Professor Paul J.H. Schoemaker is research director of the Mack Center for Technological Innovation at the University of Pennsylvania’s Wharton School, executive chairman of Decision Strategies International Inc. and coauthor with George S. Day of the book Peripheral Vision. He took the time to speak to us about the need for leaders to be vigilant.
What can go wrong if leaders aren’t vigilant?
They can miss opportunities, or get hammered by a threat, lose a customer, be too late in seeing a technological development, like when Microsoft got blindsided by Google moving into desktop search, for instance. You lose market share and in extreme cases, CEOs can get fired. About 23% of CEOs, in fact, get fired for not having noticed an external threat in time, for denying reality.
Take something that just recently happened. [Barack] Obama was blindsided by his pastor’s words at the United Church of Christ, but he had this wonderful peripheral vision about how to get younger and disenfranchised voters to come back. He was savvy in the political space, but got caught off guard by this other event, which speaks, in part, to the role emotions and networks play in being vigilant. You need to have good social networks to keep up with everything that is going on -- that’s a form of vigilance. Because you alone can’t study everything, look at everything, or you’ll become overloaded. So it’s a matter of balance.
What are some of the traits vigilant leaders possess?
There are four traits: First, they have a very external orientation; they look outside the company and outside the market as well. They have a broad view of things. Second, they tend to be very curious. When external things happen, they ask not only the obvious questions but also the less obvious ones. So when it emerged that China would be hosting the Olympics, leaders might think not only that this is good for tourism or political freedom, but that this may also lead to a shortage in steel because of all the necessary construction. They take things to a deeper level, ask questions in a more penetrating way.
Curious leaders also foster cultures in which this type of questioning is permitted -- they create space in meetings and discussions to talk about the unexpected, which is the third characteristic. Operational leaders stick to asking questions about the numbers, about margins, but don’t ask what people find puzzling. Vigilant leaders will deliberately ask that in order to increase their peripheral range. Often, when companies miss threats, we find out later that somebody in the company knew about it -- knew it was coming -- but the information wasn’t shared well across the organization. We call this distributed intelligence. And problems emerge when it’s not evenly available.
The fourth trait is that leaders tend to take the longer view more often; they look at longer-term consequences. I was once at a company where they needed to make a decision about who to promote. A committee was formed and there were three candidates: A, B, C. A was the best one for the job, so that’s who got recommended. But the CEO decided to promote B, choosing him because he would be better for the position he’d have after the current one. The CEO was thinking that whoever got the promotion would be promoted again, and would end up joining the executive committee, and he thought that B would function better in that role than A would, which displays long-term thinking.
How do companies foster vigilance?
Some CEOs will have a meeting where they will talk about paranoia -- they term it “collecting the paranoia of the organization.” This isn’t something that should be done all the time -- they could be weekly sessions, or monthly ones, brown-bag lunches. It should be set up to be a broad, and not a tight, agenda. At Boeing, the board didn’t feel it had enough time to talk about things that were important -- the agenda was so tight they were just reporting on how the company was doing. So they began to block two hours to talk about “stuff we want to talk about.” Studying past blind spots is also very useful. Do an audit of what you’ve missed and why. Examine also what you saw early and why. What were you abreast of?