A symptom of world wide connectivity is that we are now subject to rapid economic, political or social change like never before. Word moves faster than ever, as does public response and, as a result, the response from the market. For all the focus on the logic of market mechanisms and forces, we should remember a lesser used cliché: market sentiment. For this reason, a company’s success can’t be measured purely in terms of its market dominance. If an organisation’s seniority is to remain sustainable, it needs to be counter balanced with the ability to adapt as needed. Inflexibility, stubbornness and a reticence to move with the times can be fatal. For this reason, we increasingly require our business leaders to be individuals that are highly adept at identifying changing trends and acting accordingly.

In an old but entirely relevant article, Marketing Myopia, Theodore Levitt (Harvard Business Review, 1960) illustrates how blinkered executives can often doom their companies to failure by tying themselves too loyally to a single product or service:

It is hard for people who today confidently hail the twin messiahs of electronics and chemicals to see how things could possible go wrong with these galloping industries. They probably also cannot see how a reasonably sensible businessman could have been as myopic as the famous Boston billionaire who 50 years ago sentenced his heirs to poverty by stipulating that his entire estate be forever invested in electric streetcar securities. His posthumous declaration, “There will always be a demand for efficient urban transportation,” is no consolation to his heirs who sustain life by pumping gasoline at automobile filling stations.”

The demand for ‘efficient urban transportation’ is as relevant now as it ever was, if not more so. Unfortunately for the billionaire in question, the streetcar as a means of meeting that demand is not.

Companies that remain successful through boom and bust are those that have the capacity to both capitalise and compromise. Attempting to force growth when it is not economically viable to do so will end in disaster, just as marketing a product that is no longer relevant to consumer demand is destined to end in failure. The dominant species in any given ecosystem is the one that is best adapted to its surroundings and competitors. Successful businesses are those that not only excel in the provision of certain products or services, but those that can adapt these offerings to meet the shifting demands of the markets. Granted, there are examples of creatures in the wild that have gone for billions of years unchanged, but these instances tend only to occur when an ecosystem enters a state of relative stasis, changing extremely slowly or not at all, or when a creature has no predators. Be aware, free markets do not enter a similar state.

Just as Levitt condemns short sightedness when it comes to identifying and moving with emerging markets, businesses that are unwilling to adapt their organisational culture are also doomed to fall behind their more flexible counterparts. In fact, flexibility and pragmatism are perhaps the only two qualities particular to any organisation that are likely to see it in good stead no matter what.

In a CIPD podcast on leadership, Linda Holbeche, director of research and policy at the CIPD, identified the shifting role of leaders within organisations, and the qualities expected of them:

“In today’s knowledge economy, service economy, particularly where talent is key and where talent is in short supply, even in these uncertain times, it’s going to be much more the leader’s agenda to build organisational capabilities, like speed and flexibility, and really understand how to connect with people and connect people to the organizations in ways that once upon a time they wouldn’t have needed to do..”

Unfortunately while it may be possible, to some extent, to read markets and to anticipate their developments with some degree of certainty, the same cannot be said of world events. International politics can be inextricably linked to international trade, the two often having a profound effect on one another. A recent example of this is the soaring price of cocoa following the political violence in the Ivory Coast – producer of 40% of the world’s supply.

Lynda Gratton, professor of management practice at London Business School, addressed the HR Directors Business Summit yesterday, saying that:

“The most important thing you can do right now is to have skills in ‘futuring’,”…. “Sooner or later the CEO will ask about the future and you will need to put together an answer at short notice.”

She suggested three things that would need to be addressed in a blueprint for 2015: how the context of the world is changing, understanding all the points of leverage that will help prepare for the future and making sure the company is capable of adapting to innovative practice.”

A survey of 500 HR directors recently published by Mercer found that although 65% of the recipients considered themselves to be strategic partners, only a fraction of their work had any strategic merit.

“On average they believed only 15% of their time constituted strategic work.

The rest of their time is taken up mostly by delivering HR services (27%), compliance and auditing (12%) and transacting and record-keeping (18%).”

This representation of HR as a largely administrative or bureaucratic function is unfortunate, as is the unaccounted for 28% of activity that seems to be missing from the article. As Gratton says, a fundamental concern of HR should be the extent to which the workforce are aligned with organisational objectives for the future. Karsten Hetland, the global vice president of Executive Resourcing, Resourcing and Diversity at Nokia, describes how HR helps position the workforce – in particular the leadership – to meet the challenges of the changes in the company’s mobile communications market.

“Entering the internet services and software is the strategic challenge for Nokia, with that follows a different way of leading. You have to be much more collaborative, you have to be even more personal and relationship oriented. You need to be able to connect, not only within, but to a large extent, outside a company. You need to achieve, not only with your fellow Nokians, but with partners, with collaborators that are not on Nokia’s payroll.”

HR’s strategic function is in ensuring that the workforce, the leadership, the HR procedures and protocols are all aligned with the organisational strategy. Future proofing an organisation is integral now like never before, and HR’s role in the process shouldn’t be underestimated. Unfortunately, it seems that for the present it is. That said, the Mercer report did bring with it some good news:

The poll suggests more HR departments seem to be embarking on such transformative projects as a result of self-reflection. Some 14% of HR departments said that “awareness of their own imperfections” prompted change, whereas no-one cited this reason in Mercer’s 2006 survey.

Such transformations included: redesigning HR processes (42%), designing a new strategy for delivering HR services (39%) and implementing a talent development strategy for improving skills in HR (39%).

Brad McCaw, a principal at Mercer and co-author of the report, said:

“This gap in perception and activities can be addressed by investing in the skills and training of HR staff, while also increasing awareness and people-management skills among line management, to ensure that their activities encompass not only the day-to-day work that needs to be done, but also supports the strategic direction of the business. Measurement and analysis are also vital.”

Astik Ranade, another co-author and principal at Mercer, said:

“What we’re seeing is a renewed interest across EMEA companies keen to re-examine their HR function, its value to the business and how it can further influence its internal strategy and alignment. Slowly but surely, HR is making progress.”

Whether we like it or not, the future is coming. We can’t put it off because it’s inconvenient, or leave it in the pending tray. But we can find ways of being better prepared.