Lego management missed the electronic
revolution in toys and gaming. Strategic
leaders, in contrast, are constantly
vigilant, honing their ability to anticipate
by scanning the environment for signals
of change.
We worked with a CEO named Mike
who had built his reputation as a turnaround
wizard in heavy manufacturing
businesses. He was terrific at reacting to
crises and fixing them. After he’d worked
his magic in one particular crisis, Mike’s
company enjoyed a bump in growth,
fueled in part by an up cycle. But after
the cycle had peaked, demand abruptly
softened, catching Mike off guard. More of
the same in a down market wasn’t going
to work. Mike needed to consider various
scenarios and gather better information
from diverse sources in order to anticipate
where his industry was headed.
We showed Mike and his team members
how to pick up weak signals from
both inside and outside the organization.
They worked to develop broader networks
and to take the perspective of customers,
competitors, and partners. More alert
to opportunities outside the core business,
Mike and the team diversified their
product portfolio and acquired a company
in an adjacent market where demand was
higher and less susceptible to boom-andbust
cycles.
To improve your ability to anticipate:
Talk to your customers, suppliers, and other
partners to understand their challenges.
Conduct market research and business
simulations to understand competitors’ perspectives,
gauge their likely reactions to new
initiatives or products, and predict potential
disruptive offerings.
Use scenario planning to imagine various
futures and prepare for the unexpected.
Look at a fast-growing rival and examine
actions it has taken that puzzle you.
List customers you have lost recently and try
to figure out why.
Attend conferences and events in other industries
or functions.
Challenge
Strategic thinkers question the status quo.
They challenge their own and others’ assumptions
and encourage divergent points
of view. Only after careful reflection and
examination of a problem through many
lenses do they take decisive action. This requires
patience, courage, and an open mind.
Consider Bob, a division president in
an energy company we worked with, who
was set in his ways and avoided risky
or messy situations. When faced with
a tough problem—for example, how to
consolidate business units to streamline
costs—he would gather all available information
and retreat alone into his office.
His solutions, although well thought out,
were predictable and rarely innovative. In
the consolidation case he focused entirely
on two similar and underperforming businesses
rather than considering a bolder
reorganization that would streamline
activities across the entire division. When
he needed outside advice, he turned to a
few seasoned consultants in one trusted
firm who suggested tried-and-true solutions
instead of questioning basic industry
assumptions.
Through coaching, we helped Bob
learn how to invite different (even opposing)
views to challenge his own thinking
and that of his advisers. This was uncomfortable
for him at first, but then he
began to see that he could generate fresh
solutions to stale problems and improve
his strategic decision making. For the organizational
streamlining he even assigned
a colleague to play devil’s advocate—an
approach that yielded a hybrid solution:
Certain emerging market teams were
allowed to keep their local HR and finance
support for a transitional period while tapping
the fully centralized model for IT and
legal support.
To improve your ability to challenge:
Focus on the root causes of a problem rather
than the symptoms. Apply the “five whys” of
Sakichi Toyoda, Toyota’s founder. (“Product
returns increased 5% this month.” “Why?”
“Because the product intermittently malfunctions.”
“Why?” And so on.)
List long-standing assumptions about an
aspect of your business (“High switching
costs prevent our customers from defecting”)
and ask a diverse group if they hold
true.
Encourage debate by holding “safe zone”
meetings where open dialogue and conflict
are expected and welcomed.
Create a rotating position for the express
purpose of questioning the status quo.
Include naysayers in a decision process to
surface challenges early.
Capture input from people not directly
affected by a decision who may have a good
perspective on the repercussions.
Interpret
Leaders who challenge in the right way
invariably elicit complex and conflicting
information. That’s why the best ones are
also able to interpret. Instead of reflexively
seeing or hearing what you expect, you
should synthesize all the input you have.
You’ll need to recognize patterns, push
through ambiguity, and seek new insights.
Finland’s former president J. K. Paasikivi
was fond of saying that wisdom begins by
recognizing the facts and then “re-cognizing,”
or rethinking, them to expose their
hidden implications.
Some years ago Liz, a U.S. food company
CMO, was developing a marketing
plan for the company’s