Thought Leaders
Future-Proofing Your Strategy: The Gorilla Before Your Eyes
The
sub-prime mortgage meltdown and Mattel's toy recall remind
us of the challenge of developing and implementing strategy in a world
of high uncertainty. "There is a growing need for "peripheral
vision' in a world that has become increasingly complex and interlinked," says
Paul Schoemaker, academic co-director of Wharton's Critical
Thinking: Real-World, Real-Time Decisions program and research
director of Wharton's Mack Center for Technological Innovation. "The
activities of low-income mortgage applicants or factories in China might
have been considered pretty far out on the periphery. But recent events
have shown once again how small problems at the edge can come front and
center with surprising force. In both of these cases, looking back, there
were many warnings before disaster struck, but they just were not seen."
A study of more than 300 global senior executives by Professor Schoemaker and Wharton Professor George Day, co-authors of Peripheral Vision, found that 80 percent felt that they had less capacity for peripheral vision than they needed. Another study found that two-thirds of corporate strategists admitted that their organizations had been surprised by as many as three high-impact competitive events in the past five years. Moreover, 97 percent of respondents said that their companies lacked any early warning system to prevent such surprises in the future.
The Gorilla in Front of You
Many companies plan for the future based on the past. With a focus on current operations, they can fail to see new changes brewing at the periphery. Schoemaker points to an experiment that showed subjects a video of basketball players passing a ball. The subjects were asked to count the number of times the players in white shirts passed the ball. At the end of the short exercise, most subjects gave a fairly accurate count. But they failed to see a person in a gorilla costume who walked right through the center of the scene. They missed the gorilla that was right in front of them.
"When we show this to executives, we have to run the clip again because they don't believe they could have missed this," Schoemaker says. "But they are so focused on the task at hand that they literally cannot see what is right in front of them." The price of focus is that we lose peripheral vision, without realizing it.
Attentional blindness, as illustrated by the basketball experiment, is just one such example of the blindspots decision makers face. In a certain sense, failing to see the missing pieces of the picture is only human. Schoemaker, co-author of the best-selling books Decision Traps and Winning Decisions, examines traps such as poor framing or overconfidence in the Critical Thinking: Real-World, Real-Time Decisions program.
Living in Multiple Futures
Scenario planning can help to fill the holes in strategy by considering different possible futures and the strategies that are needed to be successful in each. This tends to broaden strategic discussion — encouraging managers to look at forces on the periphery that could change their company or industry. This process can lead to more robust and resilient strategies across a range of different futures.
"Managers sometimes make a projection of a certain future and then prepare to succeed in that world. But they could be dead wrong," says Schoemaker. "Instead, scenario planning looks across a range of futures and allows managers to prepare for success — no matter what the future brings." He has helped to develop scenarios for specific companies as well as broader industry scenarios in areas such as financial services, human resources, services for the aging, cancer care, and a public report on the biosciences, published through Wharton's Mack Center.
Building Peripheral Vision
Leaders play a central role in building peripheral vision in their organizations. "Our research shows that vigilant leadership has been the cornerstone of improving an organization's overall peripheral vision," Schoemaker says. "In particular, vigilant leaders have an external focus and curiosity, they exercise strategic foresight and probe for second-order effects, and they enable exploration by others in their organizations."
Companies also have to consider the balance between focusing on the current business and looking to the periphery. "Companies tend to concentrate on the short-term and immediate operational concerns rather than taking a broader view," he says. Schoemaker points out that the human eye has about ten times more "rod" cells (used to detect weak signals at the periphery) than the focal "cone" cells (which help us see things clearly and in color). This ratio has helped humans survive as a species, allowing us to recognize when a predator is about to attack or a car is merging into our lane of traffic. The dangers of tunnel vision in a personal context are well recognized. "Perhaps organizations could balance their focus more like the human eye, devoting more resources to the periphery," Schoemaker says. "This would mean hiring mavericks, increasing investments in scanning technologies, creating staff and structures for scanning the periphery, and sharing new insights, even if in the form of weak signals."
Procter & Gamble did this very successfully by augmenting its internal research and development capabilities with a "connect and develop" strategy designed to connect to the best ideas from a global network of innovators. This led to a series of powerful innovations that fueled the company's growth. Schoemaker and Day consider the role of peripheral vision in new product development and innovation in Wharton's Full-Spectrum Innovation: Driving Organic Growth program. Larry Huston, who led the development of P&G's "connect and develop" initiative, also teaches in that program and is a senior fellow in Wharton's Mack Center.
Avoiding Hypervigilance
Of course, focusing on every little action at the periphery can lead to hypervigilance, which has its own dangers. There is a need for a balance between peripheral vision and focal vision. This is the balance that the FBI cultivates in its agents with an approach called "splatter vision." Agents are trained to scan a crowd for suspects by looking into the distance and not focusing on anyone in particular. Once this general gaze takes hold, the agent looks for deviation or change. Is someone restless, looking around too much, slowly putting his hand in his coat? This suspicious activity would then trigger a more intense focus. This way, a single agent can be alert for signs of trouble across a fairly large area.
From an organizational perspective, the equivalent of splatter vision might be to have a set of surveillance units broadly scanning the globe to answer strategic questions, combined with ad hoc task forces that could be directed to explore potential hot spots. Leading organizations are increasingly investing in scanning and other strategic radar capabilities, using their extended business networks to tap into a deep and wide social network. This approach permits a wide scope of vision without requiring the cost and complexity of carefully monitoring every square foot of the globe.
To avoid surprises, companies need to bring the periphery into their strategic planning. They need to keep their eye on the ball while also noticing any unexpected gorillas. "Andy Grove (former CEO of Intel) points out that the first signs of spring are observable in the snow melting around the edges. More than ever, in a world of subtle changes that can lead to dramatic results — from toys manufactured in China to volatile financial markets — we need to be attentive to these first signs of melting snow," Schoemaker says. "These changes at the edges of our business can warn us about impending meltdowns as well as emerging opportunities for growth."
