to manage a disruption without understanding the drivers of the disruption. Thus, the first thing to do is to learn about it. It is therefore important to have key people on your team who can learn quickly and who can understand how “others” think, the others being the people who are driving the disruption.
It is important to note that while most organizations have people who manage crises, that is not what we are talking about here. Some crises can be solved, and then reality can go back to square one. What we are talking about here are seismic changes with permanent consequences; things that may require complete readaptation, a new mode of thinking, in fact.
Having people who keep an eye on the outside world and identify emerging trends early enough is essential, but you also need people who can assemble teams and who can look at the issues from various angles to think about the implications, threats, and also opportunities that may be brought on by the disruption. Perhaps there is a chance to emerge better than others being disrupted.
It is also essential to have people who can be the connective tissue of the team, integrating ideas, dealing with conflicting viewpoints, and connecting different domains. In short, you need what I call Nexus thinkers. Perhaps you are such an individual.
Leading with a compass versus leading with a map
Nexus leaders know the difference between compasses and maps. Maps show how to go from point A to B to C. They work well in stable, well-understood environments, a world where B and C stay in locked positions, where the map itself does not change. But in complex, rapidly changing environments, a compass is preferable to a map. A detailed map showing the precise locations of trails and streams in a dense forest is not much use. They are also not useful in the middle of a blizzard, in cases where we may not see more than a few feet in front of us. In complex environments, maps, no matter how precisely detailed, are not enough.
A compass, on the other hand, is useful no matter where you are. Crises may alter maps, but they do not disrupt a compass. It remains steady and useful, always pointing north.
This is what differentiates managers from leaders: a manager operates with a map, while a leader develops and operates with a compass. The compass is the organization’s sense of self, of its larger purposes and values, the culture of the place. In fact, the ability to create a compass may be the essence of leadership.
It is hard to define the components that go into a good compass, but let’s equate compass with good aspects of a culture (your list of good adjectives here: collaborative, ambitious, adaptable, ethical, etc.). A well-run organization has a developed sense of itself or its abilities and possible limitations.
That is not to say that organizations should not have plans at all. Plans are essential for success. No one launches a new airplane, a new drug, or prepares for an energy transition, without precise plans being in place.
But even there, at the very root, a compass may be essential as well. Guyana emerging as a top oil producer alters the world’s energy landscape. Many country’s energy plans need to be readjusted. But other energy readjustments have been less gradual and more painful. The invasion of Ukraine made clear Europe’s lack of compass. Should Europe’s compass had included as its very core the value of energy’s independence, its dependence on Russia ‘s gas would not have been so extreme.
Yes, plans are needed, but the most important thing is the thinking behind the plans. The culture of the organization should be one where change is expected. Its culture, its compass, provides stability in times of change. Timeless values remain.
The lessons
No one can predict the future. The only constant is change. Despite this, organizations continue to create strategic plans based on assumptions about the external environment.
How can organizations be agile and adaptable in the face of unexpected disruptions and events that were not part of their plans? It is critical to have a few key individuals, Nexus thinkers are capable of learning quickly, understanding different perspectives, assembling diverse groups to analyze implications, and integrating ideas to forge possible paths to move forward.
The concepts of maps and compass are critical. The compass (the organization’s sense of purpose and values) is more valuable than a detailed map in complex and rapidly changing environments.
The limitations of traditional strategic planning become critical in times of rapid transformational change. Organizations need to cultivate agility, adaptability, and a strong cultural compass to navigate unexpected disruptions effectively.
