One of the biggest problems leaders have today is making decisions based on the overwhelming wave of information pouring in. In a recent KPMG report (CEO Outlook 2016) 86% of CEOs indicated a "lack of time to think strategically about the forces of disruption and innovation shaping their company's future" as a top concern. So what can they do about it?
“The future is already here — it’s just unevenly distributed” (William Gibson)
The modern world has become too complex for a single person - even a great CEO - to be in complete control of. There was a time when a master craftsman would know where all the tools in his workshop were, the stage all jobs were at, supplier prices by heart and customers by name. But the complexity and pace of modern business alienates CEOs from what’s really happening on the frontline and undermines their ability to lead effectively.
Emma Walmsley, CEO of GSK Consumer Healthcare offers insight into how a modern leader approaches this challenge. ‘Our approach’ she outlines, is to centre on “sharpening our listening skills internally and externally to ensure that we hone in on early signals and can be agile and entrepreneurial enough to shift course if necessary.” Though replete with commonly misunderstood and hard to action buzzwords her comment, unpacked, reveals real options.
Today more information flows through organisations than exists within them. Early detection and exploitation of weak signals (of emerging opportunities and threats) becomes central to gaining a competitive edge. Yet, too often, modern organisations focus on trying to anticipate what might happen rather than increasing awareness of what is really happening - hindering their capacity to act quickly enough, let alone entrepreneurially (which is likely impossible inside a culture of plenty).
In a probably futile search for a silver bullet half of top CEOs are looking to make deals to create “partnerships or collaborative arrangements with other firms.” But this attempt to import new capabilities quickly will be offset by the usual frustrations such deals bring: a failure to deliver the value expected; mainly due to culture-based challenges executives still don’t have an angle on.
Owning more sources of information, rather than better tapping the knowledge it triggers, is a numbers fallacy - a belief that more data increases the likelihood of more signals; but it also increases the amount of noise CEOs must wade through to get to them. Big Data will tell you who said what, where and when, but it won’t tell you why. More data equals less time for CEOs to reflect on the forces driving their business landscapes and what they should do about it.
“Thinking is difficult; that’s why most people judge.” (Carl Jung)
Colonel William Boyd was an airforce instructor, known affectionally as ’40 second Boyd’, as it took him just this long to turn any disadvantageous position in a dog fight to one of superiority. He did this be navigating what he called an OODA (Observation, Orientation, Decision and Action) Loop faster than his rival, throwing him off balance and putting Boyd in charge of the ‘battlefield.’ Advantage is not gained by increasing the amount of observations (or information) alone but using them to drive evidence-based decisions and rapid action that shapes the environment favourably.
Our approach - powered by SenseMaker® - seeks to accelerate navigation through the OODA Loop by: (1) tapping into the micro-observations of key networks (staff, customers, other stakeholders), which is self-interpreted to produce rich data revealing what’s really happening on the frontline, (2) presenting hard and soft data of the whole of system perspective to leaders in formats they can quickly see, understand and act on, and (3) monitoring the impact of decisions in real time to reduce the burden on reflection time.
In a complex world with more noise than signals, time-poor CEOs must learn to tap the knowledge flowing through their networks rather than trying to build new sources that will require even more time to make sense of them. The future beings to those who act on ‘thick data’ rather than just owning more ‘big data.’
Customer loyalty is a top concern for 88 percent of leaders surveyed in the KPMG CEO Outlook (2016). But just 40 percent of them currently feel their organisations are capable of “responding quickly” to emerging customer needs. This lack of responsiveness could be devastating to businesses, as customers enjoy greater choice than ever today, which is eroding loyalty (a willingness to sacrifice personal advantage) to even well-established relationships.
Agility is the new CEO buzzword - but old paradigm thinking dominates Digital platforms connect the world at virtually zero cost, yet many organisations do little more than use this to “significantly increase the number of customer segments [and] include more targeted segments.” This focus on greater “cost effectiveness” may be attractive from the CEO perspective but does little to increase loyalty from the customer perspective.
BNP Paribas Wealth Management took an approach increasingly popular amongst CEOs: they sped up product delivery; facilitating cross-silo, non-linear project work with team members “assigned to projects for two full days a week, during which they work on the project at hand only, free from the daily duties of their regular jobs.” Yet faster product delivery cycles only risk making organisations fail faster if they're not accompanied by an understanding of how these products are being experienced by customers and whether they are amplifying or dampening their brand loyalty.
No loyal customer ever left you because you weren’t quick enough to sell them a new product! Understanding how customers experience your products or services requires understanding how they make sense of the world around them. What do ‘things’ mean to them and which relationships to which things matter most? But paradoxically, if you need to ask them then you don’t have a loyalty-based relationship in the first place. For asking questions “is not really connecting. It is actually a sign that you're creating a distance between you and your target group. You wouldn’t normally ask your friend about his ‘motives’, because based on your intuitive knowledge of his needs, you would already understand them.”
In the mid-2000s Samsung and Sony battled it out for the high-end TV market. Walking into a store at this time you would have been met by screens covered in stickers listing the latest technological features inside. But something didn’t feel right to the Samsung executives. They were seeing signs of growing dissatisfaction with the added features. Customers simply didn’t seem to care! So they started to shift from an internal focus to an external one: instead of ‘how do we sell more TVs?’ they started to wonder what the experience of having a TV in the home was like for people. They became interested in the relationship potential customers had to their TVs.
So Samsung deployed anthropologists to observe how people interacted with TVs in their home. What they saw surprised them. Their big insight, from months of observations, was that a TV was not just experienced as a piece of technology, but as a piece of furniture as well. This insight - though perhaps obvious with hindsight - signalled a major breakthrough, opening the door to “redesigning its entire product line based on its new point of view.” They immersed themselves in their new philosophy; engaging Scandinavian designers - famed for functional and simple elegance - and pumped R&D money into new directions. The result was a true game changer: the flat screen LED, setting “an entirely new standard for TV design” propelling Samsung to market leader (for example, if you have a high-end TV at home today chances are it’s a Samsung).
The ‘sense-making’ journey - seeing the world through the eyes of customers - initially gained Samsung 11.3% of the TV market. Five years later that share had doubled Good market researchers have always been aware of the fact that consumers do not always say what they mean, or mean what they say. This means we need to elicit richer, more complex, emotional responses rather than just the super rationalised thinking triggered by traditional quantitative methods - for ‘reason’ alone has never been a creative power. This richer, sense-making approach, requires us to recognise that ‘meaning’ is not in the things themselves, but in customers’ relationship to them. So we must:
We, ourselves, don’t employ teams of expensive anthropologists in our global operations. Instead we deploy a tool called SenseMaker® that lets customers share their experiences of a brand in free-form ‘narratives’ (micro-stories), which they ‘tag’ (or label) to add extra layers of meaning. Visualisation technology then presents these responses en masse as patterns, clearly visible to anyone (without the need for special training). Any interesting patterns (e.g. why do we have affluent customers sharing negative experiences about service speed, what’s happening there?) can be drilled down into to get at the original underlying experiences. This lets - and forces - you to see the world as experienced by your customers, letting you make a genuine connection to them.
Seeing the world through the eyes of those that matter most to you triggers fresh insights and leads to genuine breakthrough action It has been said that you cannot understand a man until you have walked a thousand miles in his shoes. Tools such as SenseMaker® enable you to do this now, rapidly and at scale: giving the CEO who worries about customer attrition the chance to make the genuine connections that help deepen loyalty, before it’s too late.
Accelerating speed of change makes long-term plans less attainable but also less desirable - that ‘sometime in the future' ideal may turn out to be anything but ideal if you do get there, just ask the US shale industry when oil prices recently collapsed.
But as a leader you simply cannot wait for “a satisfying level of clarity” about where to go next “because you might never get it.” Instead, agile principles (crossing-over from the software development industry) are being adapted and adopted by other industries in an effort to act because of, not just in spite of, ambiguity:
Choosing to focus on your core skills to maximise short-term gain appears logical, but when the outside world is changing faster than you are then pitfalls open up all around. Rigid plans may provide direction, but are not a prescription for detailed action in a shifting world.
Rather than increasing and improving rules governing action which, like an beetle’s exoskeleton, provides protection from the shocks you know but also imposes limiting constraints (such as what do you do when you’re flipped over) consider heuristics (rules of thumb) instead. These act like a human skeleton, an enabling set of guides around which more flexible muscle and resilient tissue form to enable flexibility in action.
To the questions that keep CEOs awake at night the answers are all around in the natural sciences - it’s all about working with the way humans are, rather than the way we - and that classical economics and management theory - wish they were. You only have to look a bit harder to see them.
Shape the Future
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