Did You Win or Did They Lose? Thought Leadership Through Thinking
Business people often cast critical thinking as a due-diligence gauntlet. Where did that number come from? How confident are you? What does [fill in author, authority, or celebrity] say?
Those aren’t bad questions; they’re just not good enough. They’re necessary but not sufficient. Saying you must be right because you survived the gauntlet is like saying you must be movie-star gorgeous because you floss your teeth.
Think of it this way. No strategy or business plan ever gets adopted without passing the gauntlet, yet strategies and plans fail. We know that because companies go bankrupt (a severe form of failure), and it’s unlikely that bankruptcy was their goal.
Our culture does not reward critical thinking. It rewards sound bites, über-confidence, fast fast fast, and results. It’s not easy to promote intellectual rigor when gut feel — excuse me, instinct acquired through experience — is regarded as a sound basis to risk vast sums. But thought leadership isn’t about instinct; that’d be instinct leadership. Thought leadership requires thinking. So let’s think awhile.
Think about a case in which an upstart sacked an incumbent or snatched a prize the incumbent left unattended. Walmart, like the rest of us, was young once. Sears (to pick just one big retailer) could have said cool idea, we can do that, and rolled over the pipsqueak from Arkansas. Netflix was young once too, and Blockbuster could have busted it. Southwest Airlines is flying while you probably haven’t even heard of Braniff.
A thinking question here might be this: did the upstarts win or did the incumbents lose?
A quick answer would be “some of both.” That’s not wrong, but we miss the best part if we stop there. Think: how did the upstarts win, why did the incumbents lose? Upstarts don’t always win. Incumbents don’t always lose.
One reason the upstarts won was because they challenged companies that were primed to lose. Did the upstarts think purposely to go after such companies or did they just get lucky?
One reason the incumbents lost was because they didn’t respond in time. The incumbents were thinking, but what were they thinking? They weren’t stupid; they didn’t say hey, everyone, let’s not respond in time. Tellingly, the stock price of at least one of the incumbents (Blockbuster) improved for years after its upstart (Netflix) took them on! It can be tough to argue against “look at the numbers, everything is fine” or “we don’t want to cannibalize our own products.”
Even companies that lose employ smart, motivated people who want to succeed. They don’t set out to lose; they don’t try to be complacent and inflexible. But still it happens. How can you avoid it?
The answer: through thought leadership. That means leading through thinking. That’s the conclusion I’ve come to after decades of war-gaming businesses, simulating strategies, and teaching strategic thinking, all of which have given me a front-row seat as executives confront raw competition. I learned to keep my eyes and ears open, and I think it paid off.
Here are some ideas:
- Most companies drift from an investment mentality to a budget mentality. We need X morphs into X isn’t in our budget. The budget mentality rests on the idea that you can manage your financial statements, as opposed to your financial statements being the result of actions you and others take. Others? Yes. Your competitors’ actions affect you even if they don’t show up on that spreadsheet you’re managing.
- Foster a culture where questions are seen not as disloyal but as patriotic. Ask probing, open-ended questions such as what has to happen for us to succeed. In Netflix’ case, the answer would include something like Blockbuster gives us a window of opportunity to establish our brand and reach critical mass. Be careful not to limit yourself to operational issues or to focus only on your company.
- Learn to recognize assumptions. Assumptions aren’t always wrong but they sure have potential. Our competitors don’t have the technology to match us; what if they buy it or partner with someone? Our competitors like to price for high margins; does that mean they won’t respond if we cut our prices? We’ve got momentum; what is “momentum,” especially if someone launches a better product?
Perhaps toughest of all: watch that ego. Maybe you didn’t win; maybe they lost. Humility and even a little healthy paranoia can keep you from getting complacent and inflexible. Not bad traits for a leader.
I think, that’s it.