This weekend I went to see the move The Big Short, the behind-the-scenes story of what led to the 2008 Great Recession. Though there were many insights from the film, one thing that I took away was how many signs there were that something was wrong with the housing market. Yet, despite the warnings, the perception that the housing market would always be a safe bet overshadowed the realities of blooming adjustable mortgages, suburban communities filled with foreclosed homes, and people securing mortgages that they did not have the incomes to support. Even as some credible experts came forward and made public speeches about the housing bubble and its future demise, there was little belief that this would actually become reality.
Since the recession, the idea that you can expect anything to be a safe bet, or that the way the world is today is the way it will always be, is wildly naïve. Technology, social media, leadership turnover, and the political and economic climate are wreaking havoc on the status quo. To sustain an organization in 2016 and into the future, leaders, boards of directors, and the organization itself must have high levels of adaptive capacity in order to navigate a volatile, uncertain, complex, and ambiguous climate (VUCA).
Adaptive capacity is the ability to understand the environment (internal and external) as it is today, what it may be in the future, and respond effectively to address the pending climate changes through innovation, connecting, and inquisitiveness. This means scanning the landscape, staying on top of trends, as well as networking and collaborating to leverage the resources in the community system. It means managing the organization’s vulnerabilities, and creating scenarios of ‘what if’ so a nonprofit can respond to a crisis, in addition to reach out and capture new opportunities.
The basis for adaptive capacity can be found in Peter Senge’s 1990 seminal work The Fifth Discipline. Senge outlines the principles of a learning organization - where members are continuously seeking improvement to enhance their capabilities and achieve what they want. Since the book’s release, many leading leadership and organizational research institutions have studied how leaders and organizations respond to change.
Recently, Jim Collins’ Great by Choice profiles why some organizations thrive during turbulent times. What Collins found is that these organizations had leaders who were disciplined, used facts to inform decisions, and were more paranoid than those leading the organizations that did not thrive. They planned for worse case scenarios, and they were methodical in their innovation.
Last night at the Delaware State Chamber’s 179th Annual Dinner, our political leaders talked about the changing times, and how this can lead to opportunities. Senator Carper said it well: “Under the mud there is a pony.” Leaders and nonprofit boards who embrace a learning culture, look outward, and take initiative to change the status quo will most likely be the first to find that pony and ride it into the sunset.