S7E05: "How can we make friends with volatility?"

An episode of The Impact Multiplier CEO Podcast

S7E05: “How can we make friends with volatility?”

We're continuing our season on powerful questions that every CEO, entrepreneur or senior business leader should reflect on. Engage with them fully, and they'll provoke deeper thinking and shift you into a new realm of possibility.

In this conversation, you’ll learn:

  • Why the "new normal" is a myth (and what there is instead)
  • Why minimalism, optimisation, and "lean business" can be a trap
  • What anti-fragility is, and three questions you can ask to become more anti-fragile

"Instead of seeing volatility as a bug, how can make it a feature?"

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Transcript

Davina Stanley
Welcome back to The Impact Multipliers CEO Podcast. I'm Davina Stanley and as usual, I'm here today with Richard Medcalf to continue our season on questions to multiply your impact. There are some powerful questions that every CEO, entrepreneur or senior business leader should reflect on, engage with them fully and they'll provoke deeper thinking and shift you to a new realm of possibility. Hi, Richard, how are you going?

Richard Medcalf
I'm doing well. Thanks, Davina. How are you today?

Davina Stanley
I'm good. I'm good. I've been thinking quite a bit about last week's podcast on what's an eight or less and just how easy it is to think about what's an eight or more, but it's a bit of a mind shift, isn't it to think of what's eight or less, I really enjoyed that. So I'm looking forward to today's question, I really enjoy your questions.

Richard Medcalf
Yeah, we're gonna take it a bit of a different way this time, because I think this question today is a little bit, a bit left field for many people. So hopefully, it will provoke some insight and some thoughts.

Davina Stanley
So what is it? Okay. What's your question?

Richard Medcalf
I guess it's on the episode title. So they'll have seen it, but it's how can we make friends with volatility?

Davina Stanley
Okay. Tell us more about that.

Richard Medcalf
Well, it's volatility is here to stay. Anyone who's lived through the last few months with COVID, and everything else knows that right? And as Alan vice says, There isn't a new normal, right? There's just no normal. That's the point that we just don't know what around the corner and in a sense, it probably has never been right. It's, you know, we never know what's gonna happen until something happens right out of the blue and the thing is, many, many of us as leaders, we've learned, we've been trained almost to predict and to plan to do forecasts and to decompose complicated problems. In order to figure out the best answer, right? We, you know, we kind of know how to take a really complicated situation and put together a plan to achieve something but what happens when the unexpected occurs, as it's constantly doing? So most leaders see that as like a almost as a problem, or difficulty, you know, this is a, this is a dangerous risk and it's a bit annoying and the point is that rather than seeing this volatility, and unexpectedness as a bug, how do we turn it into a feature? How do we actually become have a business or life or zone of influence where actually, we thrive in this situation? We actually thrive when there's uncertainty and volatility.

Davina Stanley
So I remember a saying from when I grew up, which was make every filter feature, it was a friend of my mother's who was an artist who took that on as her philosophy and I think that's what you're saying is perhaps a really healthy thing to do in everyday business in everyday work is just to say, Okay, well, you know, that's a problem. Well, let's make it a feature is the fault, right? Let's make it a feature.

Richard Medcalf
Yeah. So how do we do that? Well, I think here's, here's the key insight, there's a book called anti fragile. And I love this term, anti fragile, because you know, what's something that's fragile? It's fragile, if an unexpected shock, weakens, or destroys an object. I said, What's the opposite of fragile? Well, most people would say robust. As in you drop, it doesn't break. But that's just something that doesn't change. Right? Whereas anti fragile is actually something that gets stronger, the more it's exposed to shocks of all And if you think that doesn't exist, well, it does exist, it exists in the realm mainly of nature. So you know, our bodies, right, if you just sit in bed, you know, eating, you know, fast food all day, here we go, then, you know, your body is not going to get stronger. You know, if you go to the gym or you do it, you know, you go for a run, or whatever it is, you're subjecting your body to stresses and strains of all sorts, with the result that it becomes healthier, and stronger. Economies also exhibit this tendency, right? economies will adapt and actually get stronger. As new things come in, and new ideas and things like you know, some, you get a bit of short term pain, but overall, the economy becomes stronger, and you feel it in nature. I know, you know, in Australia, I remember visiting parts of the bush, where you know, they've been forest fires, right, and nature can come back stronger and healthier after that shock. And so this idea of anti fragile, is really helpful, because we so often look for predictability and stability, and we try to kind of create it, but we actually create these fragile structures is like, the classic one is like corporate jobs, to be honest, you know, you kind of get into a corporate role with a very steady paycheck. And it feels that you've suddenly eliminated all this unpredictability out of your life. And it might work for ages until you lose your job, all of it disappears, right? It's like, boom. And then suddenly, you know, in the worst case, you realize you haven't kept your skills up to date. And you're unemployable. And it's a nightmare, right? So consider that with somebody who's perhaps being a freelancer for that period, they might have had volatility, good years and less good years, but their risk is spread out. And they're also able to pick up on new market signals and learn new skills as things come along. So in the job market, you might say, the freelance life is kind of anti fragile, because actually, the new trends and things will actually increase employability and skills. Whereas in the corporate world, you get the short term gain of this kind of stability. So that's just on a personal level, but it's applies to businesses as well, right. And so the question I'd like to ask is, if you think about your business, you can apply it to your life as well. And you should, but on the business line, you might want to think about actually thinking about these questions apply to both, right? What's your single point of failure is the first one. So when you think about how do I make friends with volatility? The first one is, well, where is my single point of failure? And you can say, Well, at work, it might be, it's my job, I only have one source of income, right? That's my filter, that's my source of failure. If it's in your business, you might say, you know, we only have one supplier for our most critical component, or, you know, we only have one key leader, he's the only person who knows how to do this particular task, or, you know, we're only present in one market, or whatever it is, right? Or we only have one, you know, we only have one internet connection, whatever it is, right. But what is what's the most obvious the most risky single point of failure? It's all about to be lean. But as somebody once said, you know, when there's like a nuclear war, it's not the kind of the, it's not the minimalist. You know, he's only got like, a few jars of food, whatever, in the kitchen, who survives, it's the guy who's been holding stuff in his basement for years. Right? Who's Well, in the event of, you know, prepper, right. And so, in business, we try to get things lean and cut down and everything. And there's some advantages to that. But where do you actually need redundancy? Where do you actually need to over engineer? Because you're not quite sure what's coming? Right? When everything's totally predictable, it makes sense to kind of fine tune and eliminate everything. 

Davina Stanley
But make a big assumption is a big assumption in what is predictable to isn't there. You know, there's some very big global shifts happening right now around supply chain for that very simple reason. Yeah. Right. And, yeah, I think that single point of failure thing is quite relevant right now.

Richard Medcalf
And I think the second one is, where can we plan so that's if you'd like the risk management part. Because we want to try to make sure that on one level, we're very conservative in a world where we don't know what's going on where we're not sure what's going to happen. Do the sense of being conservative in terms of having some, you know, some stability in our own model, whatever that is, but then you want to have opportunities for upside for how you take advantage of this volatility. So how you and there's two questions here. One is, what's my sensing approach? So how am I going to detect these trends? early enough? So many people may CEOs I work with, they don't know what's going on in their business, right? Because people yes, man, they don't tell them everything they want to hear or need to hear. And it can be quite removed from the business, because you've got so many things to do. So how you going to build a sensing operators inside and outside the business so that you're getting, you're getting ahead of the game, you're not just waiting for to be reported in the newspaper? Right? So who you're talking to, you know, who the industry analysts that you have on your side? And who are the people that you would normally be listening to, with a very different perspective on the world that you want to be speaking to? Who are the people in your organization? Who are picking things up on the front line that you want to be having direct conversations with? So first of all, what is their sensing operators? And then, how do I plant seeds to give me an upside? Okay, how do I plant the seed? So what is that? Is that a small little project to test something out in a new market? You know, is it getting a couple of people to to do a skunkworks project in a certain area? You know, is it setting up a provisional partnership with somebody outside my industry, trying to find one of those different things that we could be doing? Not with a huge amount of costs, but just allows us to ride a curve? If and when that curve emerges? And I think often we don't we, you know, the temptation is just to put everything into the model that's working right now. And just double down into that one model that's working. I'm always willing to say, well, what's, what's that? One of the models stops working, right? What have you got in the bag? To bring out right out of your magic bag of tricks? So those are really the three sub questions if you'd like to break down this question and volatility, it's, what's my single point of failure? Right, now that I see? What am I sensing at Redis to detect opportunities? And then where am I planting seeds? Where am I opening myself up to opportunity might be as simple as going to more parties, right? And just have conversations with new people. Right, that might be enough to open you up to new opportunities, new ideas.

Davina Stanley
So where are you planting new seeds, then?

Richard Medcalf
I think what I'm focusing on is building up the community part of my business right now. So because I think that creates, so not just working with clients individually, but also creating communities of those clients, because that helps think create new conversations that perhaps were being had and communities that are a little bit more robust as well than, than individual relationships, right? It has more links, right, that keeps me together then keeps a one to one relationship together. So I think that's one, one example. Another example, is very candidly, this podcast, right? As you know, you know, we do seasons, where we get to have us get to speak. And we do other seasons, where I get to speak to a whole bunch of really interesting CEOs, some of those I've known for many years and so those are new people. That's a new way. It's just one little way in which I open myself up to new people, new ideas, and new opportunities. How about you Davina? What's this raising in your mouth? How do you want to make friends with volatility?

Davina Stanley
Well, the podcast again, you know, it's I think, for both of us, one of the relatively new things for, you know, trying, trying new things and experimenting. For me, I'm trying a new strategy where, in fact, two new strategies in my business, one of those is to build standalone courses, little courses, rather than just having one big program, but carve out elements of it that are separate, that might be useful to the people inside my program, who everyone in the program gets access to all of them anyway, that then provide those as standalone, smaller opportunity for people to see that's interesting and had a modest amount of success with that over the last week or two just to first go with that. So that's really quite exciting. So that's one thing. And another thing is to say, right, well, I'm going to offer a new pathway in my program. So at the moment, clarity first is a self directed learning program where I'm there to support people regularly every month and and help them on their learning journey to answer questions. And they work through the program at their own pace. And we've got a structure around that, which is working really well for a lot of people. But then I'm aware that for some people, that self direction is a little bit tough. So I thought, right, well, I'm going to offer an intensive version in September, and see how that goes. And, you know, offer six weeks, six weekly workshops, and, you know, give people access to the material to do their pre work and give them a chance to really smash through it if they want to. And then if they want to continue on a month by month basis, they can do so just to offer different people with a different learning style, you know, a different sort of opportunity than in the past. Yeah, yeah. But I just want to experiment with that in a new way and see see how well that's received. So you're looking for new ways to help people.

Richard Medcalf
And here's the other question on this, I want to ask you is what's your single point of failure the moment or single point of failure at the moment?

Davina Stanley
I was thinking about that, as you were talking? Well, I'd say the electricity if today's anything to go by, because I do all of my programs online. And I didn't check the mailbox to see that there was a notification saying your power will go out for four hours this morning. So thankfully, I was not in the middle of a workshop when that happened. And I was able to reschedule but I certainly Yeah, that's that's a really interesting challenge when the power just goes off, and you're not expecting it. And you're doing everything online. So it was thankfully in the end, it was only off for about 90 minutes. But you know, they always allow a margin of error here, they'll always tell you what's going to be worse than it is if they can write it, that's certainly certainly correct. required some current creativity, just wanting to fix that.

Richard Medcalf
But I don't I thought to myself was the one I thought of myself as he was, with me Actually, right. In my business, you know, it's just the state of the business. Right. But obviously, a lot of it does depend on me at the moment. And so I am a single point of failure in the business. That's not for me, I can change overnight. But it's also important to think about, well, how do you manage risk?

Davina Stanley
And really, it's hard, because when you can reschedule things to, can't you, and I've done that, okay, very occasional act today, obviously, that was a slightly different cause. But that's, I guess, I've got a team. So I'm very grateful to that. I've only ever invoked that a couple of times, you know, simple, single point of failure, my voice, if I lose my voice, then that becomes really problematic. And, you know, having someone to step in is very helpful. Yeah.

Richard Medcalf
Yeah. So there you have a question. So, if you're listening to this, I'd really encourage you to, just to think a little bit about, especially if you got a business, we'd love employees, you know, it's really thinking about, well, you know, we can keep optimizing and, and, and cutting things out and, and really cutting it back. But, you know, given we don't know what's around the corner, how can I? How can I create a situation where we can be ahead of the curve, when the next big thing happens is what Steve Jobs said, right? He said, and when he came back to Apple, somebody asked him, What are you going to do, Steve? And he said, I'm gonna wait for the next big thing and the next big thing was music. Right? And that was iPads and that was it. Right? He was away. But, you know, he's in a position at that point, whatever it was to be able to ride that curve. Now, obviously, at some point, you have to double down and go, this is the bet we're making. Right? But you need to have your antennas open, right, your computer company, you need to be detecting the changes in the music industry, right? You need to see that this is an adjacency that we can explore and I know businesses have a whole bunch of the, you know, do trainings, but I think really making sure you know, how many seeds are we really planting? How many conversations are we getting into and it can be very easy when you're a focused leader to focus come in and, and almost cut out any opportunity for serendipity. You know, so I'll have sometimes people will declined to be on the podcast, because they're very focused on their business goals, or whatever it is, and I get that and as a pup is a place for that but there's also a place for going, you know, what is half an hour of my time, and it can create this new set of connections, new interactions, new ideas, new ideas, where could this take me and perhaps is just worth that bit of r&d time. That little bit of time. Integrity time. So have a look at your diary, you know, and if you're somebody who's very, very relentless and focused about your goals, you might want to say, Well, what happens if I'm wrong ones if those aren't the right goals and ones that the world shifts and I might actually creating that space for randomness and upside.

Davina Stanley
Yes, and volatility, here we are housecat. Thank you. That was another fantastic one. I'm looking forward to seeing what you've got next. I think the question you might have put forward for the next one is where are you playing it safe or dithering and I love that dithering word because that's all that sets that's got my attention. So thank you for that and if anybody is looking for the recording, go to xquadrant.com/podcast, and we look forward to seeing you again soon.

Richard Medcalf
Speak to you soon. Bye now.

**Note: This transcript is automatically generated.
Please excuse any errors.

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