One of our seven competitive strategies for running a more profitable business in a complex world is the adaptive strategy. This strategy enables the business to adapt to changes in customer needs, which may be difficult to predict. Sir Ben Ainslie is a great example of the adaptive strategy in operation.

The adaptive strategy fits circumstances where the environment is in a state of flux. Customer needs could be changing, products and technologies could be evolving. The adaptive strategy can also be deployed where the firm chooses to meet customers’ needs with a bespoke service offering.

This strategy builds the firm’s ability to adjust to the unfolding changes in the environment. Key to the adaptive strategy is enhancing both the ability of the system to sense early signals of impending change and to have the flexibility to respond to what unfolds.

While it is possible to create new knowledge inside the organisation, this process is enhanced by the ability to absorb knowledge from the external environment. The “absorptive capacity” of the firm is driven by the ability to acquire information, to assimilate it and combine it with existing knowledge and to exploit the resultant benefits. Managers have to see that there is value in acquiring knowledge externally, to prioritise its acquisition and to ensure that it gets to the staff who can use it best. An “open” attitude to information from outside can be contrasted with a “closed” view that does not value anything that was “not invented here”.

For a firm pursuing an adaptive strategy, there are some generic adaptive practices to consider adopting. These include:Culture:

A customer-centric culture focused on delivering solutions to clients, not selling a product to them
Encouraging initiatives and experimentation in response to market changes
Recognise when staff go “the extra mile” to solve a client’s problem

Developing adaptive and fluid organisational structures
Localising decision making to speed up response rate and stay in sync with the market
Moving to a low-fixed/high-variable cost mix
Building flexible operations to enable rapid adjustments
Acting as project “integrators” rather than doing everything “in-house”
Developing multi-skilled staff and empowering them to respond to changing circumstances

Strong coordination to ensure clients’ specific requirements are met
Share learning from working with demanding clients
Basing decisions more on intuitive insights than analysis of the past
Seeking multiple sourcing options
Improving market-sensing capabilities to detect impending change

Sailors have many variables to deal with and these variables interact in complex ways. The wind varies from minute to minute, the tides will be different each day and local currents will interact with changing wind speeds and directions in unpredictable ways.

The Olympic sailing course will be set differently for each race and competitors will approach the course in their own way. Successful sailors have to be physically fit, but they also have to be able to continually analyse the changing conditions, the competitors and their likely behaviours and positions on a second-by-second basis. This can only be done intuitively.

Great sailors build their intuitive know-how through many years of competing, and some, like Sir Ben Ainslie, the most successful sailor in Olympic history, seem to operate on a different level to everyone else.

It’s difficult to create another Ben Ainslie; his know-how built through experience provides a fitting example of an adaptive capability.

Article by Cliff Bowman and Paul Raspin, co-authors of What’s Your Competitive Advantage?: 7 Strategies for running a more profitable business in a complex world, published by FT Publishing, priced £19.99

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