Author: George Day & Paul Schoemaker|October 16, 2019

How Vigilant Organizations Act Faster

The world of business is increasingly turbulent. And as the pace of technological change accelerates, organizations must learn to see signals sooner and — importantly– learn to act faster than rivals upon those insights. Charles Schwab did so when it became an early adopter of robo-advisors. GM did the same when it moved swiftly into the world of autonomous cars. And Novartis raced ahead when it equipped its sales teams with a digital platform to access medical expertise in real-time.

Unfortunately, such organizational vigilance is rare. For every Charles Schwab, GM, and Novartis, there is a RadioShack, Mattel, or Volkswagen. Vulnerability is the norm.

A vigilant organization knows how to move faster as soon as they verify a game-changing signal. But while speed is vital, it takes planning. An organization cannot react adequately to a crisis, challenge, or opportunity unless it prepares to do so ahead of time. By testing prototypes, taking small bets early on, or making exploratory acquisitions, organizations can give themselves a head start when the fog of uncertainty eventually lifts.

In the ongoing maelstrom of digital turbulence, speed is an especially useful creed. But moving faster, does not mean operating in haste. Acting faster than rivals is about being ready for action when needed. This starts with early detection and learning through probing questions and exploration. The aim of seeing sooner is to create greater freedom of action when threats or opportunities emerge. Vigilance capabilities foster agility — which means being able to move quickly and shift resources adroitly when needed.

Become More Vigilant: An Action Agenda

An Action Agenda

Whereas vulnerable organizations are typically built on principles of decomposition, vigilant organizations rely on some variant of an adhocracy design. Activities are combined throughout an organization and actions matter more than any one person’s position. In an adhocracy, probing the periphery for fresh ideas and continually experimenting is more important than sticking to old and established rules and customs. Vigilant firms are guided by principles that specifically encourage agility. While there are dedicated members of the leadership team who collect the paranoia, assemble weak signals, and interpret their significance, vigilance is ultimately a team sport. Collaboration and communication are key.

Navigating deep uncertainty — which companies in the midst of digital turbulence must do — requires a toolkit based on three dynamic capabilities: sensing change sooner than rivals, seizing opportunities more effectively, and transforming the organization as needed to stay ahead. Organizations must employ the latest insights about design thinking, including “fail-fast” experiments and investing flexibly using strategic options. Such options are typically small bets that a firm can roll back if necessary but, importantly, still teach an organization enough about staking out new market positions or building new capabilities to stay alert and stay ahead.

Buying strategic options is more and more common, with large companies making small bets on small start-ups, embryonic development projects, and joint ventures. Many big firms are buying their start-up challengers, such as when Walmart acquired Jet.com and UPS bought Coyote Logistics, which advertised itself as the Uber of trucking.

To see sooner and move faster, leaders must work tirelessly to keep their organizations at a heightened state of alertness. They must always be poised to act on early signals from both inside and outside their natural environments. The challenge is about creating new hands of cards, not simply refining existing ones. To stay ahead of digital turbulence, there is no room for complacency. But the rewards — stronger market positions, higher profits and growth, more motivated employees, and longer life expectancies — are worth it.

Gain in market cap (2008-2015)*

Gain in Market Cap

*Rohrbeck and Kum 2018
Vigilant organizations achieve significantly higher market capitalizations than vulnerable or neurotic rivals.