“For organizations to survive and grow, their rate of learning has to be equal to, or greater than, the rate of change in their environment. Revans’s axiom –L ≥ C –is an essential of organizational ecology.”
from “The Fish Rots From The Head: The Crisis in our Boardrooms: Developing the Crucial Skills of the Competent Director” by Bob Garratt
Organisations need to change and learn. The question is how fast? This axiom helps in understanding and answering that.
How do we understand the rate of change?
We focus on understanding the key external drivers and trends that matter for the business. The demographic ones, technology ones, the rules and regulations, economy, environment and competition.
All of this need to anchor back to the customer and their expectations, pains and gains.
This is not enough. We need to fast forward and see where the world is going into the future. What does it look like in 2028?
By doing this work, we will then understand the rate of change. Each industry will be effected differently. A combination of the Porter’s forces (suppliers, demand, competition etc) and the external drivers and trends.
Now go back and check.
- How much has your business model changed?
- Are your value propositions relevant?
- How much revenue are we getting from products created in the last two years?
- What new capabilities have you built recently?
- Who are you partnering now that you didn’t partner 5 years back?
Now lets look into the future
- What do we need to improve on?
- What do we need to maintain?
- What do we need to create?
- And What do we need to eliminate?
Is your rate of learning greater than the change in the environment? If not, what are you doing about it?