Vigilant Organization
Vigilant Organization
All organizations are vulnerable to missing signals because of the limited attention, competing priorities, and frequently, a lack of curiosity. When uncertainty increases, top performing organizations stay ahead since they know where to look for warning signs and how to explore their environment. The truly vigilant organization manages a process which routinely and effectively watches for, evaluates, and responds to those signals from the far reaches of its environment which are difficult to interpret. A vigilant organization is noteworthy for its ability to ‘see around the corners’, and attends to early signals of threats and potential opportunities. It has a superior peripheral vision capability which determines how well it senses and acts on these frequently confusing signals. This capability has the following five components.
The first component is the management of a vigilant organization. It encourages a broad focus on the periphery. A management team which seeks and values early warnings, is needed for mobilizing the rest of the organization to pay attention to the periphery. The second component is a flexible and curious culture which rewards exploring the fringes and encourages outliers and mavericks to speak up about emerging issues. The management establishes a culture which is respectful of ideas outside the mainstream concerns of the organization. The third component is an inquisitive approach to strategy making. Out of this strategy process come probing questions which focus the organization on specific challenges, rather than diffusing energy on uninteresting concerns.
The fourth component is networks and knowledge systems for detecting, tracking, and sharing weak signals. Rather than waiting for these signals to become clearer, these systems actively track interesting trends. The fifth component is the organizational configuration which encourages the exploration of the periphery. Within the vigilant organization, the configuration assigns clear accountability for seeking answers to the probing questions which are surfaced during the strategy process, and provides incentives for individuals to report and share meaningful signals.
As the organizational management reads memos and reports, it can frame troubling issues in overly abstract, and easier to dismiss terms, losing touch with what is really happening on the ground. Management also does not appreciate the stresses others are under or the reasons that they can withhold information from the management. The net result is a partial and frequently distorted view of what is happening right under the management nose inside the organization.
The understanding of the nature of vigilance, including corporate foresight, has advanced steadily. In vigilant organizations, management attention is leveraged for higher agility and advantage, whereas in vulnerable organizations, mis-directed attention creates blind spots, myopia, and delayed reactions. The challenge for the management is to deal appropriately with vast quantities of regular information while strengthening the ability to pay attention.
Majority of the organizations lack sufficient capacity to detect, interpret, and act on the critically important but weak and ambiguous signals of fresh threats or new opportunities which emerge on the periphery of their normal operating environment. Organizations without this capability are vulnerable to rivals who see and take advantage of these early, easily missed signals sooner. Hence, the organization is required to become more vigilant and reduce the risk of being blind-sided. Also, there is an important role of the management in improving the peripheral vision of the organization.
Part of the issue is that, in the normal course of operation, majority of the organizations focus narrowly on managing their offering in their immediate marketing environment which consists of a complicated landscape of markets, customers, competitors, regulations, technology and stake-holders. This unwavering attention benefits short-term performance, but when it routinely ignores subtle signals from the periphery of the organizational environment which can foretell considerable changes it threatens the organizational long-term survival. However, successful peripheral vision, such as monitoring other industries, remote markets, theoretical studies, exotic operational models, and arcane demographic data which seems to have little relevance to the organizational offering, is much more than sensing incipient change. It is also about knowing where to look more carefully for clues, how to interpret the weak signals, and how to act when the signals are still ambiguous. In sum, a truly vigilant organization manages a process which routinely and effectively watches for, evaluates, and responds to signals from the far reaches of its environment which are otherwise difficult to interpret.
The attitude of the management is the most significant component of a superior capability for acute peripheral vision. Management defines what the organization sees and how it makes sense. It also determines which voices are to be heard and which are to be ignored. Executives at different levels either open the organization to the weak signals from the environment and inside the organization, or shuts these signals out. Even the organization with the strongest individual mechanisms and processes for peripheral vision can find itself limited by the executives who ignore all the weak signals which come into the organization.
Minding and mining the periphery – The ability to ‘mind’ a broad periphery needs divergent attention and actions across several areas. After all, one does not know whether the next relevant signal comes from the realm of economics, the world of politics, the domain of technology, or from within the industry itself in terms of customers or competitors. In contrast, when dealing with a well-defined part of the periphery, such as pending regulations or a specific technology, management is required to encourage the organization to thoroughly ‘mine’ for knowledge in a specific area. Indeed, only a very close examination can reveal the key insights. Hence, mining the periphery also needs a strong convergent focus on a specific part of the surrounding and rapidly developing the capacity to respond to it.
Few organizations need to be aware of as broad and ambiguous a periphery. The on-going efforts of the organization to learn more deeply and quickly about its periphery, for becoming a more vigilant organization, is instructive. The danger for the organization which seeks to mind a broad periphery is that its attention can become very diffused. The management can avoid this by encouraging the organization to mind the periphery in certain ways. It can mobilize the organization to be more inquisitive, and directed attention to specific challenges, broadly tracked different trends and tastes, and assigned clear accountabilities. There are other dimensions to the ‘minding’ strategy, but four are more important which are described below in more detail for appreciating the approach.
Mobilize the organization to become more inquisitive – The management is to set about passionately focusing organizational attention on how the outside world is changing and needs to better understand it. There can be a need for a restructuring of the executive committee and set in motion a review which challenges the organizational operations. While the organization needs to cut costs, the management is required to make it clear that the bigger focus is to be on asking questions which challenges the way the executives think about the organizational operation. The management is to go into this with a genuinely open mind, but these are questions which are not going to go away. If the organization does not examine them thoroughly, others are going to do it. The task of the management is to see that the organization changes more rapidly and radically during the coming years.
For the organization which has a broad periphery, it is important for the management not to provide employees with simple answers. Instead, the management is required to challenge the organization to better understand diverse aspects of the periphery. The management is required to launch an initiative called ‘future focus’ for encouraging every part of the organization to pay more attention for the changes which defines the organizational future.
The goal is to get everyone in the organization looking outside at the periphery, particularly new technology, channels, and customer behaviour, for better understanding how the organizational own part of the operations can change. This results into a considerable culture change for the organization. The management encourages the entire organization to engage in active scanning, sharing information and discussing what these signals can mean. A project named ‘creative future’ can bring together different heterogenous groups to look over the previous years to find how customer requirements are changing and technology developing and what this can mean for the creative strategy of the organization.
This culture change prompts diverse insights and actions in different parts of the organization. For example, in seeking to understand customers, the organization can find that a certain category of customers like certain organizational product very much, but they do no associate with the overall organizational brand. Hence, the organization is to think about launching corporate image-building campaigns with these customers for raising their awareness that the product they liked so much actually come from the organization. The challenge is to reach these customers on their own turf and in their own language.
Focus attention on specific challenges – The issue with minding the broadest periphery is that the organization can easily become overwhelmed and attention diffused. There is an important need for prioritization and focus, to direct attention to specific areas while continuing to promote a broad awareness. The management creates specific initiatives to focus organizational attention on a detailed understanding of changes in the landscape. These initiatives serve the purpose of directing attention to smaller, significant areas of the periphery.
For example, digital technology can be one of the areas of focus. The management can make a strategy for changing the organization to meet the demands and opportunities of a digital age. It can foresee the organization in which all the stake-holders of the organization have equal access to digital services, on demand, portable, and personalized, in which the traditional one-way traffic from the organization to the stake-holders evolves into a true creative dialogue in which the stake-holders are not passive audiences but active, inspired participants. This can provide the motivation for the organization to assess the implications of these technologies and take full advantage of the opportunities of a completely digital world. In this regard, the organization can take the help from different consultants for examining some of the changes in the outside world. This can make the management realize that the organizational stake-holders are far ahead of the organization in adopting digital technology, and how, where, and why the interactions of the stake-holders with the organization has changed dramatically because of the technology. The organization can also conduct a variety of experiments to respond to profoundly different behaviours of the stake-holders. These experiments and initiatives can constitute real-world tests and probes of the periphery.
Actively track trends and tastes – The management is required to tap into ‘cool hunters’ (individuals who are among the first to spot new trends) to scan, search, and feed observations into to the organizational production process. It is also required to look at what can be learned from precursors, i.e., organizations, markets, or segments which are ahead of the organization. For example, the product development people are required to be a frequent visitor to the customers for knowing their preferences and priorities so that the organization can fine tune its products.
The organizational executives are also required to look into trends towards the changes in the society, which can lead to unexpected insights. For example, the key trend can be towards building of societies where people can become owner of their flats or they build their own houses on the plot of land owned by them. This insight can help the organization to concentrate on the production of those products which are in line with the trend.
Ensuring accountability – Vigilant organizations charge specific groups with the responsibility for scanning the fringes and making sense of the signals, and they make this a continuing process known throughout the organization. Best practices for ensuring higher accountability include the following.
The first is to assign the responsibility to an existing functional group. Groups such as corporate development, competitor intelligence, market research or technology forecasting can be given the task of scanning. The risk is that these mid-level groups can limit their roles to narrowly collecting and processing data from the domain they know best rather than scanning broadly and educating others about what they have learned.
The second is to mobilize ad-hoc issue groups. The management can identify the most pressing issues and then form separate task-forces to pursue each one. This process is frequently guided by a scenario analysis for identifying key uncertainties which need to be understood and monitored better.
The third is the creation of a high-level lookout. As a case in point, one of the task-forces can scan specific zones of the periphery and shares insights with the management. Examples of the zones can include time compression, customer diversity, globalization, and networks.
The fourth is the creation of game changing initiatives. For the encouragement of the executives for foreseeing and test hypotheses about new opportunities beyond the core products, the organization can launch its game changing programme by which the organization can screen new ideas, and develop new products or adopt new technologies.
The fifth is to invest in start-up ventures. Majority of the large organizations in the technology sector have a pool of capital to invest in promising start-ups. These investments can be modest, but sufficient to get a clear view of the emerging technology and market. If the start-up succeeds, then an option to acquire can be exercised.
The sixth is outsourcing. The organization can also outsource responsibility for peripheral vision to external consultants, who can offer insights on the factors which can transform the organizational activities. While these outside partners can provide fresh perspectives on the organizational activities, the organization is required to ensure that these ‘private eyes’ are focused on the right areas and that the information is shared throughout the organization.
Guiding principles for the monitoring of the periphery – There are six guiding principles which are normally used by the management to successfully manage how the organization monitors its peripheral environment. These core guiding principles are extracted from different studies of best practice organizations which can help the organization and its executives for monitoring of the periphery of the organizational environment without becoming overloaded, distracted, or confused.
Guiding principle 1 – Peripheral vision is more about anticipation and alertness than prediction. Even effective peripheral vision is always a bit blurry. Weak signals are, by definition, faint. Despite these limitations, peripheral vision is a necessary first step for two kinds of anticipation namely making preparations in the face of uncertainty, and being able to act before anyone else has time to do so. By the time a weak signal is received, analyzed, and a clear prediction or forecast can be made, the opportunity to be a first responder is likely to have passed. Hence, the organization is required to be routinely ready to understand the implications of weak signals and to react effectively if they are ever to successfully anticipate the future. Several organizations invest considerable resources in improving their anticipation capabilities. This can take the form of trend analysis, scenario planning, war gaming, role-playing, and designing monitoring systems.
The basic idea is to prepare the organizational mind so that it can indeed be favoured by chance, to paraphrase Louis Pasteur. In several cases, organizational management ask executives for accurate predictions when it is not possible, given the volatile nature of the environment. Instead, the management is required to ask for assurances that the organization has systems and procedures in place to deal with the unknown and the unexpected. For example, rather than asking what sales revenue is going to be in a given market segment three years from now, management can ask what factors drive sales, how unpredictable they are, and whether the organization has the capability to spot deviations or surprises early.
Guiding principle 2 – The issue is not a lack of data, but a lack of good questions. Very frequently, executives take false comfort in gathering more information, but fail to expand their field of vision to include potential significant changes which are occurring in far-flung markets or other industries. But no matter how carefully executives look, they are not going to see the delicate signs of emerging opportunities and threats unless the scope is broad enough. The right guiding questions direct the attention of the entire organization to the places which matter, while filtering out meaningless noise.
Too much data frequently prevents executives from seeing the true picture. Executives with good intuition know how to focus only on the sub-set of information which is relevant while ignoring the rest. Frequently, these executives improve this skill by systematically testing competing hypotheses about what matter and what does not matter. The key idea is to look at fewer data points rather than more. Typically, insightful executives distinguish themselves by asking sharper questions. They have a keen eye for what is missing as well as what is present. This means ignoring extraneous information and asking for better information.
For example, if only NASA (National Aeronautics and Space Administration) executives had focused on the missing data, when debating whether or not to launch the space shuttle Challenger in January of 1986, lives would have been saved. The executives were trying to assess whether cold temperatures had any impact on the performance of a critical component, the O-rings of the rocket boosters. Hence, they looked at previous launches where damage had occurred and plotted it against the ambient temperature at launch time. There was no correlation. But if they had also included the launches where zero damage occurred, a definite correlation would have been seen and they would not have launched the shuttle.
Guiding principle 3 – Executives are required to scan actively, but with an open mind, since the periphery does not always come to the people. While passive scanning has an important role to play in peripheral vision, executives also need to explore the periphery actively through directed hypotheses as well as undirected journeys into the unknown. In short, executives are to explore the periphery of the organizational environment. Executives can use different tools to focus attention on specific parts of it (such as customer shifts or emerging technologies) which are particularly important to the organization or the question under consideration. Active scanning is not a one-time or even annual event. It has to be an ongoing process which draws on a broad range of techniques and approaches.
Guiding principle 4 – Executives use multiple perspectives for better understanding of the periphery If events and trends on the periphery of the organizational environment are confusing, bring different people with diverse views into the process and use multiple methods or techniques to collect the information. The conflicts and differences in view-points, as well as multiple hypotheses, can help illuminate different parts of the picture.
Guiding principle 5 – When catching glimpses from the periphery, executives are to probe before jumping into conclusion. They are not always to trust what they see out of the corner of their eye. It is important not to jump to conclusions when a signal is detected. Instead, it is required to take time to learn more. Executives need to amplify the weak signals with directed probes. They also need to take measured actions through a portfolio of real options and experiments for maintaining the flexibility until the uncertainty is more tolerable. The key in probing is to look for both confirming and non-confirming evidence, while entertaining a variety of hypotheses. The organization is to guard against the confirmation bias, i.e. settling on one interpretation and then selectively looking for only supporting evidence.
Guiding principle 6 – Balancing peripheral and focal vision is a management challenge. Resources and attention devoted to the periphery are frequently taken away from investments in the focal area. Organizations need to strike the right balance between focal and peripheral vision. Management is required to strike the right balance based on the needs of the organization and its environment. Some need a tightly focused organization while others need to develop an organization which can manage small incremental moves as well as lead revolutionary changes.
Survival of the most responsive – Somewhere in the organization, there is probably someone who knows about weak but potentially important signals of changes on the periphery. The organization is to be well prepared and designed to capture and to share these insights. Peripheral vision does not happen automatically in the organization. Organization operating in complex environments needs to make deliberate investments of resources and attention to improve their peripheral vision. Organization which develops an effective peripheral vision capability can gain tremendous advantages over rivals. As Charles Darwin observed ‘it is not the strongest of the species who survive, nor the most intelligent, but the ones most responsive to change’.
Executives are vulnerable to missing signals because of the limited attention, competing priorities, and, frequently, a lack of curiosity. When the executives say at some point that ‘their plate is full’ and proceed to ignore a signal of a potential issue then they regret later. As the executives read memos and reports, they can frame troubling issues in overly abstract, and easier to dismiss terms, losing touch with what is really happening on the ground. The executives also do not appreciate the stresses others are under or the reasons they can withhold information from them. The net result is a partial and frequently a distorted view of what is happening right under the noses of executives inside the organization.
The nature of vigilance, including corporate foresight, has advanced steadily. In vigilant organizations, management attention is leveraged for higher agility and advantage, whereas in vulnerable organizations, misdirected attention creates blind spots, myopia, and delayed reactions. The challenge for the management is to deal appropriately with huge quantities of ‘regular’ information while strengthening the ability to pay attention. The following four action steps in helping the spot early warning signs and take action sooner.
Scope to decide how widely to look – In today’s era of continual data generation and the signal amplification in the polarized media world, the sheer volume of warning signs can easily overwhelm the ability of the organization to absorb them. Strategic scoping by the management draws the attention to the most pressing matters so that relevant inputs can be garnered from executives at all levels. One way to scope is by assembling a diverse team of independent thinkers from both inside and outside the organization who can tap into the organizational fear and invite everyone to voice hunches, concerns, doubts, or intuitions which can otherwise remain dormant. The management team can then shine a spotlight on issues which seem negligible now but can emerge as serious over the next few years. Adopting a three-year to five-year time frame allow the management to peer further ahead than rivals, especially when few clouds are visible yet on the horizon.
Focus attention with guiding questions – Deciding which looming issues merit close attention and why needs curiosity, management is required to pose questions which reveal the limits of the organizational present knowledge so that it can flag areas of collective ignorance and sensitize the organization to emerging issues. The questions are to be organized into three categories namely learning from the past, interrogating the present, and anticipating the future. One method for learning from the past is to use past successes to create watching and listening outposts in other markets by looking into ‘who have a consistent record of seeing sooner and acting faster’, and ‘what are their secret’.
Actively scan for deep exploration – Active scanning is built on the scientific method, i.e., it starts with a set of hypotheses, which are then tested and revised based on the availability of new data. It is rooted in a deep sense of curiosity and exploration. Doing this type of scanning, however, needs actively encouraging diverse, and even contradictory, inputs for ensuring that all sides of the issue are surfaced.
Decide which signals to amplify and clarify – Through active scanning, the organization frequently identifies several more signals than they can possibly digest. Hence, the management is required to develop ways to highlight the most interesting signals. Canvassing the wisdom of crowds is one approach. Studies have shown that groups are frequently better than individuals at making accurate judgments. This is since individuals have only partial information while groups of people with different skills are collectively smarter than the smartest person in them. Assuming the group does not have a collective blind spot, which points everyone in the wrong direction, a diverse crowd reflects the varying experiences and views of several people.
The costs of being slow to sense threats and opportunities on the competitive horizon can be devastating. Organizations can avoid such threats by spotting directional shifts ahead of their rivals. In one of the studies, it has been found that what sets the majority of the vigilant organizations apart are not the tools and methods they use but their systematic approaches in determining where to look and how to explore. They tend to take four basic steps. First, they strategically scope the environment, frequently scanning beyond their comfort zones, to begin identifying where relevant signals can come from. Second, they formulate guiding questions which direct the scarce attention of the organization to the places most likely to brood threats or opportunities. Third, they conduct targeted analyses to better understand the sources and meanings of any weak signals they pick up. Finally, they track the most intriguing signals, amplifying and clarifying them sufficiently to act decisively when the fog clears.
One of the vigilant organizations has built a vigilant information system (VIS) which includes both sensing and responding capabilities. The system includes an underlying layer of operational intelligence applications which analyze data from several sources, and management dashboards which automate the alerting process and provide the means for responding. The operational costs of the organization have been reduced almost 50 % because of both the vigilant information system and the revamping of the organizational processes so that the right people are alerted and have the means to respond correctly and quickly. Fig 1 shows comparison of traditional and vigilant information systems.
Fig 1 Comparison of traditional and vigilant information systems
Seven lessons have been learned from the effort of building vigilant information system. These are (i) to design the real-time management dash-boards to be the nerve centre for managing the organization, (ii) to plan and to schedule the coordination among teams for using the dash-boards to manage organization-wide, (iii) to build a learning loop around each OODA (observe, orient, decide, act) loop to foster group learning since the faster the loop, the more important is the learning reviews, (iv) to match the time latency of each OODA loop to the needs and capabilities of the organization for becoming truly vigilant (do not indiscriminately chase zero latency), (v) to provide the building blocks for the ‘sense-and-respond’ real-time initiative through a vigilant information system and real-time management dash-boards, (vi) to justify vigilant information systems on a basis other than return on investment, and (vii) to make implementation of an organization-wide vigilant information system, a management initiative (not a technology initiative) since it needs ‘active, and collaborative engagement’ from the management for instilling the needed organizational transformation. Fig 2 shows the OODA loop.
Fig 2 The OODA loop
Embracing this process does not mean that the organization is to identify every important signal. Several signals remain weak or ambiguous for some time, and some can just be missed. But the organization which is actively engaged in sensing are better prepared for things which can happen and are able to bounce back faster. Their attentiveness to faint stirrings both inside and outside the organization allows the management to take timely action when threats or opportunities emerge. There are several steps to be followed. The first step is the scope which decides how widely to look.
The analysis – As part of their study for their new book, ‘See Sooner, Act Faster’, the authors have conducted exploratory case studies of vigilant organizations against vulnerable organizations, using published sources as well as their own industry connections. From there, they developed different hypotheses about sensing practices at both the organizational-process and top-management levels. They tested their conceptual framework in a survey of senior executives of 118 global organizations, assessing their capabilities to see sooner and act faster.
In majority of the organizations, executives limit their scanning to familiar places and sources within their comfort zones. This approach generates a wealth of data, everything from the uncertain impressions of industry rumours to detailed evidence from sales reports, technology trend studies, and trade association alerts. Having all this data can instill a sense of control, but that is an illusion, since weak signals of transformative change frequently enter from left field, outside focus of the management. The management can avoid the fate by making the executives to use a more expansive scanning process.
An effective strategy for detecting change early is assembling a diverse team of independent thinkers from both inside and outside the organization who can, as one of the organizations has phrased it, ‘tap into the organization’s paranoia’ and invited everyone to voice hunches, concerns, doubts, or intuitions which otherwise remains inactive. The management team can then shine a spotlight on issues which seem negligible now but can emerge as serious over the next few years. Adopting a three-year to five-year time frame allows the organization to move further ahead than rivals, especially when few clouds are visible yet on the horizon.
Where to look for weak signals – The executives are required to stay on top of the full range of forces and under-currents which collectively shape the future of the organization, although the specific concerns differ by the product-segment and by the industry (Fig 3). Different teams can be assigned to surface weak signals in different ‘zones’ (e.g., the socio-economic and political forces, shifts in customers or channels, behaviour of competitors and complementors, emerging technologies, and actions of media and influence shapers), some of which can at first seem peripheral to the organization.
- Fig 3 Types of forces and undercurrents in the organization
In addition to looking outside, the executives are also to remain alert to risks within their own organization, such as misguided sales targets and rocky relationships, for preventing small issues from becoming major crises. As several organizations have learned the hard way, ignoring decaying internal issues because of the negligence or willful blindness can cause as much damage as external blind spots. In the present-day era of continual data generation and selective signal amplification in today’s polarized media world, the sheer volume of warning signs can easily overwhelm the ability of the organization to absorb them properly. The purpose of strategic scoping by the executives is to start drawing the attention of the organization to the most pressing matters so that relevant inputs can be garnered from employees at all levels.
The second step is to focus attention with guiding questions. The management is to decide which looming issues merit close attention and why it needs curiosity. Executives are to pose questions which reveal the limits of the present knowledge of the organization so that they can flag areas of collective ignorance and sensitize the organization to emerging issues. For example, the management challenges the development teams of the organization to anticipate the future not by thinking about what is true or what is likely to happen but by asking themselves what can be true, even if it is totally unexpected. Such inquiry pushes the executives to look broader and deeper. It has been found that it is helpful to organize the questions into three categories namely learning from the past, interrogating the present, and anticipating the future.
Learning from the past – The past is not always a reliable predictor of the future, but it can help the organization to identify persistent blind spots and systemic weaknesses. For example, the organization can make a point of systematically cataloguing missed threats and opportunities which likely to have led to growth. In the view of the organizational management, executives used to be too narrowly focused. Although they have been good at spotting technological trends, they have been slow in detecting shifts in customer sentiment and threats from potential rivals in adjacent markets. For example, since they have been focused on higher-end applications, they failed to see the potential for a particular aspect of the product.
Once the executives have seen the patterns in past hits and misses, they began regularly conducting wider scans, asking themselves deeper questions about what non-traditional competitors have been up to and what disruptive technologies they have been overlooking, hoping to avoid repeating errors from the past. They have looked at new technologies but also paid close attention to what distributors and end customers have been saying and the level of profits downstream players have been able to reap.
Studying the past can also be helpful in identifying relevant analogies or precedents from another industry or another region where issues of concern have already been tackled. In several cases, the proponents of new approaches have been viewed with suspicion, and there have been real skepticism about the benefits against the risks. Examining parallel cases can help executives to see their situations in a broader context and develop better ways to track and interpret additional early warning signals.
Another good method is to use past successes to create watching and listening outposts in other markets by considering ‘who there has a consistent record of seeing sooner and acting faster, and what their secret is. For example, a USA-based packaging technology organization has maintained a small office in Japan, staffed with a handful of employees, to be on the look-out for early innovations there. It has created this outpost after noticing that several important break-throughs in packaging shapes and materials appeared first in Japan. Other organizations are finding that it pays to have ears and eyes across the globe. For example, an organization retains retired executives on a part-time basis in its major markets for reporting on noteworthy developments in the products of the organization.
Interrogating the present. Sometimes the signals are right in front of organization. However, even smart executives can fall victim to rationalizing away warning signs of impending issues. Indeed, entire organization has been known to engage in defensive routines which systematically filter out such signals in order to protect the status quo. Fortunately, several surprises have backgrounds which appear initially as deviations from what is expected. For example, an alliance partner starting to recruit a different kind of talent, a customer complaining about a tightening of labour supply, or a rumour that a competitor is cutting its prices. Several signals are there waiting to be discovered, as if the future is whispering to the management. All executives need to do is ask what the signals are and listen.
Unhappy customers, especially the ones who switch over to other organizations, can be a rich source of guiding questions. Post-mortems on missed sales deals or on contracts won by competitors can be very revealing, but only if the executives doing the follow-up ask point-blank why they are losing these opportunities and are open to learning the truth and sharing what they learn.
Several organizations interrogate the present by monitoring blogs, social media sites, and chat rooms for signs of brewing trouble with customers, with an eye toward timely remedial action. Vigilant organizations pay special attention to the evolving behaviours and needs of the customers. One way to do this is by studying the ‘edge cases’ which can suggest opportunities or threats. In engineering, the term ‘edge’ is used to describe situations which purposefully push the limits. For example, a customer recently pointed out some of the new products which have surfaced in recent years are the products which address new sets of customer needs. This observation has led the executives to ask themselves what other products are about to emerge and why.
To prepare for what is ahead, the executives can develop different scenarios which reflect how the uncertainties of today can play out in years to come. For stimulating scenario planning, the executives are to pose guiding questions about the future such as what are the surprises which can really hurt the organization (or help the organization), and what can be some future surprises as big as those which the organization has seen in recent years.
Anticipating the future – For preparing for what is ahead, management can develop different scenarios which reflect how the uncertainties of today play out in years to come. When it engages in this kind of activity, the management is less likely to see a weak signal in isolation and dismiss it as mere background noise. If competing scenario narratives are developed, it is going to be easier to connect potentially important weak signals to some of them and hence place them in a broader context. For example, a rival’s decision to reduce prices does not seem particularly noteworthy, but in a scenario where It is linked to new regulations or customers switching to another brand, it can become highly relevant.
For stimulating scenario planning, management is to pose guiding questions about the future such as what surprises can really hurt the organization (or help the organization), and what some future surprises can be as big as those that the organization has seen in recent decades. For example, organizations in mature manufacturing sectors are to consider if a technological advance can disrupt their operations and in what ways and how quickly.
The third step is actively scan to deeply explore. The choices the organization makes concerning scope are not set in stone. They evolve as priorities and issues change. The specific explorations, executives launch, are required to change, as well, as new insights about the competitive environment emerge and give rise to new opportunities. For example, an auto insurance organization has noticed that its customers are not renewing their contracts as frequently as they had in the past but returned as customers later. The organization has analyzed to know why they are leaving in the first place. Contrary to the initial assumption of the organization, it has nothing to do with pricing. Rather, the organization has learned by listening closely to lapsed customers that some competitors are becoming more flexible about their coverage and terms, and some prospects had short-term coverage needs which are not being met. Those probing conversations, being a form of active scanning, challenged the belief that pricing is the issue and prompted the organization to develop competitive short-term policies.
Active scanning is built on the scientific method. It starts with a set of hypotheses, which are then tested and revised based on the availability of new data. It is rooted in a deep sense of curiosity and exploration. R Buckminster Fuller, the American architect and futurist known for popularizing the geodesic dome (a structure modeled after the beehive), approached problem-solving in a similar way. He found several of his ideas by studying the nature and asking questions about the world around him. Wherever he traveled, he picked up magazines and forced himself to read them from cover to cover, whether the articles were about basket weaving, fly-fishing, electronics, or politics. He tried to escape information bubbles and echo chambers by exposing himself to divergent thinking and by examining ideas from the outside in. Organizational management who adopts these same two behaviours and cultivates them in the organizations, is able to see the world with fresh eyes and make surprising connections.
Encouraging divergent thinking – Divergent thinking, which is wide-ranging, and frequently opposing, ideas from a variety of inputs, can lead to deeper insights provided that the intellectual conflict it generates is well managed. For doing this, executives need to set a norm of tolerance and openness, even when the contributions are clearly contradictory. Staying open to different view-points can help executives escape their own blinders and turn their eyes to information or solutions which have not been previously considered.
Fortunately, majority of the organizations do have some independent thinkers. But the issue is that they are frequently uncomfortable sharing their deep-seated concerns and feelings with the management. For example, when unexpected events occur within the organization, normally at least a few people are not surprised, but they do not say anything. Maverick insights seldom come to the surface without explicit encouragement. Management is required to create safe spaces for people on the fringes to voice their views. In addition, vigilant organizations are to solicit involvement from employees at multiple levels. Together, these tactics help foster an inquisitive culture which is primed to spot opportunities and defuse issues before they blow up.
Although the dangers of group-think are widely recognized, several executives continue to wrestle with it. For example, the management of an organization has sought to fight what it calls the ‘sticky tendency of people who like to agree with each other and find consensus comfortable’. It has attempted to build a culture where executives challenge ideas they disagree with ‘even when doing so is uncomfortable or exhausting’. The management of another organization tries to create a similar environment and puts what it calls ‘radical transparency’ at the top of its list of priorities.
In practice this means not speaking behind other people’s backs, while being sure to record meetings for those unable to attend, share emails broadly, and air disagreements openly and constructively. Of course, promoting transparency is easier said than done, since dislike to conflict and offending others frequently gets in the way of honest discussion.
Thinking from the outside in – Vigilant organizations also know how to step outside the boundaries of their organizations and view things through the eyes of customers and competitors. They continually consider critical issues such as, ‘how the customers are changing, what new needs they are likely to have, and how these needs are going to be met’. They can then do some role-playing to shift the perspective, e.g., contemplating how a new market entrant can launch an attack on the organizational own marketing. A good way to do this is to establish a cross-functional team with some outsiders added to provide fresh perspectives. This variant of the ‘red team’ exercise used by the military can sensitize the executives to threats they can otherwise miss.
The logic of surveying markets from the outside in and then using the market insights to test hypotheses about the possibilities is compelling. But it goes counter to what several organizations do. Indeed, majority of the organizations operate from inside out, believing that marketing personnel know what their customers want, research and development (R&D) personnel know what is possible, and the management has its finger on the pulse of the organizational operations. These are dangerous assumptions when times are changing and turbulence abounds.
The fourth step is to decide which signals are to be amplified and clarified. Through active scanning, organizations frequently identify several more signals than they can possibly digest. Hence, the executives need to develop ways to highlight the most interesting signals. Useful approaches include canvassing the wisdom of the crowd and soliciting input from the organizational network of partners and collaborators.
Canvassing the wisdom of crowds – Studies have shown that groups are frequently better than individuals at making accurate judgments. This is because individuals have only partial information while groups of people with different skills are collectively smarter than the smartest people in them. Assuming the group does not have a collective blind spot, which points everyone in the wrong direction, a diverse crowd reflects the varying experiences and views of several people.
Leveraging the extended network – The networks of partners, suppliers, distributors, research and development personnel, and consultants of the organization allow them to extend the reach of their sensing systems without the risk of overloading their own capacity to absorb weak signals. A good example of sensing broadly is Apple which maintains relationships with more than 1 million software developers, thousands of accessory makers, and myriad content suppliers, each with the ability to pick up weak signals such as early warnings about software problems, latent concerns about data collection procedures, and trends among early adopters. The supply chains of the majority of the organizations can be used to gather intelligence about industry dynamics, competitor behaviour, or impending supply shortages.
Clarifying by triangulating – Leonardo da Vinci extolled the virtue of system thinking and trying to look at things from different vantage points. Just as a GPS uses three coordinates to place a vehicle on a map, executives can develop sharper insights by using multiple inquiry methods and different viewpoints. People trust a signal of an impending threat or opportunity, if it is verified from different sources. This is the spirit of good journalism and good science. The aim is to avoid possible biases and misleading signals arising from a single source of information, and to build confidence in the interpretation.
The management of the organization us to realize that the executives are missing a lot of potential insights about how markets are changing. It is to encourage the executives not only to study the eco-system of customers, competitors, suppliers, joint venture partners, and strategic alliances of the customers, but also to draw on a variety of perspectives to create what-if scenarios which anticipate possible moves in the competitive environment. The intent is to be ‘to triangulate’ the available information and to uncover relevant market developments which the executives and even the customers have not fully considered.
For conducting the above exercise, the organization is (i) to form diverse customer teams, with representatives from different regions, functions, and divisions, (ii) to add non-traditional data sources such as blogs and on-line chats to more conventional ones such as feed-back on annual reports and investor presentations, and (iii) to map key stake-holders and influencers in and outside the organization, engaging as many of them as possible to capture comprehensive data. Team members within the individual regions are now able to see their customer accounts in their totality and share insights with colleagues from other regions. Account plans are now based on inputs from multiple vantage points and hence more complete. This allows the teams to connect dots in real time during regular tele-conference meetings.
Improve the sensing capability of people – When environments are changing and filled with uncertainty, organizations asking good questions have an edge. Yet, vigilant management needs to balance the eagerness to find answers to these questions with a recognition that it cannot do everything at once. Below is given some tested guidelines designed to help the management to better navigate turbulence and sharpen the sensing capability of the organization.
The first is to sense actively, with an open mind and a mix of directed hypothesizing and exploratory journeys into the unknown. Rather than treating this as a one-time event, it is to be woven into a continuous learning process which engages the entire organization. The second is that the lack of data is seldom as big an issue as the overload from distracting and noisy signals which can waste the scarce attention of the management. The guiding questions are to be used to help focus the collective attention. The third is to practice empathy and use outside-in approaches for deeply understanding the customers, competitors, and collaborators, and where they are likely to be in the future. The fourth is to activate the collective curiosity, and look for ways to stimulate the natural curiosity of the people. People are to be open to exploration, chance discoveries, random walks, and experimentation. The fifth is that the executives invest in broader personal and professional networks to extend their personal strategic radar system and to maintain links with the changes which are occurring around them. The sixth is to encourage colleagues to admit when they do not have answers. Rather than guessing or rushing to conclusions, ask them to generate hypotheses and then explore the possibilities further with others.
Judicious sensing allows for timely, flexible decision-making and deeper probing. That, in turn, enables vigilant organizations to see threats and opportunities sooner and act with confidence when the time is right.
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