Navigating CEO complexity with adaptive thinking and agile strategy

15 March 2023 4 min. read
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Research from AlixPartners suggests that the level of current business disruption faced by CEOs is at its highest and most complex point since World War II. So can how CEOs ride the wave of complexity? Nathan Farrugia, Managing Director of Vistage, makes the case for adaptive thinking.

The economic climate and pandemic have proven the role of CEO is becoming even more complex. Not only do they have to lead the company towards profitability and sustainability, maximising shareholder value and owner returns, but they need to shift and swerve to avoid crashing into the next black swan.

Navigating these and more challenges requires a different skill set that is putting pressure on leaders to perform in VUCA situations that is, frankly, un-trainable.

Nathan Farrugia, Managing Director, Vistage

Leaders need to be street-smart, able to read external factors and adjust their approach constantly. Sometimes it’s trimming the sails, and other times it’s a complete tack or gybe. So how do you acquire the skills to perform in this way?

Perhaps the most valuable skill in this climate is adaptive thinking – it’s the only real practical way to make decisions in such a changing world. Making your mind up (i.e. setting a strategy) is now less effective than ‘muddling through’.

What is adaptive thinking?

Adaptive thinking relies on the ability to hold multiple thoughts and ideas in your head, to be able to trade these off to make the best decisions. It requires CEOs to let go of their own opinion and think creatively to come to solutions that are, sometimes at first, counter intuitive.

Instead of thinking of ‘what should be done’ as a strategy to deal with an issue, challenge or opportunity, consider asking yourself what ‘could be done’. Whilst it only looks like a small change in letters, the power of ‘should’ versus ‘could’ is significant.

This is based on our neuroscience (or the way our mind is wired) to put the obvious course of action to one side and opens up more creative solutions to achieve the same end result. ‘Could’ creates adaptive thinking simply because it allows for possibilities.

Should we still have a strategy?

Strategy making is often described as planning ahead, however it is best described retrospectively and ‘what got us here’. This can be dangerous, as you can’t always carry forwards what worked in the past. In this sense, experience can be problematic, blocking exploration and innovation.

What can we do? We don’t want to lose experience – experience in itself has value from lessons learnt. But adaptive thinking takes experience and evaluates it in a current situation, creating options.

This application of past learning into future decisions is what Socrates would label ‘wisdom’, and it is the crux of adaptive thinking.

One could argue that strategy and adaptive thinking are the past and the future is about your present point. Steve Jobs explained that you can only define strategy by joining the dots backwards, while adaptive thinking is the ability to recognise patterns and create ‘best options’ moving forwards.

Businesses still need a strategy. But you need to take the strategy with a pinch of salt and tweak it as you go, as conditions change. A strategy is the plan A if everything in the market remains the same – which let’s be honest, rarely happens. Using adaptive thinking allows you to see how you can implement your strategy by altering it to market conditions.

To be truly adaptive in our thinking, we need to shift from our lizard brain and let go of our ego. We need to be open to possibilities without fear of consequences in order to take in all the information available, reorganise it and make decisions.

What are the challenges of using adaptive thinking?

The main challenge is to get everyone to shift their mindset too. Going to your board without a long term plan, claiming you are going to adapt according to the presenting situation can be daunting to any CEO that wants his or her board to trust them.

Telling your team that you don’t have a long term plan and your strategy is to ‘muddle through’ isn’t going to give them reassurance when they look to you as their leader. Yet, this is the nature of doing business in times like these and they need to buy into the idea and become advocates for adaptive thinking across the whole organisation.

The key approach is to make the vision and the purpose of the organisation extremely clear, whilst making the strategies to achieve them adaptive and situational.