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Seeing Around Corners: Be Present at the Edges of Your Business (Best Practices 1-4), with Rita McGrath, Professor of Business Strategy, Columbia Business School, and Author, Seeing Around Corners
One of the things that I have distilled in the book is a set of practices. There are eight of them that I recommend people can use. And the reason I like to make it simple like that with just eight is I could overwhelm you with a thousand things you could be paying attention to and a million different checklists you could use and that doesn’t really help. What we need is some simplicity. We need a way of cutting through some of the activities that we need to do in order to spot inflection points coming.
1. Ensure direct connection between the people at the edges of your company and the people making strategy.
So the first practice that I see as absolutely critical for senior executives especially is getting out to the edges but doing it personally. And one of the things I would observe is that it’s very easy for the organization to hide things from you. As a senior executive, especially the more power that you have the less the organization wants to look bad in your eyes or bring you bad news or otherwise throw anything other than the most flattering image to you.
And a great example of this was The Gap some years back in 2015 made a commitment to try to provide its workers with more predictable hours. And they were really struggling with doing this and so the New York Times wanted to know some years later well why was it so difficult. And the first answer was uh, corporate. Like there’s these national promotions and I don’t know when they’re coming and so we’re having a special nationwide offer on skinny jeans so now I’ve got to have people running through the store pulling all the skinny jeans and putting them to where they’re supposed to be. But the one that really caught my eye was uh, and there’s executive visits. You know I had everybody on double overtime for three weeks running up to the visit by a corporate executive. Now let that sink in a minute. The executive is doing the right thing, right. Going off and visiting the stores and trying to interact with customers. And yet the store itself is a fantasy. It’s like when company is coming over you clean up your living room. So what the executive see is not the store as it actually is.
2. Leverage diversity of thought.
One of the things to be aware of is that in many organizations the decision-making teams are pretty homogenous, you know. They all went to the same schools, they all had the same training. Many of them came up through the same functions. The dilemma that creates is that then tend to look at problems the same way.
To get diversity of ideas you really need to go out of your way to get people who are from different places, who think differently than you. Maybe they speak different languages. Maybe they’ve had a different life experience. My colleague Kathy Phillips has done some fascinating research on this. Part of the problem with understanding what the consequences of this are is that in real life you never know. You never know what the outcome should be in a real-life situation because it’s just so noisy and it’s conflicting and it’s hard to make up.
But in a laboratory, you can actually design an experiment to find out which kinds of groups do better on experimental conditions. And what Kathy’s research shows which I think is absolutely fascinating is that homogenous groups perform worse on cognitive tasks requiring creativity but they feel better about it. Diverse groups actually perform a lot better but it’s so hard. It’s hard work. You have to go out of your way. It sort of activates a part of your brain you don’t normally work. But they actually perform better. Now if you take this to a corporate setting let’s say and you imagine how many homogenous decision-making teams are there as you start to get up to the tops of companies. And then you remember clinically and research-wise those teams are more likely to make big fat errors than teams that have more diversity to them. It’s a pretty sobering thought.
3. Balance type 1 and type 2 decisions.
Another distinction I think companies want to make is something that Jeff Bezos of Amazon has been very articulate in saying. He says, you know, in any large corporation, any large organization you have type one decisions that are irreversible. They’re expensive. They’re highly risky. They could expose the company to danger. They could result in a lot of risk. Those kinds of decisions yes, you want to use a very deliberate process. You’d prefer not to be wrong. You’d like to be very formal in how you go about making those kind of type one decisions. Type two decisions, on the other hand, are modest in risk. They can be done quickly. They can be reversed. If you go through a door and you decide that wasn’t the right direction you come back in the door. And he said the problem most organizations have when they get to a certain level of complexity is that they treat all decisions as though they’re type one decisions.
A friend of mine who works for a large organization that I won’t name but he said oh, there is no risk too small that someone from our company won’t try to avoid it. And I think that’s the dilemma which is if you treat everything like a type one decision your decision making speed is going to be glacial. It’s going to be really hard to get everybody on board and it starts to be an exercise in creating consensus rather than making the decision, learning from it and moving on.
4. Foster little bets that are rich in learning.
If you accept the premise that when a strategic inflection point is upon you someone always sees it. Then one of the things you want to think about is can I put enough resources and enough time into the lives of ordinary people that they can take little bets. Peter Sims used that phrase in a wonderful book he wrote called Little Bets. And the hypothesis behind the book was the more you can get variety of experimentation going on, the more likely you are to stumble across something that is useful to you. So it’s a bit like if you did a coin toss a thousand times you’re much more likely to get an event that matters than if you just do it once or twice. So that’s really the idea. And a company that does this very well is Adobe. What Adobe has is a program called Kickbox which allows just about anybody in the company to get this box which has among other things a thousand dollar gift card inside. And you can use that thousand dollars to do an experiment and it doesn’t really matter if you’re in procurement or sales or someplace that’s not product development. You can still try things out. That’s a nice example of very practically how you can make this happen.