The landscape of global business has undergone a seismic shift in the past few decades, reshaping the balance of corporate power across continents. Two regions have risen to prominence, eclipsing their European counterparts: the US and China. 

This blog post charts the implications of this worldwide transformation, examining the managerial factors that have led to the current state of play in the corporate world.

The Rise of US and Chinese Corporates

Historically, Europe was a stronghold of global business, boasting several of the world’s largest multinationals. However, recent trends paint a different picture. European firms are now a rarity in the top 20 global companies – a shift that was unimaginable when a young Steve Jobs on a 1985 visit to Europe was asked his opinion of European attitudes to entrepreneurship. His insights foreshadowed the challenges Europe would face in nurturing new corporate giants. 

Take the MSCI index shown in Figure 1, which evaluates regional financial and economic performance in terms of stock-market and investment opportunities.

Figure 1. Cumulative MSCI Index Performance-Gross Returns (USD)

The rise in the MSCI All Country World Index (ACWI) reflects particularly the rapid ascent of China, alongside other Asian-Pacific emerging markets such as South Korea and Taiwan. These countries now rival the economic might of the traditionally dominant US and Europe. However, the expected diversification of the largest firms towards Asia has not proportionately diminished the status of the US corporate giants.

Exploring the Reasons Behind the Shift

In 2000, European companies constituted about 20% of the top 100 global firms by market capitalization. Today, Europe barely holds 8%. 

In contrast, over the same period US firms have not only maintained their dominance but have grown. The reasons behind Europe’s lagging performance are multifaceted. While Europe faces stronger demographic headwinds than the US, it has enjoyed certain economic advantages, such as the adoption of a single currency and the expansion of the EU common market. Nevertheless, these factors have not yet translated into significant growth in corporate market capitalization relative to GDP growth. A critical factor in the US maintaining, and China increasing, their lead, is the latter countries’ predominance in the digital tech domain. 

Many European CEOs acknowledge the reality of this situation, hoping that it was a one-off blip from which the continent will in time recover. But that may be a cop out. The Economist argues that Europe’s failure to develop competitors in this vast new sector is not a mere accident of timing. Its roots lie deeper, in the European managerial style. A more risk-averse culture, reliance on traditional industries, and challenges in creating new industries could explain European firms’ struggle to maintain a presence at the global corporate top table, leaving firms such as Apple, Microsoft, Amazon, Google, Facebook, Alibaba, and Tencent to share the lead. 

The evidence points to a need for a fundamental reassessment of Europe’s approach to fostering corporate giants. The continent must embrace more risk, encourage innovation, and adapt to the rapidly changing global economic landscape. The key lies in learning from the past and boldly stepping into the future¹. 

The Reinvention of Management

The need for a fundamental reassessment of the traditional approach to fostering corporate giants has been known among leading management researchers and practitioners for the last two decades. Yet there are few international, regional or even national forums dedicated to discussing the need to reinvent firm management, or sharing operational practice on how to do it. Only a small fraction of the world’s total research funding is allocated to research on business management and its evolution and importance for global competitiveness. 

Despite this lack of political and leadership focus, the good news is that researchers have been able to identify several pioneering, mainly US and Chinese corporations that have recast themselves to better compete in the global, digital, and now AI world, and have analyzed and codified the practices that enable them to outshine their international counterparts. 

Managerial implications

Based on their findings there are five key lessons for managers in less performing companies. 

Embrace Dynamic, Agile Management Practices: The success of the US and Chinese pioneers can be attributed to their dynamic capabilities, which involve integrating, developing, and reconfiguring competencies to meet rapidly changing environments. Other firms should adopt similar agile management practices, focusing on continuous adaptation and proactive change management

Foster and retain a Culture of Entrepreneurship and Innovation: The entrepreneurial spirit of the pioneers should be contrasted with the more risk-averse culture of European and other more traditional firms. Other companies need to cultivate a culture that encourages entrepreneurship, innovation, and calculated risk-taking. This involves transforming traditional management styles to maximize the firm’s human potential and support creativity, flexibility, and experimentation.

Adopt Customer-Centric and Networked Organizational Structures: The success of the pioneers demonstrates the effectiveness of a customer-centric approach and a networked organizational structure. Firms should aim for ‘zero distance’ to customers and users, ensuring seamless, direct connections to understand and meet their needs effectively. This could involve restructuring organizations into more decentralized, networked models that promote closer customer and user engagement and responsiveness

Empower Employees and Decentralize Decision-Making: The model of the pioneers emphasizes employee empowerment and decentralization. Other firms should consider adopting models that transform employees into intrapreneurs and even entrepreneurs, granting them more autonomy, responsibility, and stake in the success of their projects or microenterprises.

Leverage Digital Transformation and Global Leadership: With the digital revolution being a key factor in the rise of pioneering US and Chinese firms, other firms must intensify their digital transformation efforts. This involves not only adopting new technologies but also developing leadership that is adept at navigating digital landscapes, fostering global cultural integration, and building collaborative, innovative ecosystems. Leaders in other firms need to be adaptive, non-hierarchical, and skilled in managing diverse, global teams.

In summary, non-pioneering firms must fundamentally reassess and revamp their management styles, corporate cultures, and organizational structures, taking cues from the successful practices of US and Chinese pioneering megafirms to remain competitive and relevant in the global market.

About the author:

Dr. Annika Steiber, the author of the 2^nd Edition of the Silicon Valley Model-Management for Entrepreneurship, available on Amazon.

Thinking about resilience as a leadership quality, we can draw on a potent 2,300-year-old remedy from the philosophical medicine chest: Stoicism.

Imagine a powerful leader jotting down his thoughts in his hideout near Vienna, while the world collapses around him: a destructive pandemic is spreading, wars are raging, one natural disaster after another. 

Only our manager is neither CEO of a flashy IT company nor a prime minister. Rather, we’re talking about the Roman philosopher-emperor Marcus Aurelius (not to be confused with today’s eponymous fashion brand), who in 170 AD composed his famous Meditations – a classic of world literature which has aged remarkably well, particularly in terms of its application to everyday life. This helps explain why Silicon Valley and its proponents have embraced Stoicism, the philosophical tradition that Aurelius followed. (Be warned: most of the volumes on the subject flooding the management advice market are hasty assemblages of self-help aphorisms: “fast stoa”, or an intellectual snack rather than a proper meal.)

The importance of discernment

What Nietzsche recommended as a “tonic” is in fact a complex body of thought that adds up to much more than a philosophy. Stoicism – or the Stoa (from the Greek stoa: hall of columns, where the first Stoic, Zeno of Cition, taught) – is at once cosmology, logic and ethics. Thus, the Stoic recognises his or her place in the cosmic order, learns to accept fate through emotional self-control, and calmly strives for wisdom.

What makes you unhappy, says Marcus Aurelius, is not the events that happen to you – these are neutral, indifferent: What makes you unhappy is how you think about them. The error of perception is to confuse the happenings with our interpretation of them – which is what is to be avoided. For while we can’t  control the things themselves, Stoicism says that we can, and should, control our thoughts and interpretations. 

In fact, for Stoics one of the most important “skills” is being able to distinguish things which they can influence from those that they can’t. According to Epictetus (55–135 AD), another prominent Stoic, there is no point in wasting time and thought on the latter.

On the other hand, you don’t just passively accept fate – where influence can be exerted, Stoicism demands action and perseverance. “He who trusts in his own strength is mightier than fate”, wrote Seneca, one of the best known of all Stoics .

Question yourself each morning

In practical terms, what might this mean for managers, for example? Epictetus recommends a daily exercise that crops up later in the reflections of the Jesuits. Every morning we should ask ourselves: What more can I do to be free of negative emotions? What do I need to achieve peace of mind? What am I? (Answer: a rational being). Reflecting on the day’s progress again in the evening is useful in approaching the Stoic ideal – imperturbability (ataraxia) through self-control. The Stoic wants to be the best version of him- or herself, especially on a moral and ethical plane.

This exercise may remind you of the questions Peter Drucker asks in his famous article “Managing Yourself”. What are my strengths? Where and how can I make a meaningful contribution? Where do I belong? What are my values? Drucker suggests the uncompromising mirror test: Who would I like to meet in the mirror in the morning?

Combating frustration

The great Seneca put forward another important piece of advice: “premeditatio malorum” – expect the worst, and you won’t be prey to anger, disappointment and stress when things go wrong. Beware of assuming that a course of action will pay off, he warns: If success or failure is out of your hands, mentally preparing yourself for failure means that you won’t be completely thrown off course emotionally when the worst happens. This strategy also minimizes the anxiety and worry that come with wanting to succeed at all costs. And if things do go well, observe Marcus Aurelius’ tip: If fame and honour come your way, treat these impostors with disdain – they make you vain and dependent on the mind and word of others.

Can Stoic insights like these be integrated into everyday working life? Heiner Müller-Merbach, economist and author of “The Stoic Manager”, has formulated some guiding principles that lead from self-management to management success:   

– Recognise the things that are within your power.

– Accept those that are out of your control.

– Concentrate your energies on things that can be shaped.

– Distinguish between suggestions and attacks.

– Be open to the ideas of others.

– Manage disputes with skill and care.

– Create a climate of trust and openness.

– Use your own judgment.

– Focus on the overall task.

Composed and in control in both thought and action, the Stoic manager can’t be thrown off course, accepting things that are beyond personal control and focusing instead on goals that can be shaped. The Stoic work ethic is based on what is best for the community.

As manager, the Stoic is an action-oriented pragmatist who relies on his or her own judgment and takes full responsibility for those things that can be controlled: the soul, the will, emotions, thoughts and habits, behaviour. That’s the ideal. In any case, an exercise in serenity is a sensible approach in times of upheaval.Incidentally, Marcus Aurelius did not survive the pandemic (probably the Antonine Plague.  He wrote in Meditations: Everything passes and soon becomes a fairy tale and quickly sinks into complete oblivion. Which is definitely not true of his notations.

Marcus Aurelius’ Meditations can be downloaded free of charge as part of “Project Gutenberg”. www.projekt-gutenberg.org

About the author:

Isabella Straub studied philosophy and German studies, she is a copywriter and German editor at Peter Drucker Society of Austria. As a writer, she has received numerous prizes and awards, most recently the Literar Mechana Annual Scholarship and Erfurt City Clerk 2023.

At this year’s Peter Drucker Forum, I was confronted with a pivotal question: Does digital transformation genuinely make organizations flexible? 

My candid response: Nowhere near the mark.

In the rapidly evolving digital landscape of the past decade, executives have grappled with a common dilemma: How do I digitally transform my business? The term ‘digital transformation’ became synonymous with big budgets and high-risk, multi-year programs, primarily focused on implementing new technologies. However, often lacking was sufficient emphasis on delivering the flexibilities necessary to succeed in the ever-changing business world.

Flexibility for an organization can manifest in various ways. It aspires to be swift – quick to launch new products, adaptable in response to customer feedback, and capable of swiftly entering new markets. It seeks a resilient supply chain that can cope with demand fluctuations. It also aims to facilitate seamless collaboration among employees across different locations, breaking down organizational silos. Assessing our flexibility, the pandemic has shown how resilient businesses have been, while decreasing corporate longevity on the S&P 500 Index serves as a testament to their relevance for their customers.

Fast forward to the present, where, with everything changing at the same time, escalating complexity, and a pace of change that can only go up, it is imperative to critically re-assess the design of digital transformations.

Leveraging insights gained from hands-on experience in transformation initiatives, here are six rules to guide the re-design of your digital journey for enhanced flexibility:

1. OUTCOMES DRIVE WHAT GETS PRIORITIZED:
   There’s a common pitfall in transformative journeys: the measure of progress shifts from achieving outcomes to simply executing the plan and delivering outputs. This happens because those devising the strategy and those who execute it aren’t quite on the same page. Simultaneously, the world has become increasingly complex. To navigate this complexity successfully, it’s crucial to continuously steer the transformation based on the insights gained at every stage of execution.

This rule empowers organizations to consistently direct their efforts toward actions that lead to the desired outcome. Stay focused on the goal, but be prepared to adapt on the way.

2. TIME-BOX OUTCOMES:
   Humans are very good at expanding work to fill the time available for its completion. 

This rule introduces an explicit time constraint for achieving outcomes, no matter what. A commitment to demonstrating real value within 120 days not only speeds us up, but also sparks creative thinking to focus on what truly counts. This creates an environment in which organizations can constantly learn and adjust.

3. RE-IMAGINE THE WAY UNCERTAINTY IS MANAGED:
   Strategic decision-making is crucial for the success of any transformation, yet executives steering the process often hesitate in the face of inherent risks.

Imagine a company contemplating a shift in its product line to align with evolving market trends. Executives might well feel queasy – will customers respond positively? Are we addressing their most pressing needs? Will they be willing to stump up to pay for the proposed changes?

This rule dials down their discomfort by breaking down such decisions into micro-components, providing executives with incremental evidence and facts to underpin their choices, and minimize risk before expensive commitments are made. By reducing uncertainty at an early stage, such a structured approach enhances the chances of success.

4. ADOPTION BY DESIGN:
   Meaningful change happens when the solution created by a digital transformation is adopted by target customers. Take-up happens when the solution genuinely adds value from their point of view, meaning it must address problems that truly concern them. We often assume we understand their needs, but much of the time reality is quite different.

Placing people’s needs at the core, this rule enables you to continuously learn what really matters to customers and fosters an ongoing understanding of their evolving needs. The key is to establish a proactive strategy for driving adoption of the solution, recognizing that merely creating the solution isn’t sufficient.

5. INNOVATION-INFUSED TRANSFORMATION:
   Despite substantial investments in digital transformation, many organizations still lack readiness for the future. The issue often arises from treating innovation and transformation as distinct entities, assigning the sole responsibility for innovation to the innovation department rather than integrating it into the overall transformation.

This rule reshapes the approach, emphasizing the integration of innovation at the heart of transformation. It promotes a culture where creativity, adaptability, and forward thinking are inherent at every step of the ongoing change, helping organizations build a powerful competitive advantage.

6. BALANCED PORTFOLIO APPROACH:
   A common pitfall for many organizations is the tendency to lean heavily towards either efficiency or growth while shaping their transformations, even when the underlying landscape that delivers both remains the same. An excessive focus on efficiency may streamline operations but risks losing customers to competition, while an exclusive emphasis on growth might result in unsustainable cost levels.

This rule serves as a strategic compass, urging organizations to avoid the extremes and adopt a balanced portfolio approach. Embracing both offensive strategies for growth and defensive measures for efficiency, tailored to the organization’s risk appetite, ensures a dynamic equilibrium.

These rules, drawn from our practical experience of assisting customers with the TCS Pace^TM – Digital Innovation Factory, aid them in establishing a next-generation setup for digital transformation to deliver enhanced flexibility. This enables them to stay resilient and relevant in these uncertain times, making the transition from merely ‘doing’ digital to ‘being digital’, and transitioning them into a digital business that constantly adapts.

The future is exciting. Get comfortable with being uncomfortable and embrace the future with confidence.

About the author:

Lalit Karwa is Head, TCS PACE, Tata Consultancy Services, Europe, specializing in helping organizations respond to shifting customer needs and gain more value from their innovation and transformation investments.

What kinds of companies have bounced back better from the pandemic years? New evidence shows it’s the ones who had already invested time and energy in building their capacities for innovation.

Bill Fischer Senior Lecturer at the Sloan School of Management, at MIT, and Emeritus Professor of Innovation Management, IMD

John Hagel III Faculty member, Singularity University & Member Board of Trustees, Santa Fe Institute; Founder of Beyond On Edge, LLC 

Tim Brown Chair of IDEO, Vice Chair of the kyu Collective

Gilma Teodora Gylytė Architect; Co-founder, DO ARCHITECTS

Radoslaw Kedzia Senior Vice President of Huawei European Region

Attitudes to chaos are conflicted. It’s no secret that our world is dynamic and non-linear and only in equilibrium by (temporary) accident. As Huawei’s Rado Kedzia put it, entropy means that everything in the universe tends to chaos –  except organizations, which are our attempt to impose order on it, at least momentarily. So we ignore chaos as long as possible  –”we don’t teach it at business schools, and it’s so far from normalcy that we treat it as something to stay clear of,”  noted session moderator Bill Fischer of MIT. 

But that is no longer possible.Today’s chaos seems more immediate, more chaotic. Why – and how can organizations more constructively approach it?

From a compelling interactive session, a number of insights emerged. IDEO’s Tim Brown suggested that it was the pandemic – with its intimations of mortality and sudden upending of decades of work routine – that marked the turning point. The kneejerk response to “bounce back” clearly no longer cut it: it was only by “bouncing forward” (in the phrase of John Hagel of Singularity University) to find new ways to evolve that organizations could genuinely become fitter to face a more turbulent future.

Hagel strikingly argued that we live at a moment of “exponentially expanding opportunity” to create more value with less resource faster than ever before. But not if as all too often we’re driven by fear. So in times of chaos and change, the first imperative was to engage with emotions above all, cultivating those that motivate creativity and curiosity rather than withdrawal and fear. Then, the emphasis should be on developing the general capabilities of collaboration and reflection (as opposed to narrower skills) that facilitate learning based on creating new knowledge rather than transferring what we know already – “and that occurs not in a training room but by acting together with others in the workplace.” He pinpointed the need to go beyond engagement to unleash “the passion of the explorer” – the urge to actively actively seek out change that will lead to positive impact.

Brown took up the “bounce forward” theme by emphasizing the importance of a creative mindset– “An organizational creative mindset can only happen if you’ve got individual creative mindsets, and organizational resilience can only happen if you’ve got individual resilience. The two are not the same – one builds from the other”. A creative mindset leads to more connections and collaboration, building open-mindedness and “creative confidence” – an idea that chimed with Hagel’s set of reflective capabilities. The organization can reciprocate through leadership “that asks bigger questions than have been asked before”, that fosters diversity and that creates the climate of psychological safety that featured prominently in other panels at the Forum.

Psychological safety also figured large in the exuberant presentation of Lithuanian architect Gilma Gylytė, who demonstrated the remarkable effects of apparently simple alterations to the built environment. She described what happened when architects opened up the kitchen and eating area in a Vilnius kindergarten. Previously (and systematically in schools all over what was Soviet dominated central and eastern Europe), cooks worked in windowless kitchens cut off from interaction with the kids who ate their invisibly produced food. As expected, the children loved the result – but the major effect was on the cooks who responded to the spotlight by becoming “cooking stars not only for the children and the teachers, but for the whole community” as they began catering for birthday parties and the like. Having taken 33 years after independence to fully grasp the effect of creating an environment reflecting democratic rather than Soviet values, architects are eagerly reproducing it elsewhere – transforming bleak boulevards by creating spaces for street markets and other human gatherings, and perhaps even more radically, experimenting with ideas to make corporate offices so attractive that employees prefer to work there than at home. Whatever next?

Reflecting on these ideas, Huawei’s Kedzia noted that his company had learned from experience of navigating external surprise the importance of reinforcing broad capabilities rather than having to reinvent the wheel with every change of circumstance, while deeply exploring new developments was more serious and challenging but also satisfying than waiting for serendipity or accidental discovery. “We focus on our core values, why we exist, what is our strong point”, he said. One core value is being customer centric; another is perseverance – ”’we don’t give up easily on a daily basis, but nor do we shy away from difficult situations. Anyone can do easy. I tell employees you have to feel a bit of challenge and pain to feel the satisfaction that you can overcome these things.’ Difficulties, he said, help you get clear about purpose, what matters and what doesn’t, leaving the organization fitter and more resilient than rivals who have had it easier, and determined to outlast both them and the typical 30-year corporate life cycle.

Chaos emerged from a rich discussion as something neither to be shunned nor feared. On the contrary, if treated with respect, like a judoka exploiting an opponent’s force, it can be a friend and an asset to creativity, Brown pointed out. As Kedzia identified, chaos is the acid test of a company’s purpose and values – “what’s left to hang on to when the lights go out”, as it was put elsewhere at the Forum. As with the pandemic, which “unfroze” work arrangements unquestioned for decades, chaos can crack open old certainties for creative thinkers to exploit. In a later panel, a participant described how he was appointed CEO of a company paralyzed by sudden surprise precisely because he knew nothing about the industry’s conventions, shareholders gambling, correctly, that someone untrammeled by preconceptions was more likely to come up with a fresh new approach. But you ignore it at your peril –  use chaos creatively to come out ahead, or risk finding the ship’s lights fading in the distance when the waves recede and you finally come up for air.

About the author:

Simon Caulkin is senior editor, Global Peter Drucker Forum

At this year’s 15th Global Peter Drucker Forum, the Huawei Masterclass had as its guiding principle the idea of enabling the growth and innovation of startups. In his opening remarks, Gavin Allen, editor-in-chief of Huawei, said that SMEs are the engine that keeps Europe’s economy running and new ideas coming to fruition. A prosperous economy in Europe depends on its millions of new businesses. 

According to studies, a significant portion of SMEs still lack essential components of their ICT infrastructure, putting them in a digitally immature state. Huawei pledged in 2022 to build a start-up ecosystem around the world. In only three years, they aimed to back 10,000 promising new businesses. Speaking at the event, Fen Zhuang—Director of Global Industry Development at Huawei Cloud Global Marketing and Sales Service—introduced the attendees to the Huawei Cloud Start-up Program. Zhuang spoke about how the start-up community at Huawei is leading in this age of disruption by sharing knowledge and adding to the international conversation around creative resilience. 

Michael Anthony of AI4Privacy, Juan Romero of PhotoILike, Thamio Singou of Lean-Link, and Charles Dickson of Wemeetz were the leaders of four start-ups that participated in the Huawei program. They shed light on topics like cloud solutions and entrepreneurial leadership. 

As the room seemed to agree that digital maturity was a key ingredient in becoming a unicorn, the tables were turned by Carla Arellano, Partner at Greyhound Capital, and Curt Carlson, Distinguished Executive in Residence at Worcester Polytechnic Institute.

Exceptional leaders needed

Carla is an entrepreneur with a knack for solving problems and a history of building successful businesses. She is fascinated by the power of collaboration between individuals and organizations to bring about long-term growth and industry revolutions. She firmly believes that in this age of discontinuity, no amount of initial public offerings (IPOs) can guarantee a startup’s success; rather, only exceptional leaders can devise and implement daring plans by mastering the art of people and organization development. Startups that go on to become unicorns often have a trait in common: they are the ones that hire leaders early on and place a premium on making this process a profession. Spending time learning the ins and outs of the company’s structure, including who does what and how important people pursue certain goals, is crucial, according to her, an investment partner at a growth equity fund. Investors like us put money into specific individuals rather than businesses. The individuals you choose to work for you and the way you set up shop are the deciding factors. On the path to becoming a unicorn, how you approach different roles, who you hire for what, how you hire great people, and how you create this combination of many individuals — matters a lot. While Carla is correct in saying that there is no magic formula for success, her team’s analysis of 350 FinTech companies over the past 20 years reveals two major factors that contribute to a startup’s chances of success: an organizational superpower and CEOs who put an early emphasis on attracting leaders. Organizational superpowers are different from start-ups’ product or technological superpowers. That superpower can be used to create a flywheel. From the way they hire new employees to the way they introduce new products/services, every aspect of a start-up’s management philosophy is important. Get a head start on hiring leaders and do it professionally. Hiring and recruiting C-suite executives is essential for investors who wish to witness start-ups expand at an exponential rate. 

Internal and external customers

According to Curt’s formula, superpowers pay attention to both internal and external customers, and they also create value. His work with managers at both established companies and fledgling businesses led him to believe that a systematic approach to creating value is within reach. To build resilient companies, it is essential to have a clear understanding of each employee’s role and how they contribute. Creating value entails meeting a critical need for the end-user in a way that is superior to competing solutions while simultaneously satisfying the requirements of all parties involved. Value delivery is the only goal of a well-designed methodology that identifies and solves end-user needs while differentiating them from their problems. From this perspective, innovation is all about creating new value for society’s end-users while maintaining a sustainable business model. This means that the offering and underlying viability model must take a novel, persuasive, and defendable strategy to meet a significant unmet market and end-user needs while also outperforming the competition and all other options in terms of benefits and costs by a factor of two to ten. A start-up can go on the unicorn track faster with the help of the NABC Value Proposition methodology, which helps to methodically develop the criteria for hiring a brilliant CEO.

Peter Drucker once said that a company’s market success comes from its management thinking, and Wolfgang Lassl, an Executive Advisor to Peter Drucker Society, echoed this sentiment. Someone with the ability to anticipate the unexpected, who innovates now so they are prepared for the future, and who does it methodically is an entrepreneur. Only then can the founder of the startup understand the need to be emotionally distant from his creation and recognize the need to hire someone to cover a leadership gap. 

Given the present situation, we need to train leaders to be open to surprise and challenge, as well as able to develop new scripts. Leaders need the skills to successfully navigate the unknown as entrepreneurs, to maintain business continuity and refresh their business models.

About the author:

Sylwia Sysko-Romańczuk is professor of innovation and entrepreneurship at Warsaw University of Technology with research interests in value-driven growth in the digital and networked economy.

In 2009, the first Annual Drucker Forum was held to mark the centenary of Peter Drucker, the “father of modern management.” Coincidentally, that same year, the world faced the most severe worldwide economic crisis and recession in 80 years. Since then, we have witnessed an accelerated pace of change and experienced many unexpected challenges. The past few years have been especially difficult as we dealt with COVID-19, geopolitical disruptions affecting the global economy, very discernible effects of climate change, the polarization of societies, and the rise of artificial intelligence.

Drucker once said, “A person can perform only from strength.” Most organizations know their strengths, having nurtured and strengthened them through sound corporate strategy work and execution. But will these strengths protect us in times of disruptions, when the rules of the game can change very fast and drastically? Will they enable us to weather the storm, navigate through the needed readjustments, and leave us stronger than before, even if not fully unscathed?

The Experience of Resilience

My personal interest in resilience was sparked by the 2008 global financial crisis and the ensuing great recession. At the time, the organization I worked for relied heavily on clients’ so-called “discretionary budgets”, and everyone expected us to be among the first casualties. Instead, we fared well, our growth only temporarily affected by a few points before rebounding strongly and outperforming the market in the subsequent years. Financial analysts were somewhat flabbergasted and kept asking us why and how we did it. The truth is, we did not really know why! As a leadership team, we often laughed about it.

In trying to find the root causes of this unexpected resilience, I looked back at my career and reflected on my past experiences. I remembered the first time I was asked to run a company. It was a European publishing company massively disrupted by the digitalization and globalization of its segment. The main shareholder had told me that the business model was collapsing, and that at this point, they preferred to pick someone as CEO who knew very little about anything, hoping they would figure out what to do. I was barely 30 years old and thought I had nothing to lose. Indeed, I had to “figure it out”. We stayed true to the original mission of the company, kept and even reinforced the premium positioning, but changed everything else in a massive and largely improvised digital transformation. As it turned out, we succeeded much faster than expected, giving another decade of growth to the company.

Still trying to find the root causes of corporate resilience, I also read a few useful books, among which “Resilience” by Andrew Zolli and “Anti-Fragile” by Nassim Taleb influenced me the most. Then, 10 years after the great recession, Covid happened, and once again, we had to figure it out. Facing this “black swan” event that turned into a fascinating real-life social experiment on a global scale, the business I was running then, this time in the US, not only did rather well during the months of lockdown but also gained market share, emerged strong, and significantly outperformed the market in the subsequent years. But the aha moment I had during this period, what truly struck me, was that this time I could clearly see what had made us so resilient. And the disturbing fact was that what had made us so resilient, were the things that we had, in fact, tried to tame for years as a leadership team: the propensity of everyone, in this very entrepreneurial company, to do more or less whatever they enjoyed doing, over abiding by the corporate strategy; the complexity of our offer; and the relative fragmentation of our organization.

That is when an almost existential question started to emerge in my mind: Does the commonly accepted way of developing and executing a strategy, although making us more successful, also make us more fragile?

The Tension between Corporate Strategy and Corporate Resilience

If you think about it, corporate strategy is about making choices: where to play, and where not to play; how to win, based on expressing a relevant and differentiated value proposition; how to build capabilities to execute flawlessly; and how to reallocate resources effectively. It often comes together with an execution plan that emphasizes the need to consolidate structures, streamline the supply chain, reduce the number of product lines, eliminate cost redundancies, and sometimes even reduce the number of clients to focus on the largest and most loyal ones. And, although this is rarely the favorite topic for CEOs, risks are thoroughly assessed, sometimes driven by regulatory requirements.

The keywords are: pick your lane and scale.

As the strategy is deployed, a lot of effort is also put into “alignment.” The goal is to have the entire organization support the strategy and avoid spending time and resources on anything else.

Let’s recognize it: A well-designed and properly executed strategy usually works, at least as long as the environment is relatively well-known.

But here’s the problem: When we observe the most resilient systems around us, they do not seem to abide by all these commonly accepted good practices of strategy.

Think about ecosystems, including biosystems. Or, to refer to human creations, think about groups that are very difficult to eradicate despite the deployment of considerable resources, such as criminal or terrorist organizations. These most resilient systems seem to share a few things in common. They are complex, sometimes incredibly so, and diverse. Their components are interdependent but are distributed and balance each other. They do not seem to follow a conscious plan. Rather, they constantly adapt.

Then comes the real question for CEOs who are focused on the long-term of the organization they lead, who are obsessed with maximizing its chances to thrive long after their own tenure: Are there practical ways to combine the strategy imperative and the need to make their company resilient, so it can actually gain in the future from disruptions whose precise nature cannot be predicted, which might upset an otherwise very successful strategy?

Exploring the Search for Excellence in Both Strategy and Resilience

Combining a sound corporate strategy and the intentional development of an organization’s resilience, is more an art than a science. Maybe scholars will help make it one. Meanwhile, I can only share some ideas to explore, based on thoughts I borrowed with pride from others, on discussions with peers, and on my personal experience, both successes and failures, of decades as a “practitioner-CEO”.

Before anything else, we need to recognize that developing resilience is not just about making corporate strategy more sophisticated. It is also about multiple other things you can do as a CEO, such as:

• Fostering the right culture, by getting the organization used to change and increasing its psychological readiness for disruption, by being data-driven – that is, building data capabilities, but also the ability of the organization to accept what the data says, by nurturing feelings of belonging and mutual trust, including with suppliers and clients, or by ensuring diversity to maximize the chances that creative solutions emerge when the time comes.

• Designing the right structure, with the ideal goal to make it both distributed, so the various groups can operate with a lot of autonomy when facing unexpected situations, and clustered, so they have some scale efficiency and diversity.

• Developing the right kind of leaders, who are focused on the long-term, who have the ability to be great connectors between relatively independent elements, who are focused on outcomes rather than on outputs, who are themselves resilient individuals through their attention to mindfulness and selflessness, who are curious, culturally adaptable and constantly learning.

But when it comes to the corporate strategy itself, there are also specific steps a CEO can take.

Firstly, when designing a strategy, I believe it is better to resist the temptation of over-simplifying. What we may gain short term, will in turn increase our fragility. Leaving some room for maneuvering will be essential when the rules of the game suddenly change.

Second, when making bets, the asymmetry between risk and rewards must be thoroughly reflected upon. The organization often pushes for big bets that have big upsides. But what if the downside is massive? As the CEO, our role is to avoid these bets where we bank the future of the company we lead and are responsible for, if there is a reasonable chance that a failure will be lethal. On the contrary, multiplying small bets that have significant upside but are all recoverable from in case of failure, not only creates options that may prove very useful when unforeseen events occur, but also develop, in case of failure, “muscle memory” to the organization. It makes it more resilient no matter what.

Thirdly, it is essential that the resource allocation make room for innovation and be very intentional about it. I personally like to apply, at least directionally, the 70/20/10 principle: 70% of resources allocated to running existing products and services. 20% to developing and taking to market innovation that stays in the “known” domain for the organization. And 10% to invest in the “unknown”. It is very difficult to do this. In all companies I have run in my career, the starting point was much more in the 90/8/2 range. But maybe the journey is more important than the destination. Being intentional about innovation is a critical move to develop resilience. The unknown may not deliver much for long periods of time. And you may not understand how it will. But maybe it will save your organization when the unpredictable will occur.

Finally, in the world of project management, which is, after all, what we focus on at the Project Management Institute, the last decades have seen the constant rise and increased pervasiveness of Agile methodologies. They have progressively blended with predictive approaches to form the hybrid approaches that PMI most often favors, and to the broader emphasis on corporate agility. I believe the principles of corporate agility should apply to corporate strategy to preserve corporate resilience, while at the same time ensuring a rigorous and methodological approach to corporate strategy: Operate with incrementality or iteration, get a constant feedback loop, favor servant leadership. 

And even more importantly, combine fluidity when it comes to structures and plans, and rigidity when it comes to purpose and values. When the light suddenly switches off because of a fundamental disruption or a black swan event, this North Star, made of why your organization exists and how your teams should behave in any circumstances, will still be there. Your teams won’t require a plan nor even a precise direction to find their way back, while other organizations will collapse under the disruption. And you will emerge stronger than your competitors when the light switches back on.

Building resilience is not about dumping corporate strategy because ‘nothing is predictable.’ And nothing will ever guarantee that your organization will survive anything that may happen. It is about increasing the odds that you will survive if it happens. And being confident that when it happens, you will do better than your competition, which should even make you hope that disruption happens.

And in any case, building resilience in your strategy, culture, structure and leadership principles will ensure that whatever form it will take, the very purpose of the organization you lead, and what it deeply believes in, will carry on and thrive.

About the Author: 

Pierre Le Manh is President and CEO of Project Management Institute (PMI)

Walter Isaacson’s near-700-page biography of Elon Musk covers a lot of ground. We get many stories of the remarkable innovator, how he revolutionized at least two industries, automobiles and rockets, and his controversial purchase and overhaul of Twitter. Great reading – but what can a leader learn from Isaacson’s account?

That’s a key question because, in the end, the author concludes that Musk – a larger-than-life entrepreneur, a freak of nature in his willingness to accept, even seek out, extraordinary risk – is a complete package: you can’t get the relentless, brilliant innovation without the unfiltered, insensitive, and sometimes plain awful treatment of people around him.

Yet, although there is much to learn from Musk’s innovation record, his abrasive personality is not a necessary condition for success. When my team and I researched the factors for perpetual innovation from 2006 to 2022, Tesla was indeed among the best, but other firms had elements of what Tesla did.  You don’t have to emulate Musk’s abrasiveness to reap the benefits of his example: a move of 20 to 30% in his direction can accomplish a great amount.

Existential Purpose

Isaacson effectively describes Musk’s maniacal commitment to saving civilization through electrification, space travel, and other technologies and how these emerged from his childhood fascination with science fiction and video games.  Trumping love of money or status this commitment enables him to embrace extraordinary risk, even suing his primary customer at one point.

But omitted from the book are the crucial second-order effects of his commitments, notably the galvanizing effects on people around him. For all his divisiveness on social media, Musk has successfully won over talented people to his goals, creating innovative, profitable companies along the way. The bold pursuit of significant challenges also helps.

Even if most managers are less obsessional than Musk, they can learn from his pursuit of an existential purpose that clarifies strategic decisions and attracts highly engaged colleagues to the cause.  Most corporate purpose statements are vague or feel-good window dressing, with little actual traction in the organization. Either find something with an edge, or don’t bother.

Startup Mindset

Isaacson notes Musk’s need for drama, especially after success in overcoming an obstacle.  He would “yank the alarm bells and force a fire drill,…find something to turn into a crisis.”  It’s suggested that that’s a problem, but it’s actually common in serial entrepreneurs, which is why they move on once they succeed (or fail) with a startup.  Leaders aren’t usually entrepreneurs but can still gain a lot from a startup mindset.

Contrary to popular belief, startups rarely depend on testing and succeeding with a specific product. Instead, they attack a market segment with an idea and quickly pivot as they learn about both. As Isaacson shows, Musk didn’t set out to build a rocket company – he just wanted to get NASA and the existing industry moving toward Mars. Tesla’s founders didn’t target mainstream passenger automobiles until Musk arrived and made the crucial decision to pursue the luxury market. That willingness to pivot is vital, but all too rare.

Big companies can do something similar, not just with Agile’s minimum viable product approach, but by showing openness and flexibility toward the market. It just takes effort and focus. As Amazon’s Jeff Bezos told shareholders in 2016, “We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we must choose it.”

Managing Tempo

Where can ordinary leaders get that effort and focus? Here’s an element missing from the biography and probably from Musk’s own career. Amid the constant innovation and crises, it’s easy to forget that even at Tesla and SpaceX, a moderate amount of the work is straightforward. Engineers and designers must make the innovations practical and commercial with all the little adjustments that customers only notice when they’re not there. The slower pace is also a good time to begin deliberating big changes.

For most humans and organizations, such work is restorative, allowing normal office hours and work-life balance. Musk prefers “hard-core” dedication that squeezes out non-work ties, epitomized by the pillow he keeps under his desk for all-nighters. In recent years, his companies have lost many talented people who can’t keep up with his extraordinary stamina and willingness to forgo ordinary human relationships, only partially offset by new recruits attracted by his charismatic commitments.

Instead of continual hard-core, other organizations can adjust their tempo to save up energy for the tough periods. The corporate default is for everything to move at the same pace, but perpetual innovators alternate between periods of frenetic activity and quiet times of supportive work. During the latter they also do something different: they stay alert, looking for opportunities and threats.

To do all that, managers must fight relentlessly against creeping bureaucracy that focuses people’s attention internally during slow periods and limits their freedom to maneuver in the fast ones. Microsoft took off in the late 2010s only after CEO Satya Nadella removed many bureaucratic structures that had built up over time.

Radical Collaboration

Isaacson mentions Musk’s systematic willingness to challenge requirements but neglects how that plays out within organizations. His companies operate with a different sense of hierarchy. To solve tough problems, Musk tells employees to ask for help from anyone with the crucial expertise, irrespective of rank. No matter how outlandish the request, dismissing someone with what Musk calls an “unproductive no” can be a firing offense.

Ordinary leaders can similarly loosen hierarchies by resisting the pull of rank and focusing on solving the problem, not structures and status to be respected.

Besides these four areas, Isaacson’s engaging story falls short in showing the broader effects of Musk’s potent mix of generosity, ferocity, and courage. It’s not just that he combines enormous energy, engineering brilliance, and a high tolerance of risk – he puts those gifts to highly productive use through effective leadership.

There is no reason why ordinary leaders can’t learn from his examples to make their organizations more innovative. They might not revolutionize industries, but they’ll do themselves and society a favor by creating value in these disruptive times. 

Elon Musk by Walter Isaacson Simon & Schuster, 688 pages

About the Author: 

Behnam Tabrizi has taught “Leading Organizational Transformation” at Stanford University and its executive programs for over 25 years and consulted on innovative transformational initiatives with thousands of CEOs and leaders. His latest WSJ bestseller book is Going on Offense: A Leader’s Playbook for Perpetual Innovation (IdeaPress Publishing). 

Well might the organisers of this year’s Global Peter Drucker Forum have invoked “an age of discontinuity” in the conference title. These have been a shattering few years. If you are not troubled you have not been paying attention. Indeed, “troubled” will hardly do as a descriptive term. “Exhausted” might be a more honest assessment. The more stable world we once knew, and perhaps took for granted, seems a thing of the past.

But the conference headline also offers a more optimistic thought, and goal: “creative resilience”. This could point to a reasonable route ahead, and an answer to some of our concerns. What form might this resilience take?

In the past, when business leaders have called for resilience from their people, it was not always an encouraging sign. The implication was that, not only are times tough, but only the toughest will survive, and will deserve to survive.

But the discontinuity of 2023 – sometimes referred to as a “polycrisis” – demands a more considered and sophisticated approach than mere machismo. As Lynda Gratton, professor at London Business School, told me in an interview for Drucker Forum TV, a healthier kind of resilience will involve being honest with friends and colleagues about the challenges you are facing. Creative resilience means opening up, not hunkering down and “toughing it out” on your own. Resilience today means acknowledging vulnerability, not denying it. It calls for collaborative endeavour, not lonely attempts at heroic individualism.

Even if the world remains Darwinian, we should understand that the resilience Darwin detected in the natural world was down to the survival of the most adaptable, and not the “fittest”. So creative resilience is very much the kind the great naturalist would have approved of.

Drucker, of course, emphasised the importance of being clear about your objectives. But that clarity should not imply rigidity. As a practical – liberal – art, management must mean finding creative ways of achieving objectives, especially in a world of discontinuity. “Some things change, some stay the same”, as the rock star Chrissie Hynde sings. The trick lies in recognising what has to change and what must not change. This is a task for leadership.

The biggest change looming large in all our lives – beyond geopolitical crises – is the emergence of ever-more powerful “large language models” which support generative artificial intelligence: ChatGPT and the rest. Drucker was famously sceptical about the computer, labelling it a “total moron” in a McKinsey article in 1967. 

In fact, Drucker was well aware of the potential of these powerful processing machines, as long as managers understood how to use them. “Though it can’t make decisions,” he wrote, “the computer will – if we use it intelligently – increase the availability of information…That’s why it’s so important to exploit the computer’s ability to give us only the information we want – nothing else.” Drucker anticipated the danger of “hallucinations” – useless and misleading data, generated by “brilliant” AI at the speed of light.

Working wisely and imaginatively with the new technology, to allow our fellow human beings to work more effectively, may be the top agenda item for managers today. If we want to re-establish a semblance of order in an age of discontinuity, a happy marriage of human and machine will have to be arranged, and managed. At the end of this year’s Drucker Forum perhaps delegates will leave with a few new ideas about how they might achieve this.

About the Author: 

Stefan Stern is the author (with Prof Cary Cooper) of “Myths of Management: what people get wrong about being the boss” , and also of “How To Be A Better Leader”. He is Visiting Professor at Bayes Business School, City, University of London, and a former Financial Times columnist