When Dutch drugmaker Organon International Inc. was conducting clinical trials for a new antihistamine, the secretary registering the trial volunteers noticed that some volunteers were unusually cheerful. A small observation, perhaps, but one she decided to share with the trial managers. They did further research, only to discover that all the giddy participants were in the group taking the drug. Ultimately, the drug proved unsuccessful as an allergy fighter. But by then the managers knew they had an effective depression treatment -- a drug they later marketed successfully. That product would not have materialized if not for an employee trained to be attentive and to managers receptive to taking her input seriously.
We value this type of vigilance most in its absence. Boards and investors never want to hear that leaders “ignored the warning signs.” Being vigilant means spotting opportunities and threats before rivals do. Boards don’t expect prescience, but they do rely on leaders to sense and then act on early warning signs of trouble or opportunity.
In actuality, however, slow-dawning awareness is the norm. Years of warnings foreshadowed the recent subprime mortgage meltdown that most investment banks and mortgage brokers ignored or downplayed. Years of concern about murky supply chains and systematic reductions in quality also preceded problems with Chinese-made exports, leading to recalls of tainted pet foods and defective diabetes tests. In a survey of 140 corporate strategists, two-thirds of those surveyed admitted that their organization had been surprised by as many as three high-impact competitive events during the previous five years. Moreover, 97% of the respondents said their companies lacked any early warning systems to prevent future surprises. Lack of vigilance can be a career killer: A study examining why companies fire CEOs found that 23% were terminated for “denying reality.”
Leaders need to be vigilant -- they have to possess a heightened state of awareness, which means being curious, alert and willing to act on incomplete information. They need to look for weak and unexpected signals, which are crucial for recognizing new growth opportunities, as well as understanding how playing fields change and how competitors may act.
Leaders lack vigilance often because they are focused on operations. But doing so creates a narrow field of vision for the management team and deters front-line employees from sharing concerns. It is easier to consider the operational sphere than it is to worry about the vast uncertainties in the world at large, but it is crucial that leaders have a clear view of the big picture.
Vigilant leaders focus externally and stay open to diverse perspectives, apply strategic foresight and probe deeply for second-order effects. They also encourage others to do so. Operationally focused leaders concentrate on the tasks at hand, engage in traditional strategic planning and budgeting, and encourage cultures of superb execution. They run like thoroughbreds, wearing blinders to keep them focused on the track and finish line, while vigilant leaders look all around them for new paths and opportunities as well as for threats that might impede their progress. Organizations need both, but vigilance is usually in shorter supply, since managers often get promoted on their ability to deliver results.
Vigilant leaders are deeply curious and focus beyond the immediate. They also display strategic foresight. And they develop cultures of discovery in their organization.
Consider how Texas Instruments Inc.’s CEO, Jerry Junkins, began reinventing the company in the 1990s. He encouraged the company’s “lunatic fringe” to look for new ideas among the company’s engineers, as well as among original thinkers in small startups and academia. Each week, the company held a “Sea of Ideas” meeting to recognize emerging needs and innovation at the fringes. In 2003, a group of engineers recognized that mobile phones needed power management chips to meet the demand for digital photos, television, gaming and other power-consuming applications. They set a goal to create a chip that would cut power consumption a thousandfold by the end of 2004, working on their own time to design it. The resulting technology has helped make TI a mobile-phone technology leader.
For more information on this topic is available at http://sloanreview.mit.edu/smr/issue/2008/spring/12/