How to navigate the challenges of business and become a more adaptive leader

The challenges confronting business owners and leaders are often mistreated as technical problems and this can inhibit business growth, according to two leading US leadership practitioners.

Instead, Ed O’Malley and Julia Fabris McBride from the Kansas Leadership Center (KLC) say addressing complex business challenges requires a form of leadership that recognises the “adaptive” nature of the challenges.

O’Malley, who is president and chief executive of the KLC, and McBride, who is vice-president of the KLC, were in Melbourne at the end of February and together with Leadership Victoria, delivered a two-day workshop about their model of adaptive leadership to business owners, senior managers and leadership practitioners.

What is adaptive leadership?

O’Malley and McBride define leadership as “mobilising people to make progress on adaptive challenges” and in turn, an “adaptive” challenge is defined as a problem, issue or opportunity that “demands a response outside of your current repertoire”.

In other words, these adaptive challenges are ones that you don’t readily have the information needed to find the answer and there is no set formula for how to solve it.

The nature of adaptive challenges means a leader must mobilise others to change their behaviour and effectively deal with loss, according to the model developed by the KLC. New tools may need to be designed and the system itself may need to be reinvented.

According to O’Malley and McBride, most leaders mistreat adaptive challenges as technical problem, for which they already know the answer or know which expert to go to for the answer.

For technical challenges, both the problem and the solution are clear and there is often a defined timeline.

But for adaptive challenges, uncovering both the problem and solution requires learning from those involved. Instead of “fixing” the problem, tackling adaptive challenges is about making progress and acting experimentally.

As a consequence, O’Mally and McBride describe leadership as “an activity, not a position” and as something that starts with the leader but can be undertaken by everyone.

The four competencies

In the adaptive leadership model, there are four key competencies.

1. Diagnose situation

According to O’Malley and McBride, the biggest mistake leaders make is misdiagnose a situation. Is the challenge facing your business a technical one where the solution is clear or is it adaptive?

Determining the nature of the challenge is a key step, as is exploring multiple, tough interpretations about the current state of play. Diagnosing a situation also involves identifying who needs to do the work.

2. Energise others

The KLC model of adaptive leadership is also about inspiring a collective purpose within an organisation or team and creating a trustworthy process to carry out that purpose. This can mean leaders need to engage “unusual voices” in the team and work across factions or groups of people who come from different positions and viewpoints. In this situation, leaders need to understand and speak to the loss that members of these groups may be fearful of.

3. Manage self

Being a leader is personally challenging and O’Malley and McBride spoke to attendees at the Leadership Victoria workshop about the importance of taking care of oneself and knowing one’s strengths, vulnerabilities and triggers.

In the case of business owners, managing self can often mean choosing between competing values, which may change throughout the course of a business’ lifecycle. In the early days, the focus may be on achieving rapid growth and scaling the company but once the business has matured, the owner may start to think about taking a step back from the day-to-day demands of the job.

But that being said, the model of adaptive leadership also requires individual leaders to experiment beyond their comfort zone and get used to certainty.

4. Intervene skillfully

According to O’Malley and McBride, intervening skillfully is the riskiest of the four competencies but without deliberate interventions, either big or small, change within organisations rarely happens. Leaders must make conscious choices and speak from their heart when intervening, they say.

What adaptive leadership means for small businesses

As most small businesses owners know, there is a difference between working in their business and working on their business. According to O’Malley, the adaptive leadership model applies to the challenge of doing both.

“Our experience is that one of the keys to be able to work on the business, rather than just in it, is to manage self,” O’Malley told SmartCompany.

“And if you can’t manage self, if you can’t take care of yourself … it’s almost impossible to work on the business.

“In some ways, I wonder if the smaller the company, the smaller the staff, the more vital it is there are people who can truly manage themselves so that they can create that distinction.”

O’Malley says there are adaptive challenges “all over small businesses”.

One of the most difficult challenges confronting small business owners and operators is the choice between competing values, says McBride.

“What that means is to actually stop regularly and think what is it that I value and how is how I am running my business aligning with my values,” she says.

“And I think the truth is you can work very hard, many hours a day if what you’re doing is aligned with your core values. If it’s not, if you’re neglecting your family and family is a value, or you’re neglecting health and health is a value, you’ll burn out. It’s the continual reflection and recognition.”

O’Malley says not differentiating between what is a technical challenge and what is an adaptive challenge can harm small businesses.

“Someone can work lots and lots of hours and have tremendous passion for their work but they can be working on the technical side of an adaptive challenge. They can feel virtuous in their 80 hours of work but if they are working on the wrong stuff, [they’re] actually hurting the business,” he says.

“Whether it’s civic life or small business, how you identify the technical aspects from the adaptive aspects and how you get more and more time on the adaptive aspects is one of the really big challenges.”

Part of the difficulty as a business owner or leader is being able to consider the “tough interpretations” of what may be the cause of the challenge facing the business, as opposed to the easiest or safest interpretation.

“No one in the business will tell the owner the tough interpretations,” O’Malley says.

“So if the owner can’t imagine the tough interpretations, which is hard to do … then the owner’s got to find a way to create the conditions where they’re interacting with others who will tell them the tough interpretations.”

One option that O’Malley has seen work for some small business owners is regularly meeting with other small businesses just to talk about their companies.

“It can be a way to imagine those tough interpretations,” he says.

But small business owners can also make changes within their business that encourage this kind of activity.

“The other thing is to, from the beginning, create a culture of diagnosis and frank naming of tough interpretations; a culture among your employees as they come on where people … are expected to be naming tough interpretations and testing them constantly,” McBride adds.

Growth will come from those that adapt

Richard Dent, chief executive of Leadership Victoria, told SmartCompany within the Victorian economy, 80% of economic growth is going to come from small and medium businesses over coming years.

“A lot of that growth is going to come because [businesses] are nimble, flexible and they focus on innovation,” Dent says.

“We know our national government is focusing on innovation as well.”

Dent says there is a clear relationship between innovation and leadership.

“If you want to innovate, you have to know how to lead so you can mobilise people to [adopt] something that is new,” he says.

“The skill of leadership is going to be utterly critical for small and medium businesses to make progress.”

SmartCompany attended the workshop with the Kansas Leadership Center as a guest of Leadership Victoria.