Expert AQ guide for leaders

Garreth Hanley:
This is INTHEBLACK, a leadership strategy and business podcast, brought to you by CPA Australia.

Tahn Sharpe:
Welcome to INTHEBLACK, a CPA Australia podcast. I'm Tahn Sharpe, editor of INTHEBLACK. Today we're exploring the idea of the adaptability quotient or AQ, which is the capability to navigate complexity, uncertainty, and change when there's no clear playbook. Joining me are two experts on the topic, Professor Catherine Althaus, founding director of the UNSW Academy of Adaptive Leadership, and organisational psychologist Kath McEwan, founder of Working with Resilience. Catherine, Kath, welcome to INTHEBLACK.

Catherine Althaus:
Thank you so much for having us.

Kathryn McEwan:
Lovely to be here.

Tahn Sharpe:
Now, Catherine, I'll start with you. We've long talked about IQ and EQ in reference to the intelligence and emotional quotients. Now AQ is entering the conversation. In simple terms, what is adaptability quotient and why is it becoming so important right now?

Catherine Althaus:
The adaptability quotient is similar to what you just explained in terms of being very equated to the psychometric studies such as IQ and EQ, and it's become quite significant in the last 10 to 15 years as organisations and individuals are grappling with this very turbulent, rapidly changing and uncertain environment that we face in our contemporary world.

And of course the repercussions and implications of that in terms of growth, economic performance, and the ability to step into that space with greater confidence. I would note that it is different from adaptive leadership. The adaptability quotient is centred on individuals and their skills and traits, whereas adaptive leadership is a practice.

So it's not so much focused on a person or a position, but on the situation and system and diagnosing what is technical and what is adaptive. The technical aspect is obviously things that can be solved or confronted by expertise. Whereas the adaptive ones are the deeper undercurrents of cultural behavioural and system change. It's the things that don't have clear or easy answers.

As you mentioned earlier, we don't have a playbook for them. If we did, they would be solved by now. But by their very nature, adaptive leadership challenges are the things that actually don't have those solutions yet. So adaptability quotient has that ability for us to start to assess our capacities in this space.

Tahn Sharpe:
Yes, it's an important distinction that you make there and we are very much in a changed world. Kath, from a psychological perspective, why are professionals finding change harder to navigate today than in the past? What's different about the environment we're operating in?

Kathryn McEwan:
I think, Tahn, it's probably the quantity of change and the interconnectedness of those changes. So if you think about an average day at work, we've got the changes that are happening immediately when we turn up. So one of trends at the moment is it's fairly rare to have all your team there. So straight away we're looking at how do we cover.

Then we've got organisational restructuring, seems to be happening more and more. And of course at a global level we have changes such as AI, which will fundamentally change the way in which we do work. And so all of those changes at multiple levels, of course, create a sense of overload and overwhelm and they're all connected.

So as we all know, particularly the listeners who are accountants, economic decisions across the world will immediately flow through to what we're experiencing ourselves, what our colleagues are experiencing, and what our customers are experiencing. So it's a constant dynamic and shifting that we're seeing and really nothing's linear anymore. What got us to where we are today isn't necessarily going to get as to where we need to go next.

So yeah, sheer quantity, levels of change and the interconnectedness, which as Catherine already mentioned, creates quite a lot of complexity that we're dealing with. It doesn't matter what your job is. I think it's pretty much across the board.

Tahn Sharpe:
Indeed. I think for our members, especially finance and business professionals, it's a lot tougher to be fluid and to have that adaptability because they're generally trained for precision and certainty. How do you think those people who are wired for rules and data can learn to operate effectively when the problems are say ambiguous or shifting?

Kathryn McEwan:
Yeah, I guess I'll preface my answer there by saying that we certainly are not advocating letting go of the precision and attention to detail that accountants have. I mean, we certainly don't want creative accounting. So it's more around learning to work in a different environment as opposed to changing the way we're actually doing the tasks.

And so a large part of it I think is being able to stay calm when things don't go to plan and need to be reprioritised. So it's about focusing on what you can control and being open to new ways of working. And, of course, when we are overwhelmed, we do often retreat to what we've always done.

So really, adaptability is in this space where precision and detail continue to be important. It's about being able to let go of some of the structures that aren't necessarily serving you, the routines of always doing something at a particular time. We need to be able to work with the moment and almost dance in the moment around what might be happening next in a working day.

Tahn Sharpe:
Dancing in the moment, I do like that. And especially you mentioned there, focusing on what you can control. Catherine, does that align with your thoughts?

Catherine Althaus:
Yeah, absolutely. I couldn't agree with Kathy more. I think an additional thing we can think about here is enabling listeners who are having those incredible technical skills to leverage them, but to allow yourself and give yourself permission to slow things down, to enter into some creativity and to be open to not only the possibility but the reality that other people have important contributions and knowledge pieces of the puzzle.

That could be extremely helpful here; to reframe what we're facing and how we might make progress on it or move forward. So for example, in the adaptive leadership space, we have something called the OII model, which is observation, interpretation and intervention. And that's really about slowing everything down to go into very discrete modes of... what are we observing here?

So literally just stopping and having a look at the systems in which we're located, the challenges and the opportunities that we're facing, and to really just observe first. That can be a really difficult thing for people to do because we usually jump straight away to assumptions. It's a very human thing to do, but we actually encourage you to slow that down to just observation and notice everything as much as possible.

And then we go into a discrete stage of interpretation where we open up different stories about what's going on. Because when we start coming up with these different stories, suddenly we can come up with quite dramatically different ideas about what it is that's going on for us and what might be possible to make that progress.

And the final stage is the intervention. So then it opens up through this process a more inclusive way for people to work together to enable them to then say, "Okay, well, what are we going to do with all this new data that we've started to compile together as a group?" And I've got a quick little story here that hopefully illustrates this model a little bit.

We do a lot of work with the Department of Defence, and we had a captain in the defence who when he came across this model said, "Oh, we've got something like this in the defence space that we use for very rapid risk analysis." And his light bulb moment was realising that in the past when they'd been in a theatre of conflict situation, they'd applied this model.

They took back their results to the Department of Foreign Affairs and Trade, expecting them to be very excited about the recommendations that defence had come up with when DFAT actually were very cheesed off. And he realised the reason was because they hadn't included them in the process.

So what this model does is actually enable many, many people to come into a shared experience about slowing down and observing what's going on, coming up with narratives about what might be the interpretation and what they might choose to do with that. So that's one sort of practical model that you can use for people who are very expert in technical precision and certainty, to leverage those skills, but to open it up to new people and new possibilities.

Tahn Sharpe:
Catherine, you've previously described adaptive leadership as “disappointing people at a rate they can tolerate”. Is that linked to this notion of slowing down and observing and interpreting?

Catherine Althaus:
Yeah, partly. It's also about the reality that as human beings, it's not change that we fear, it's loss. So when you put it in a loss prism, that actually changes the whole game. And we know all the statistics, that 80% now of change management initiatives fail. And I think it's largely because we haven't put the loss prism over things.

So when you address loss, and we might use David Rock's SCARF model here, status, certainty, autonomy, relatedness and fairness, these are these five primal drivers of human behaviour, and these are the things we either run towards or we run away from if they're threatened. When we are disappointing people at a rate they can tolerate, we recognise that some sort of loss is usually inevitable when we're confronting whole new change dynamics and uncertainty.

So providing a safe container for people to assess these losses and how they might have to endure them in order to make progress is part of disappointing people at a rate they can tolerate. So that's part of what we can give skills for people to do. How do we provide that safe container? How do we allow people to step into recognition of the losses? How do we mitigate and manage them, or in effect, accept that some losses cannot be ameliorated and we have to actually just endure them? So it really involves looking at what's my role in the mess? What's everybody else's role in the mess? How can we work together collectively to shift the status quo that's currently not serving us?

Tahn Sharpe:
And what's within my realm of control?

Catherine Althaus:
Absolutely.

Tahn Sharpe:
Okay. I'll step to Kath now. You've spoken before about recognising, fixed thinking patterns like denial or blame. What are common signs that someone's adaptability is being tested and what can they do in that moment?

Kathryn McEwan:
I love that framing of Catherine around my role in the mess because I think part of our accountability, particularly in teams in the situations in which we find is the way in which we perceive and think about things. And in my work in coaching, I'm quite often working with people who have what we would call thinking traps. So we all have them, we all have ways of thinking that are not necessarily going to serve us well in this new environment where we need to be a lot more adaptable.

And so just a couple of common ones which we see, which I'm sure the listeners will be able to identify them falling into these traps at certain stages, the first one is very common, increasingly common at the moment, is the catastrophising anxiety where something happens, something hasn't gone to plan, and you quickly go from A to Z. So being able to catch yourself in that, and particularly having people around you who can do a bit of a temperature check that you're going into that anxiety. So it's what's the reframe of that? Well, it's the worst-case scenario, the best-case scenario, and the most likely scenario here. So a little bit of reality checking.

Another one is black and white. And you mentioned earlier Tahn about people who come to accounting. They perhaps are very good at precision, and so black and white is not possible when there are so many shades of grey at the moment. So instead of it is this or it isn't, what are the options here?

And another one might be blaming or cynicism, it's somebody else's fault rather than what's my role in the mess, re-stating what Catherine was saying just now. So being aware of the traps that we fall into and catching ourselves is a really, really important individual accountability, I think, for us in terms of the impact that has on team dynamics as well.

Tahn Sharpe:
Okay. And so to ameliorate that, you'd look at reframing, and you mentioned they're also having the right people around you. That's part of it too.

Kathryn McEwan:
Yes. I mean, if you don't know what your thinking traps are, ask people close to you. They'll definitely be able to tell you. So having colleagues who are able to actually ... Who we respect and we trust their judgement to actually able to say, "Hey, maybe you're being a little bit black and white about this at the moment. What are the other ways of looking at this?" So it's really helpful to have that.

And of course you're not going to have colleagues say those things unless you give permission for them to do it and you act on that rather than get upset. But self-awareness is at the root of all this. And so if we don't seek that out, then how are we actually going to recognise where our thinking is actually getting in the way of adaptability in a particular situation?

Tahn Sharpe:
History tells me that siblings are also very good at recognising your traps and your patterns of thoughts and letting you know about it. Now, Kath, we know that creating growth often requires discomfort, but how can leaders stretch their teams without tipping them into burnout or resistance?

Kathryn McEwan:
One of the strategies that I often use with teams is to get the team to come up with a challenge that's a pain point for everyone because I think growth for the sake of growth, people haven't got time for that. But if you can find something that's a shared pain point for everybody and dedicate some time to exploring what the source of the pain point is rather than the symptom, and then identify two or three ways in which you can have a healthier relationship with a challenge. Because quite often we can't solve it, but we can have a bit more of a healthier relationship with it and come up with some ideas.

It's sort of a bit like Catherine was talking earlier on about the observation, interpretation, intervention model, because what we're trying to do here really is to come up with almost like a minimum viable product, if you like. So what is it that we can action around this challenge at the moment that's impacting on our performance that might not be a hundred percent exactly what we need or correct because we don't even know what correct might mean, but enables us to build some small things that actually help us evolve and learn. So it's about performance, but it's also about adaptability as well. And it's not actually another job to do. Growth and development often can be too generic and seen as an additional factor to think about.

Tahn Sharpe:
We heard Catherine a moment ago mention the role of safety. What role do you think, Kath, that psychological safety plays in building adaptability and how it relates to work? How can organisations foster it without lowering performance expectations?

Kathryn McEwan:
Well, adaptability means taking risks, doesn't it? So if within our team we feel that we can't take a risk because if we fail, we'll be blamed for it. We are not going to step out of the comfort zone. If we feel that we are not able to speak out and share ideas and voice opinions, then we are not going to have that open dialogue that's going to create the creative options that Catherine was talking around earlier on.

So psychological safety is really, really critical, and I think that leaders often can, without intention, stifle this because they're under enormous pressure and quite often they feel they need to be directive and perhaps close down ideas.

And so leaders have a big responsibility along with the team members, of course, for creating an environment where it's quite safe to say what you need to say without being judged and an environment which actually encourages creativity and taking risks and failing. So adaptability is about failing and that being okay because you can't generate new ideas without the capacity to try things out, and not all of them are going to work.

Tahn Sharpe:
Now Catherine, if listeners want to start building their adaptability quotient, what is a practical step they can take this week to become more adaptive in their work and decision-making?

Catherine Althaus:
I've got two particular suggestions for listeners. The first one is getting into something that we call being on the balcony and the dance floor in the organisations and systems of which we are a part. And by that, we are referring to getting up and taking a bit of a strategic look, but seeing ourselves on the dance floor simultaneously as looking at the broader system and who's doing what. And also inviting other people to come up with you on that balcony to start offering their interpretations of what they're seeing.

And then also inviting people who are usually up in those strategic roles to get down operationally and in the mess of the dance floor, in the hot and sweaty sticky space so that we can experience that viscerally and start to diagnose more effectively what is the adaptive challenges that we face and what might we be able to do about it. So that balcony dance floor is one practical idea I'd suggest to people. Anybody can do it. You can start to use that frame.

And then the second one is something that we call the productive zone of disequilibrium. Kath really explained very well earlier about that notion of not tipping people over the edge. So the productive zone of disequilibrium is a very discreet tool that enables people to recognise that in the adaptive leadership space, we actually have to step into some discomfort.

It's not going to be pretty all the time because that's the very nature of the adaptive challenges that we face in our contemporary world. So we have to exercise some radical empathy and responsibility, we have to exercise compassion, and we have to do that self-regulation that Kath talked about, to be aware of our triggers and vulnerabilities in the moment and capture them.

But having that productive zone of disequilibrium is a very helpful tool to recognise that we can go into a place of discomfort safely that enables people to be motivated enough to do something but not be tipped so much over the edge or overwhelmed that they walk away or switch off. So that's just another particular tool that might be helpful for listeners as they start to build their own adaptability quotient.

Tahn Sharpe:
I like that analogy of stepping out from the balcony onto the dance floor and embracing feeling uncomfortable. Kath, do you have one tip for people who want to start building their adaptability quotient?

Kathryn McEwan:
Yeah, I love those ideas from Catherine and just building on the disequilibrium, which I can't even say the word. One really simple thing you can do there is actually just break your routines. I think that some degree of routine in chaos is really useful, but if you're wanting to practice going into that state, where you are a little bit less at ease is to come up with some everyday routines that you have and swap them and change them and give them a bit more energy or creativity, so you're practicing self-imposed, I suppose, disruption.

And I just want to build on the other thing that Catherine said because perspective, the balcony and the dance floor perspective is so important. And so if you just practice being curious every day rather than making a judgement , if you practice curiosity and truly listening and exploring, that's not only going to be helpful for you within your teams, it's actually one of the key tenets anyway of psychological safety. So curiosity is definitely a big one, I think.

Tahn Sharpe:
Well, plenty to think about there. Thank you both so much. I get the sense, adaptability is something we'll be placing more and more value on as we move forward. Catherine, Kath, thanks so much for joining us today.

Catherine Althaus:
Thank you so much for having us.

Kathryn McEwan:
A pleasure.

Tahn Sharpe:
And for all our listeners eager to learn more, check out the show notes for links to additional resources from CPA Australia. Don't forget to subscribe to INTHEBLACK and share this episode with your colleagues and friends in the business community. Until next time, thanks for listening.

Garreth Hanley:
To find out more about our other podcasts, check out the show notes for this episode. And we hope you can join us again next time for another episode of INTHEBLACK.