THERE IS NO QUESTION: Taking control of uncertainty is the fundamental leadership challenge of our time. We live in the age of a technology renaissance that is not only disruptive, but destructive; it is literally destroying existing industries and creating new ones. The risk of not making a shift now outweighs that of making it, and maintaining a defensive posture leads only to a shrinking business.
Companies must go on the offense to survive. The greatest advantage goes to players that create change, not just learn to live with it. Rather than waiting and reacting, these industry leaders immerse themselves in the ambiguities of the external environment, sort through them before things are settled and known, set a path and steer the organization decisively through it. They conceive of a new need or a total redefinition of an existing one, often with a new model in mind. They don’t cling to core competencies—they take advantage of new developments to create a new need among consumers, or give them a new and more compelling experience.
As CEO, you have to be able to change course, and more than once, yet without zigzagging so much that consumers and investors become confused about who you are. Those who can do this successfully will be among the attackers, not the attacked, and ultimately among the fittest who survive. The following are seven key steps to playing an offensive game.
1. Hone your perceptual acuity. Have the psychological and mental preparedness to “see around corners” and spot potentially significant anomalies, contradictions, and oddities in the external landscape, ahead of others. Some are born with this ability, but it can be learned and even institutionalized over time.
2. Be born-again. Some companies are digital from their first breath. Others, legacy companies, must think about how to harness digitization in all of its forms to provide better information about the consumer and create new and improved experiences. They cannot simply retrofit their businesses for technology; they must experience a digital rebirth. Companies can be reborn digital if their leaders have the mindset for offense and the courage to venture into uncharted waters. Macy’s, for example, is forging a rebirth, becoming an omni-channel retailer by blending store, online and mobile, and investing in technology over the past five years to improve the end-to-end consumer experience.
Some retailers may manage to remain purely bricks and mortar, but they will be in the minority. For those who choose to make the shift, be decisive. If you vacillate, a born-digital player will move swiftly to capture your juiciest, most profitable segments.
3. Learn the power of math. The single biggest instrument of change, the one creating major uncertainties and opportunities for an ever-growing universe of today’s businesses, is the advancement of the mathematical tools called algorithms. Algorithms and the decision engines they drive process enormous amounts of data, far beyond what the brain can handle, at light speed. Companies that use these new mathematical capabilities possess a huge advantage over those that don’t, even those that have been highly successful in the past.
We can see the power of math in upending healthcare, an industry as legacy as they come. As the Affordable Care Act sharply accelerates trends already under way, aggressive companies are using sophisticated software and algorithms to help shape the industry transformation rather than become victims of it.
Des Moines-based UnityPoint Health, for example, is investing talent and funds to build an infrastructure of digitization, algorithms and software that integrates aspects of patient care from various departments and centralizes the collection and analysis of patient data, to which nurses and other providers have instant access.
4. Still, remember that the consumer holds the key. The most sophisticated data-mining software won’t replace an intuitive feel for the customer and what he or she really wants. The human mind still is unsurpassed at making connections and generating hypotheses that can then be tested. Even the UPS’ sophisticated algorithm-based On-Road Integrated Optimization and Navigation System was designed to be overridden by drivers when necessary.
A feel for the consumer can only be honed by observing consumers firsthand, as Sam Walton, Steve Jobs, Jeff Bezos and countless others were famous for doing. This is not a quaint pastime; it is a necessity for staying relevant.
5. Get comfortable with uncertainty. Your tolerance for ambiguity and risk will be tested, because going on the offense almost always requires taking action before you have a crystal clear picture of all the factors your success will depend on. As CEO of Thompson (now Thomson Reuters), Dick Harrington was a broad thinker with a finely tuned antennae for picking up signals about the outside world. Thomson, owner of what was then the world’s largest newspaper chain, was still profitable and performing well in the mid-1990s, when Harrington concluded that the rise in Internet usage would inevitably cripple Thomson’s largest source of revenue: the sale of classified ads and display ads in print media.
With the storm clouds still far on the horizon, Thomson prepared to exit newspapers altogether. A defensive mind would have seen gloom and doom in the rise of electronic media and might have sought to buttress the print business. Harrington’s mindset for offense saw the opportunity to build a business based on something new, and put the company onto a new trajectory ahead of others. That does not mean you have to be the very first in a segment; the world doesn’t change the day a technology is invented. But don’t confuse patience with a frustrated desire for certainty.
Barnes and Noble got caught waiting too long to see where online commerce was going, and as a result, lost much ground to its born-digital rival, Amazon.
6. Remove the blockages. Even if you educate yourself about digitization and the consumer, your own psychology can trip you up in the following ways:
- ATTACHMENT TO EXISTING CORE COMPETENCIES. Many lock on to these with a death grip, assuming that they are the company’s greatest or only strength and its foundation for a secure future. The CEO of Kodak is the poster child for this problem: he focused on geographic expansion into China, building on Kodak’s great expertise in film photography, and, despite his background in semiconductors, missed the implications of the shift to digital photography. John Akers, IBM’s CEO in the early ’90s, was locked on to its core competency in mainframes. His successor, Lou Gerstner, liberated the company from that blockage and refocused it from hardware to software and services, where the new game was emerging.
- REFUSAL TO RECOGNIZE OBSOLESCENCE IN KEY PEOPLE. No one wants to abandon people who have helped them succeed. But if that sentiment stops you from having a clear view of where the business should go, by definition it’s a blockage. A variation on this theme is the delusion that the key person will change. People can and do change—but will they change fast enough? During the spring of 2014, the 20 most critical senior executives of a company we’ll call “Super Snacks” convened from around the world to discuss strategy. The company was the industry leader, but CEO “Gail Jones” was worried about the accelerating shrinkage of the sweets market, the company’s mainstay. Jones invited me to help the team visualize the evolving forces that were reshaping the market space. It was a supreme challenge for them to think beyond the traditional boundaries of their business, but after some months, all but a few came along. Those few holdouts, all great people who had contributed much to the company’s success in the past, had become blockages. As painful as it was, Jones had no choice but to move them out of their jobs.
• FEAR OF FAILURE. Despite the unwavering confidence business leaders outwardly display, many have psychological blockages rooted in fear: of being shown to be wrong, of being embarrassed, of how others will respond to their decisions or actions, and, more generally, of the unknown. At times, fear can be constructive, as Intel founder Andy Grove pointed out in Only the Paranoid Survive. But if you let your subconscious fears block your judgment, you won’t know how to gauge the degree of business risk. Going on the offense does not grant you permission to gamble a business on hunches or theories, but it does involve risk-taking. Becoming aware of and confronting your own inner fears will allow you to see things more accurately, think more creatively and move more decisively.
• AVOIDANCE OF OPPOSITION. If you see something shaping up on the horizon that others don’t yet see, you will raise some hackles with your board, your investors and even a few powerful direct reports. If you doubt your ability to bring such powerful people along, you may rein in your ideas. It’s not an unfounded fear; when you push for radical change, you run
the risk of triggering backlash or revolt. But you can win over constituents by helping them develop a mindset for offense along with yours. In any organization, some 2 percent have a disproportionate influence on the other 98 percent. Never lose sight of your 2 percent—their buy-in will make all the difference.
7. Don’t be a wimp. Ultimately, going on the offense is a test of your courage. Do you have the guts to make a big move? Intellectualizing is one thing; having the courage to pull the trigger is another. As Dean Stamoulis, head of global leadership and succession services for executive search firm Russell Reynolds Associates puts it: “Savoring complexity and processing it intellectually is a learned skill that needs to be well developed. But the capacity to act is a reflection of self-confidence—not behavioral boldness or arrogance but genuine authentic self-confidence about one’s ability to figure things out and deal with the consequences. That self-confidence is vitally important when the unexpected occurs.”
We can never completely eliminate uncertainty. Doing nothing can be risky in itself and there will always be unknown unknowns—risks you don’t even know exist despite careful thinking.
But building your perceptual acuity, being able to spot the opportunity in uncertainty, having the willingness to forge a new path and commit to it as well as the adeptness to manage the transition—those are the leadership skills absolutely necessary in these, the most uncertain and fast-changing times.
THE TOOLS TO BUILD PERCEPTUAL ACUITY
The pressures of daily work and total immersion in tactical details can narrow your thinking and lower its altitude. Here are just a few tools to broaden your vision.
THE 10-MINUTE EXERCISE. In every staff meeting of an hour or more, devote the first 10 minutes to learning about and discussing the anomalies in the external landscape. Ask a different staff member at each meeting to present to the team a past, present or possible structural uncertainty or bend in the road in another industry: What is it, why did it happen or why could it happen?
SEEK CONTRARY VIEWPOINTS. Test your perceptions by talking with others, especially those you expect might have opposite views. Widen your social group, surrounding yourself with people from different industries and backgrounds, with different cognitive bandwidths and attitudes about risk-taking.
OCCASIONALLY DISSECT THE PAST. Spend time with colleagues and look at a big external change that hit your industry or another one in the past 50 years. Dissect that change.
There is much you can learn from a glance in the rear-view mirror.
CONSIDER WHO MIGHT CREATE A BEND IN THE ROAD. Is the creator of a new invention, patent or law driven to make a difference? Is someone else likely to use the invention? Who has the interest and/or resources to do something with it?
BE A VORACIOUS READER. Look for what surprises you, what is an anomaly. Reflect on what it might mean and for whom. Who will be on the attack, who on the defensive, and why? Is there a game-changer here?