Winning Practices of Adaptive Leadership Teams

Winning Practices of Adaptive Leadership Teams

          

Winning Practices of Adaptive Leadership Teams

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  • Adapt and Thrive

    While it may require significant effort to cultivate a high-performing and adaptive leadership team, the payback is strong. An upcoming BCG Strategy Institute study titled “The Adaptive Advantage Index” shows that adaptive companies generate powerful economic and financial gains. These companies consistently outperform their industry peers during periods of market volatility. And their Adaptive Advantage Index scores show a strong correlation with their growth in market capitalization. (See Exhibit 1.)

    exhibit

    In this new study, BCG complemented the Strategy Institute’s research by examining the link between the adaptive capacity of a company’s senior-leadership team and its financial performance versus that of its peers. We wanted to pinpoint the top-level teamwork characteristics that strongly differentiate average teams from the best teams. We also wanted to discern how teams that are merely adequate can stretch themselves to become outstanding teams.

    To discover the traits that set adaptive teams apart, BCG conducted an in-depth study of a representative, statistically meaningful sample of executives at middle- to top-tier companies in terms of financial performance. Through their business performance in a variety of environments, all had demonstrated that agility and adaptation were, to a greater or lesser extent, part of their company DNA.

    We surveyed and interviewed 93 executive men and women, including CEOs, business unit leaders, and functional leaders with a mix of tenures on the leadership teams. We performed both quantitative and qualitative assessments of nine intact leadership teams from a highly diverse mix of public and private companies across many industries, business sizes, regions, and company life cycles. The companies ranged in size from 300 to 130,000 employees and included both single-country and multinational organizations in developed and developing markets. (See Exhibit 2.)

    exhibit

    Regardless of industry, size, location, and life cycle, the companies that scored higher on adaptive traits all beat their peers’ financial performance—some just slightly and some by a significant margin.

    In addition, the results disproved some common fallacies about teamwork and adaptiveness. For instance, many observers claim that as companies get bigger, they get less adaptive. We found evidence to the contrary. Adaptability sometimes implies a lack of discipline, whereas we found just the opposite: adaptive teams have highly disciplined practices that give them the freedom to be more adaptive. Adaptiveness can no longer be seen as a nice-to-have skill required only in rare circumstances. In fact, almost none of the leaders interviewed could cite a situation in which adaptation was not necessary in today’s world.