In my last column, I talked about the failure of a key business process—planning. Innovation and adaptive behavior are the keys to turning this failure into success. Unfortunately, I have not developed enough solutions in the planning process area to write about it yet, so this column focuses on innovation and adaptive behavior in two other areas—organization and the regulatory environment.

ADAPTING FOR THE FUTURE

Since our business is part of the evolving landscape, we must do two things: Execute the current business plan for today and adapt the plan for tomorrow. In his book, Built to Last, Jim Collins calls it "control" and "creativity;" Dick Foster and Sarah Kaplan in their book, Creative Destruction, mention the need to "balance" and "innovate." Now, here are five things that my firm is doing to improve our own organizational adaptability:

* Become agents for change. You might not like it, but it is part of every manager's job description to look for change. Here's what I do: Discuss scenario planning and trend analysis with other Zero Alpha Group members (my study group); talk with industry leaders regularly; poll our clients looking for trends; meet quarterly on company technology issues and changes; read regularly (Bob Veres' newsletter, Inside Information, and magazines, newspapers and academic journals such as Financial Planning, Wired, Popular Science, Entrepreneur, Forbes, Fortune, Harvard Business Review, Wall Street Journal); and read about five new books each year on innovation and business.

* Do a gorilla scan. In a series of famous experiments, researchers discovered that intense focus leads to a complete loss of peripheral vision (http://viscog.beckman.illinois.edu/media/dailytelegraph.html). For managers, the price of too much focus is the loss of sensitivity to what's going on around them. I've delegated many day-to-day responsibilities in order to be able to "gorilla scan" the environment.

* Work with your key employees to recognize change. It's important to reward out-of-the-box thinking; otherwise, your staff won't be motivated to do it. Expect the unexpected by talking about it and encouraging others to look for it as well. Be aware that you tend only to see and think about things that you're prepared to see. Put another way, a lifetime of experience sometimes blinds us to alternative realities, competitive trends and disruptive innovation.

* Help employees overcome their natural tendency to avoid taking risks. Foster a positive culture that truly encourages small changes. Incremental innovation and small experiments must be acceptable, even if they lead to failures. Reward employees who come up with new ideas, no matter if they work or they don't.

For certain employees, we use management by objectives (MBO) to focus on incremental change and adaptation. As Nassim Taleb says in his book, The Black Swan, "The reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill."

* Get the right people on the bus. You may be thinking, "Can I motivate existing staff to change and be adaptable?" In short, the answer is yes. For more, read Spencer Johnson's Who Moved My Cheese? and John Kotter's Our Iceberg is Melting and Leading Change for specific ideas on finding adaptable thinkers in your firm.

REGULATORY FORECASTING

In every country, the weight of government overhead, including taxes, regulatory costs and bureaucratic manipulation, sharply affects the growth and efficiency of that economy. The impact of regulation is uneven, however, which provides opportunities to take advantage of the existing and evolving regulatory landscape. Moreover, businesses can and do shape the regulatory environment, often to their advantage and to the detriment of competitors.

So, what can we do to plan and take advantage of our regulatory environment? First, let's do a gorilla scan and see what we discover.

* Approximately 50 regulatory agencies are empowered to create and enforce regulations carrying the full force of law. As I write this, the Obama administration has proposed merging one or more of these agencies into one Federal Reserve agency due to multiple failures to regulate and enforce. Because of tremendous political infighting, many experts see little chance of one overarching regulator of systemic risk. Still, the pot is most certainly being stirred, and some new stew is likely to emerge before we see the end of 2009. Keep reading objective reports to stay on top of developments.

* The NASD and NYSE merged to become the Financial Industry Regulatory Authority (FINRA) in 2007. There's talk of an industry-wide self-regulatory organization for financial planners, and FINRA wants the job.