The Two Words That Will Save Your Medium or Large Business in the Next 18 Months

11/03/2010 12:33 pm ET | Updated May 25, 2011

One thing has become clear: in the aftermath of the recent US mid-term elections (and not just for businesses in the US), there will be no return to a period of long-term, stable, business-benign government in the foreseeable future. And as we all know, only a crazy person would try to predict how the economy will fare over the next few years.

So where does that leave medium and large businesses who need to plan for the next few years? How can the C-suite draw up any sort of effective strategic plan in the light of such uncertainties?

The answer lies in emulating a mindset and approach that small businesses do naturally: being "predictively agile."

What's a predictively agile business? Put simply, it's one where the manager ranks aren't there simply to respond to "command and control" instructions, but instead act as the effective eyes and ears of the business by identifying and responding to significant changes in the organization's operating environment -- and by doing so, significantly reducing the time lag between the organization hitting the front wave of changing circumstances, and reacting appropriately.

Organizations that do not develop predictive agility in their manager ranks over the next 18 months (and who instead continue to reserve strategic interpretation for senior leadership alone to exercise, keeping their managers static and inflexible) will find themselves increasingly on the back foot as their more predictively agile competitors steal a march in the marketplace with their faster response times.

Easy to say, of course, but how can senior leadership develop a cadre of predictively agile managers without feeling that they are taking an enormous risk in delegating such a high degree of latitude to their managers? Well, the reality is that there is nothing fundamentally new here: truly exceptional companies have been doing this all along.

Here's how I see great companies develop predictively agile managers as a matter of course:

1. Objective Data Collection

Let's start with the mundane: You'd be amazed how many leadership groups allow subjectivity in the form of personal preference and anecdote be the basis of significant managerial decisions. Truly agile organizations teach the importance of truly objective data collection - why it's important, and how to do it.

2. Pattern Recognition Skills

There's no use in your managers gathering data - however objectively - if they don't know how to interpret it. The art (and science) of data collection lies in the ability to recognize significant patterns and trends ahead of their impact crashing on the business - and this can be taught.

3. Strategic Experimentation

This is where the rubber hits the road for senior leadership, and where many leaders baulk: giving the manager group the responsibility and authority to undertake strategic experimentation, based on the data and the significant patterns they see. This is hard, both because of the potential for disaster if it all goes wrong, and because, well..'it's not how things have been done around here in the past'.

As a result, sometimes senior leadership will delegate the responsibility to make strategic experiments, without also delegating the necessary authority - a particularly fruitless and painful exercise.

My recommendation? Don't start by betting the ranch. Begin by delegating responsibility and authority to take strategic experiments in a constrained, significant, but non livelihood-threatening area. Mentor for success and build from there.

4. Analysis of the Results

Of course, the whole point of strategic experimentation is to make a decision on which way forward is best for the organization - it's where the whole 'faster-to-decide-and-act' part of predictive agility lives. So we're back to the mundane: great organizations teach their managers how to rank and prioritize the results from their strategic experimentation and make high-quality decisions about the best way forward in the light of changing circumstances.

5. Execution

From the front, predictively agile organizations look just like their non-predictively agile brethren -- managers execute. Because that's what managers are there to do, of course. The difference in the predictively agile organization is that the execution is done after, and as a consequence of, the four steps above -- resulting in faster response to change; a higher degree of buy-in, and faster, more effective remedial action if and when things go wrong.

Start training your managers to be predictively agile today, and you'll see the benefit in the form of a substantial competitive advantage 18 months from now.