The benefits of an adaptive approach to management: profiting from uncertainty

It can be hard to make decisions based on incomplete data or when there is a large degree of uncertainty. Nevertheless, decisions must be made in even the most unpredictable circumstances.

Adaptive management is an iterative learning approach that helps decision-makers establish procedures and strategies that work effectively.

By doing away with traditional management techniques and learning to adapt more intuitively, organisations can come to embrace uncertainty rather than shy away from it.

Foundations of adaptive management

With this approach, uncertainty can be viewed as an opportunity to learn rather than a recipe for failure.

It may be that information already exists which can be used to predict outcomes and inform decisions; in this case, a passive approach is used. An active adaptive management approach, however, is called for when there is no relevant data available. In both scenarios, there is a cyclical process of systematic experimentation, data gathering, adaptation and learning.

Some might mistake this for a trial-and-error approach, but it is more a case of learning through action. You make the best assumptions you can from the information and knowledge you have, then implement changes and record the effects. By evaluating the resulting data you can refine or reverse decisions, and the cycle continues.

An adaptive approach is often used in ecological scenarios where there is little hard data to analyse. In Southern Australia, for example, a framework known as the Open Standards has been used to monitor arid rangelands on a large scale over a nine-year period. A similar approach can be applied to monitor agricultural land to increase productivity and improve food management.

Applications in business

While adaptive management has traditionally been used to improve environmental processes, the framework can be just as relevant to business scenarios. In fact, in a world of increasing uncertainty and change, an adaptive approach can be the most effective way to methodically implement improvements.

An annual business planning cycle will struggle to keep up with the constantly changing environment in which most organisations now operate, while forecasting and analysis techniques traditionally used for strategic planning can quickly be rendered useless by a new industry disruptor.

Instead, success comes from being able to pick up on subtle shifts in the market and react accordingly. For this to happen effectively, adaptive systems must be in place at all levels of the business, without hold-ups from complicated hierarchies and busy decision-makers.

In the world of sport, Formula 1 is an excellent example of agile adaptation. Gone are the days when the driver got in the car and was left to his own devices. In this data-driven era, a team of technicians is constantly analysing thousands of metrics and making tiny tweaks throughout the race to improve the car’s performance. Each technician must be equipped to make spur-of-the-moment decisions based on available data, but they will monitor the results of their changes and adjust them as needed.

We can identify three significant drivers of success which should be present to support and enhance any adaptive management systems in business:

1. Awareness of external factors

It’s not difficult to gain access to information in this climate; the challenge is knowing how to interpret it and react to it before your competitors do. This requires investment in advanced data-mining technology, as well as people with the right skills to evaluate the findings and present them in a clear and meaningful way.

Having access to the latest research in the local, institutional and national environment will also prove beneficial when it comes to increasing awareness.

2. An organisational culture empowered to change

It’s of little value to be aware of industry trends and external influences – and even to develop these into a business strategy – if the organisation itself is too slow to change.

Problems often occur when we try to involve too many staff or too much information in the decision-making process. Unnecessary administration and layers of approval also kill agile adaption. Businesses must therefore be prepared to develop leaner processes that use only the necessary resources – no more and no less.

Decision makers must also be willing to use the data collected from the adaptive management process to inform their decisions; otherwise the whole system falls at the final hurdle.

3. Effective leadership

Employees should feel comfortable enough to provide feedback to their managers on things that they can see are not working. Often it’s the people on the ground who are best placed to observe that an activity is not giving the results expected. However, they will only bother raising the issue if they feel they will be taken seriously.

Leaders also need to embrace failure as a natural part of this process; without failures there would be no learning opportunities to influence future decisions. If someone’s idea fails but provides valuable data in the process, we can in fact view it as a success.

Risk-averse managers who lean towards certainty in their decision-making will struggle with an adaptive approach, but those who are willing to repeatedly analyse, test and learn may be surprised at the results their changes deliver.

I personally believe that in the uncertain environment businesses face right now, an adaptive approach is the way to go. It’s no good if every decision has to be passed through layers of hierarchy and fitted into business plans; we must be able to act quickly based on whatever information we have.

For startups especially, continuous testing, learning and pivoting can be the quickest way to reach a product and business model that works. Trying to get everything right first time will inevitably slow the process down. This ties into to the smart startup model, which I have found very effective with projects I have worked on. Larger, established businesses might find this more of a challenge but it’s becoming clear that those who can’t adapt quickly will lose out to their more agile competitors.

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Article originally posted on April 4, 2018 on LinkedIn

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