Companies get into trouble when their managers confuse technical and adaptive challenges. A technical challenge has a right answer. It involves linear thinking, root cause analysis, and straightforward trial and error. Fixing the bad carburetor on a car is a technical challenge.
In contrast, adaptive challenges have no clear solution. There is no protocol to follow. Indeed, multiple solutions are possible.
When it comes to strategy disciplines, strategic planning treats strategy is a technical challenge. Unfortunately, this process, as we know it, is largely ineffective. The reasons are straightforward. Increasingly companies are now facing adaptive challenges. A number of destabilizing forces are shaping markets in unpredictable ways: digitalization, globalization, deregulation are all common factors cited in the latest business press. Another factor — the convergence of technologies — is not so easy for business commentators to capture.
Meeting adaptive challenges requires agile frameworks and tools. Managing risks involves experimentation and designing stable processes of relentless experimentation. Through this collective combining of thinking and doing, strategies emerge that link and leverage the assets of the firm in new ways. As managers learn to think more horizontally (and less vertically), they build networks outside the firm. These networks create new portfolios of assets that can be orchestrated in new combinations.
Managers will continue to face technical challenges. Yet, increasingly they will face adaptive challenges. Distinguishing between the two will be an important skill. So, for example, mapping the workflow within a customer service center is a technical challenge: establish protocols can be followed. Designing a new, more productive workflow within the customer service center is an adaptive challenge that requires agile strategy disciplines.
