How viable is your organisation?
How viable is your organisation?
This question is currently being asked on a daily basis. Markets, politics, subsidies and tariffs, crises, wars and trade barriers repeatedly create uncertainty and often require companies to respond.
This was particularly evident a few years ago when the Covid-19 pandemic temporarily disrupted almost all established forms of cooperation. Organisations had to adapt their processes and behaviour within days. Those that were unable to do so died.
The question ‘How viable is our organisation?’ is therefore highly relevant. There are two perspectives on this: the external view and the internal view.
The external perspective
For listed companies, the external perspective is directly reflected in the share price and other key figures such as the price-earnings ratio (P/E ratio). Participants in the stock markets assess whether a share will be worth more or less in the future and base their actions on this assessment. They bet on the survivability and adaptability of companies. Today, Mercedes-Benz Group (formerly Daimler) shares have a P/E ratio of 5.28. This means that if profits remain the same, Mercedes-Benz Group will have generated the value of its shares as profit in 5.28 years.
By way of comparison, Microsoft shares currently have a P/E ratio of 36.46, Rheinmetall shares a P/E ratio of 37.23 and SAP shares a P/E ratio of 88.20. The shareholders of these companies assume that these shares have the potential to increase significantly in value. They are placing higher bets on rising share prices.
An extreme example are Tesla shares, which currently have a P/E ratio of 198.13. A buyer of Tesla shares is willing to bet that Tesla will perform so well in the market that, assuming profits remain constant, it would take almost 200 years for the company to generate this share value.
On average, around $91 million is bet on Tesla’s ability to adapt every day on the NYSE in New York alone. Despite Elon Musk’s erratic behaviour, Tesla’s survivability is clearly rated much higher than Mercedes Benz’s adaptability.
But that is only the external view of market participants, who in principle only have access to the information released to the outside world by investor relations departments. The internal view may be different.
At the boundary between the internal and external views are executive and supervisory board members whose stock market transactions must be disclosed because they naturally act with a knowledge advantage.
The internal perspective
As employees and managers, we have an internal view of our company and our organisational unit. With the internal knowledge we have, we can assess how well our organisation is doing in terms of ambidexterity. On the one hand, it’s about exploitation – colloquially known as milking the cash cows – of our products that we already have on the market in order to increase margins and absolute profits by optimising existing structures, increasing efficiency and creating stability. On the other hand, it is about exploration – creating new options for the future, exploring new things, generating innovation and verifying assumptions through experimentation. Classic agile action with tools such as ‘lean startup’ ideas or Scrum.
As managers, we are faced with the challenge of leading under pressure and contradiction. Adaptive leadership is characterised by navigating conflicts, dealing with uncertain conditions and resistance, and enduring uncertainty.
We need to make this a topic of discussion in our organisation.
How do we start the conversation?
A good introduction to a dialogue is a metaphor by Kate Christiansen from her book ‘The Thrive Cycle – Unlock the adaptive organisation within.’ She talks about adaptive archetypes, namely
- Surfers – as surfers, our organisation is proactive – it is an adaptive organisation. It anticipates change and rides the wave. In my words: it may even ensure that the tsunami is even harder on its competitors.
- Swimmers – as swimmers, our organisation is reactive. It keeps its head above water and reacts when necessary. But only when absolutely necessary.
- Splashers - as a splasher, our organisation is action-oriented. It jumps frantically from wave to wave. Many uncoordinated projects that slow each other down create uncertainty, frustration and a feeling of being overwhelmed for everyone involved.
- Sinkers – as a sinker, our organisation ignores change until it is too late. Rigidity and clinging to ‘we’ve always done it this way’ characterise the sinker.
We can take these metaphors and discuss with our colleagues which of the images we recognise our organisation in. This naturally leads to the question: ‘And what can we do to become or remain an adaptive organisation?’
If you take up this idea, we would appreciate your feedback. The members of our association for adaptive organisations are also happy to assist you in facilitatingh such discussions, if you suspect that this might be difficult.
In any case, we wish you every success in your steps towards becoming an adaptive organisation!
About the Society
The Society for Adaptive Organisations e.V. is an association of leading European organisational developers, coaches, and trainers that aims to create uniform quality standards for training and continuing education in organisational development and to support companies in uncertain markets. The goal is to help organisations become more customer-focused, effective, and resilient.