How Company Stability Drives Agility

By Elaine Pulakos, CEO, PDRI

Elaine Pulakos, CEO, PDRI

Disruptive change fueled by technology is creating unprecedented competitive threat. No one is immune. Microsoft and Dell got surprised by mobile. Uber and Lyft’s mobility services threaten the automobile industry. Netflix’s hyper-competitive streaming services that aided in the demise of brick-and-mortar video stores are now threatened by deep-pocketed Disney undercutting with lower-priced streaming and massive kid friendly content that trumps what Netflix can offer.

Surviving hyper-competition requires relentless innovation. The mantra of the day is Driving Change – and companies are rushing to restructure into agile teams, stand up new projects, and reinvent their cultures – all to power innovation and gain competitive edge.

But there’s virtually no evidence backing up the idea that these changes will yield the agility that’s needed to achieve competitive success today. In fact, new research suggests that the opposite is true. Studying over 350 companies across the globe, our team took a close look at what factors are currently most important in driving competitive success. High among these, organizational stability emerged as a top driver. Remarkably, companies with high stability deliver 150% to 500% better business results (e.g., higher profitability) than low stability companies. Beyond Driving Change, then, what we need to be doing is Driving Stability.

Our research shows that when we constantly drive change into already disruptively changing work environments, we create even more destabilizing, distracting, and chaotic situations for individuals and teams that undermine both innovation and performance. There’s no question that companies need to build environments that will spark innovation and competitive success but this won’t happen by driving unrelenting, unbridled change. Instead, our research clearly shows that companies need to counter-balance inherently destabilizing competitive environments with stability.

Stability is a psychological state that is created when organizational members feel secure in their roles and have confidence in the organization’s ability to succeed. This is bolstered by experiencing successful product and service delivery and seeing the organization’s leadership actively investing resources that are needed to execute current strategies and create new ones.

Stability through Leadership

Stability is achieved by building trust, communicating candidly and with transparency, and instilling confidence that people can experiment thoughtfully and fail without fear of finger-pointing and blame – the latter being vital for innovation. Creating these conditions falls largely on the shoulders of leaders. Our research suggests various behaviors that instill reassurance, confidence, and optimism. These are especially important for leaders to demonstrate as they work through change or unexpected jolts with their teams.

Tactically, these behaviors take on various forms. Whether it’s developing problem-solving approaches or concrete plans with the team, or sharing regular communications to drive forward movement, it’s the collective behavior of leaders from executives to managers that drives stability into the environment.

Leaders who are intentional in reassuring employees about their status and role contribute to building personal confidence, hence stability. Removing worry about where people stand and their future allows them to focus squarely on their work, which results in higher performance. Providing sufficient resources and reducing blockers that stand in the way of progress also build stability. The list goes on… ultimately, the idea is to avoid destabilizing burn-out and distraction that comes from uncertainty, added complexity, or resource constraints in already stressful and competitively threatened work environments.

  Contrary to popular leadership trends that press on driving “change” at every turn, successful companies invest in stability first — ultimately creating room for innovation and more thoughtful, meaningful change​  

A final, important way that leaders can drive stability is particularly important for innovation – that is, allowing for thoughtful experimentation and failure. This does not mean letting a million flowers bloom randomly, as this will only add to complexity and chaos. The idea instead is to create an environment that welcomes new ideas, tries new approaches that have merit, and allows for failure without finger-pointing and blame.

Stability in Action: An Example

Amazon’s handling of its Fire Phone shows stability in action. This product was in the market just over a year from July 2014 to August 2015. It was an innovation that unfortunately failed in the end. This was not a small failure but a massive failure that cost the company $170 million USD. Jeff Bezos’ commentary was that failure is a necessity for invention, innovation, and future success. This is the type of stabilizing response that allows people to continue taking risks that are essential for innovation and competitive success.

The bottom line is that foundational stability is essential for competitive success. The more that can be built into work situations for teams and individuals, the more equipped the collective system will be to absorb change, withstand competitive jolts, innovate, and initiate competitive strategies. A secure foundation allows people to move quickly and fearlessly, without emotional distractions from fear or worry. Contrary to popular leadership trends that press on driving “change” at every turn, successful companies invest in stability first — ultimately creating room for innovation and more thoughtful, meaningful change.

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