(2025-03-17) Denning Why Firms Need A Phase Change In Adaptability To Survive A Trade War

Steve Denning: Why Firms Need A Phase Change In Adaptability To Survive A Trade War. With the launch over recent weeks of a global trade war by the United States against all the major economies of the world, including its closest trading partners, individual firms face an exponentially more uncertain context. (VUCA)

Whole sectors are in danger of being wiped out, as costs explode and sales collapse.

Each sector, industry, and company function must be ready to adapt itself to survive and prosper in an uncertain on-again off-again trade war. Firms will need to realize that in a trade war, adaptability is vital.

Firms will need the equivalent of a war room to gather information, determine risks and opportunities, avoid actions that will increase risk and maximize the advantage of any opportunities.

Fortunately, firms are not starting from scratch. The fast-growing firms shown in Figure 2 below are already practicing extremely adaptable management.

• These firms begin with adaptable mindsets and values.
• These firms prioritize value for customers –understanding their situation and being responsive to their needs. Profits for the firms themselves and their executives are a result, not the goal.
• Autonomous teams, that stay in touch with customers, are key.
• Nimble networks of competence that can communicate horizontally and adjust on the fly need to replace static vertical hierarchies of authority.

Figure 1: Hierarchies of authority vs Networks of competence*

• Processes and systems need to be reconfigured to be responsive to the unpredictably shifting context.