Rita McGrath & the End of Competit ive Advantageof Competit ive AdvantagePage 6

January 2014 | Maryland Association of Certified Public Accountants, Inc.

STATEMENTMACPA’S

A L S O I N S I D ETax season: Roll with the changesPAGE 24

The new financial landscape for same-sex couplesPAGE 27

You can thrive in complex timesOur problem isn’t change; it’s keeping pace. Best-selling business expert Rita McGrath will show us how in a can’t-miss event on Jan. 30

BY BILL SHERIDAN

To hear the experts tell it, the biggest issue facing businesses today is change.

Wrong.

Change isn’t the problem. Things have always changed. The problems are the staggering pace of change and our inability to catch up.

Businesses don’t need to know that the world is changing. They need to know what to do about it.

For that bit of information, let’s bring in Rita McGrath.

A Columbia Business School professor and best-selling author who is sixth on Forbes’ most recent list of the world’s most influential business thinkers, McGrath will speak live in Baltimore on Jan. 30 as part of “The End of Competitive Advantage,” an event hosted by the MACPA and the Business Learning Institute. The event is named after McGrath’s most recent book, The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business.

Get details and register at BLIonline.org/Rita.

McGrath’s message will focus less on change and more on our reaction to it. She says too many organizations are trying to solve today’s complex problems

with outdated methods. They’re trying to predict their way out of an unpredictable situation.

“One of the dilemmas we all face,” McGrath said, “is that we are trying to grapple with truly complex systems by using tools and frameworks that were designed for more simple, more linear systems.”

So what do we need to do? Four things, says McGrath:

1. FORECAST DIFFERENTLY

Spend less time on lagging indicators like yesterday’s numbers and outcomes. Spend more time on leading indicators like data that offer clues about what the future holds.

“Leading indicators are the hardest to find,” McGrath said. “The problem is that they are subjective; they’re not facts yet. But they also give us some distant early warnings about things that might happen.”

Here’s an exercise we can try: Imagine a future event – something that’s either good or bad for your organization. Now imagine what would have to happen first in order for that event to take place. Ask yourself: “Can I see the signs that will tell me if that is happening now?”

2. TAKE ON INTELLIGENT RISK

McGrath channeled political scientist

Aaron Wildavsky for this one. Most organizations today invest in prevention – trying to keep bad things from happening to them. McGrath said we need to invest more resources in what Wildavsky called “resilience,” a trait that will help us “mount the appropriate response” when something goes wrong.

That point of view requires an eye toward innovation. Don’t be afraid to try new things. If they work, great. If they don’t, respond accordingly and try again.

“Start making small bets on things that are not part of your core business,” McGrath said. “Then ask yourself: Who are your truth-tellers – the people who are able to look at the future and articulate cases where things are going to be much different than it is today?”

And if the people in power aren’t truth-tellers, watch out: This could be a difficult exercise.

3. ALLOCATE YOUR RESOURCES DIFFERENTLY

Sure, we need to focus on our core businesses. But in this crazy environment, McGrath said it’s critical that we also devote some time and energy to innovation identifying opportunities, thinking of things we’ll want to invest in, figuring out how to ramp them up and make them scalable.

STATEMENT6

AS AN INTRO TO THE EVENT, RITA WILL ALSO BE LEADING THESE 4 WEBINARS:

EXPERIENCE A NEW APPROACH TO BUSINESS MODELING, STRATEGY,INNOVATION, AND GROWING REVENUE IN THESE DISRUPTIVE TIMES.

L I V E

That means we’ll also have to spend some time on what she calls “disengagement” – figuring out what we should stop doing so that we’ll have the time and resources to devote to innovation.

And here’s the most important thing: Your superstars need to be innovators.

“Average organizations put their best people on problems,” McGrath said. “Exceptional organizations put their best people on opportunities.”

DON’T JUST SURVIVE. THRIVE.

In times like this, when change and complexity fuel massive uncertainty, many companies take the safe route and concentrate not on growth, but on mere survival.

Big mistake, says McGrath.

“As a leader, you want to be thinking about the future at all times, and that does require some

investment,” she said. “An analogy would be to think about sending your children to college. I have absolutely no idea what those children are going to do once they’re done with their degrees, but I know that if I don’t make that investment in their education, there will be whole sets of opportunities that won’t be open to them. When you stop thinking about growth, it’s sort of the same as not investing in education, not investing in things that will give you a future.”

Getting past the barriers of change and complexity and focusing on growth has all kinds of benefits, McGrath explained.

“Think of it a bit like momentum,” she said. “If you start a race from a dead stop, you’re much less likely to get up to speed fast than someone who’s already moving. With growth, you have a similar phenomenon. Those who start making those investments today – those who start removing some of the structural barriers (to growth) – are going to be that much more in motion than companies that have been at a dead stop for the past few years.

“Plus, it’s more fun. It’s more fun for your people, it’s more fun for yourself to be thinking of doing something new rather than the same old thing. Once you’re focused on growth, people start to see opportunities more readily because they’re actively thinking about it. People are less likely to cling to the past if they see that there are opportunities in the future that they could be going after.”

Bill Sheridan is editor of The Statement and

chief communications officer for the MACPA.

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AS AN INTRO TO THE EVENT, RITA WILL ALSO BE LEADING THESE 4 WEBINARS:

EXPERIENCE A NEW APPROACH TO BUSINESS MODELING, STRATEGY,INNOVATION, AND GROWING REVENUE IN THESE DISRUPTIVE TIMES.

L I V E