In his seminal 1937 essay, “The nature of the firm,” the economist and eventual Nobel laureate Ronald Coase argued that corporations exist to avoid the transaction costs of the free market. Yet with transaction costs plummeting (spurred by rising connectivity) this rationale no longer holds up.
Why then, do companies exist? The answer is identity. People long to belong, and they want to be part of something bigger than themselves. Companies that fixate only on profits will lose ground to organisations that create a strong identity which meets employees’ needs for affiliation, social cohesion, purpose, and meaning. Future-ready organisations accomplish this in three ways: they get clear on their purpose; they know how they create value and why they are unique; and they create strong and distinct cultures that help attract and retain the best people.
When Netflix CEO Reed Hastings decided to change his then-small DVD rental business into a video streaming platform, he diligently prepared the way to fulfil his vision. First, he spent 10 years researching video streaming, spending up to US$10 million a year on the effort. He was not afraid to fail; he experimented with small projects and moved on quickly if they did.
Today, Netflix adds 10% more subscribers a year. When the COVID-19 pandemic swept across the globe, it was ready for the millions of viewers stuck at home. From February to April 2020, it raked in 15.77 million new subscribers globally, doubling the number of its projections.
Leaders like Hastings have a clear understanding of the strengths and weaknesses of their organisation, and then they create a strategy to bridge the gap between where they are and where they want to be. Yet it is not just the leadership which will indicate success; if you want to be a future-ready organisation, you have to start to recruit differently. Skills are naturally of great importance, however, skills can be taught – you need people with the correct mindset and attitude. While the basics will need to of course be there, organisations need to shift from recruiting just for skills to recruiting for people who fit in with the values, culture, and mindset of the company.
Diversity and inclusion are key talking points here, and this is not simply to do with race and gender. Future-ready organisations need to be open to diverse views and people who think, look and feel differently to them. Once hired, these people should be embraced; listen to them, see them as a different voice and accept what they bring to the table.
If you want to be future-ready, you cannot continue to work with and hire the same types of people you have worked with and hired for the past 10 years; you are going to have to be open to bringing in people with diverse skills and different views. “But we’ve been doing it like this and meeting targets for years, why do we need to change?” might be your retort. A diverse workforce keeps you on your toes, ensuring you do not get stuck in the same rut, and prepares you for future challenges.
Ideally the whole system has to change, yet it is most often the leaders who are the biggest blockers. The modern workforce does not want to sit in the same job for years – they are not like the Baby Boomers who stayed at one company for decades – they continually want to learn, develop, and experience new things. How would your organisation treat such staff? Organisations which are stuck in the past will not be able to retain the new generation of workers who are put into a ‘job’ which isn’t based on capabilities – the new workforce won’t stand for that. Future-ready organisation need to be able to provide growth opportunities which allow employees themselves to be future-ready and the organisation to be future fit.
Adoption to change for employers and employees who were future-ready would have been easier to navigate when COVID raised its head. A future-ready business would have already had numerous employees who were resilient and had a growth mindset, allowing them to adapt to change easier. They didn’t view lockdown as an obstacle, rather a challenge they could learn from and overcome. What businesses do you know which have had to close over the last 15 months? Were they future-ready?