THE THREE SCHOOLS OF THOUGHT THAT MATTER
When Webvan launched at the peak of the dot-com boom, the ambitious online grocer invested millions in redesigning the industry’s infrastructure to deliver products to people’s homes simply and inexpensively. The company’s founder raised an initial $120 million in venture capital and spent a significant chunk of it building a 330,000-square-foot distribution center—a highly complex “behemoth adorned with five miles of conveyor belts and $3 million of electrical wiring,” according to The Wall Street Journal. But while the company was counting on the internet to change consumer behavior, customer demand simply wasn’t yet there, and Webvan had made no plans for other ways to utilize its massive investment in infrastructure. After burning its way through $1.2 billion in capital in just a few short years, the company declared bankruptcy in July 2001.
Webvan’s lack of planning for an alternate future isn’t an anomaly; many modern organizations overlook the opportunity cost of building infrastructure, operating models, and workforces with a fixed mindset and fail to adopt a more adaptive strategy. They often lack the tools and methods to respond quickly to signals of change and simultaneously accommodate a range of potential futures. This was apparent recently, as businesses were caught on their back foot when COVID-19 began spreading around the globe. Business continuity planning, for many years an afterthought, became a critical imperative as companies were forced to adapt quickly, and pivot into multiple modes of operating and new ways of enabling success to survive in a climate of unforeseen change.
The widespread lack of planning for multiple futures isn’t altogether surprising; for many years, standardization was the go-to approach to make operations more efficient and less costly. But today, the pace of change due to technology advancements and other factors is exponential, and standardized systems and structures won’t give your business the freedom to evolve with customer and employee expectations and behaviors, which are changing faster than ever.
While transformation remains a top priority—everyone’s talking about the need to transform from A to B to C—few conversations center on the how. Increasingly, that how hinges on adaptability.
Today, successful businesses are ones that invest in developing flexibility and resiliency. They drive value and manage risk by adapting not with big sweeping changes but rather by changing little and often (the cumulative effects of which may ultimately be big and sweeping), and testing their business case assumptions continuously along the way. And, perhaps most importantly, as leaders look ahead in today’s climate of constant change, it's clear there's not just one possible future. Instead, businesses must prepare for multiple scenarios and continuously monitor the market landscape and signals of change so they can adjust plans as needed.
To effectively design an operating model and workforce that can flex and thrive within a variety of futures, leaders should leverage a new combination of contemporary disciplines through the integration of design, systems, and scenario thinking—a mindset we call Transformation Thinking.
This perspective unpacks how Transformation Thinking—supported by strong data and analytics tools and capabilities—leads to better decision-making while enabling your operating model and workforce to transform and adapt for a range of potential futures.
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