Most big events foreshadow themselves, but often faintly and in fragmented ways. As Winston Churchill's quipped: "People sometimes stumble upon the truth but quickly pick themselves up and hurry about their business."  As discussed in my new book, See Sooner-Act Faster: How Vigilant Leaders Thrive in an Era of Digital Turbulence, co-authored with my Wharton School colleague George Day, vigilant companies try to spot and interpret anomalies as they arise in functions, departments or business sectors. 

The future whispers to us in faint signals rather than full sentences. The signals often come as disjointed snippets of information, distributed across time, space and people, without clear meanings. The key question: How well you or your organization is listening to these faint stirrings?  The problem is that it is seldom just one weak signal that will reveal the full story. At best, it is a soft warning bell or puzzling piece of data or seemingly white noise. You will have to look for more than one needle in the haystack; you find a bunch, and you may need to work hard to connect and arrive at new insights before others do.

Embrace anomalies:  Drug maker Organon (part of Akzo Nobel) stumbled on a new antidepressant after surfacing a rather small curiosity-- and then exploring it further. The research team running clinical trials for a new antihistamine was failing to prove the drug's efficacy as a treatment for hay fever and other allergies. As it would happen, a secretary involved in registering trial participants for periodic medical check-ups noted that some of them were particularly cheerful. This casual observation would in most companies remain buried at the registration desk. Thanks to a culture of broad information sharing, an alert secretary was able to bring her curiosity to the attention of managers, who explored her observation further. The trial's leaders soon realized that the patients in the treatment group tended to be in better moods than those in the control group. Through chance and exploration, they discovered that their new drug might actually be an effective treatment for depression. Organon successfully developed and marketed the drug as Tolvon (mianserin hydrochloride) after it failed as an antihistamine.

Vulnerable organizations typically ignore information that doesn't fit their current way of thinking. Vigilant firms, in contrast, seek out anomalies and view them as possible early warning signals. Intuit calls this approach "savoring the surprise." This happened, for example, after the company launched an online money management service called Mint, which was designed for young professionals. Alert team members noticed that some of the new users weren't behaving quite the way young professionals are "supposed to." Some of the new users were different in terms of amounts transferred, time of day, or kinds of other services they used.  Rather than just celebrating their successful new launch, the team dug deeper and found that these anomalous users engaged Mint to manage their self-employment income and spending. Many, it turned out, were Uber or Lyft drivers operating in the expanding gig economy at odd hours. Embracing this market insight, Intuit designed a variation of Quick Books specifically for such self-employed workers--which in turn became its fastest-growing product.

Avoid the Pitfalls:  Interpreting anomalies surfaced by keen observers at the periphery can be difficult to interpret when the organizational frame of mind is ill-prepared for the unexpected. A classic example of this vulnerability occurred on the morning of December 7, 1941. The captain of the destroyer USS Ward, which was patrolling outside of Pearl Harbor, heard the sound of muffled explosions coming from the Hawaiian mainland. The Ward's commander had just fired on an unidentified submarine barely visible at the surface and then dropped depth charges when that vessel submerged. He was pretty sure he had sunk the intruder. Despite firing what was probably the first American shots in the second World War, his peacetime frame of mind caused him to misinterpret the sounds of explosions. He turned to his lieutenant commander and said, "I guess they're blasting the new road from Pearl Harbor to Honolulu."

Mental frames can distort important signals that seems obvious in hindsight. This happened recently, for instance, to Facebook and other social media companies who badly misread the growing concern about personal data violations, hate speech and fake news.  Leaders such as Facebook's founder and CEO Mark Zuckerberg viewed their companies as mere communications platforms, rather than publishing houses, and thus took little responsibility for content flowing through their conduits.  This lax view opened the door for hijacking by Russian operatives, extreme fringe groups, and other nefarious players, resulting in a huge social backlash against the companies, and additional tightening of regulations in the U.S. and elsewhere.

Our book, See Sooner-Act Faster, explores how vigilant firms can develop greater foresight than their rivals, and outlines why vulnerable firms often miss early signals of external threats or internal organizational challenges. Charles Schwab, for example, was early to see and act on the promise of "robo- advisors," whereas Honeywell stumbled, letting Nest Labs launch the first "smart" thermostat.  The role of leaders is critical in how organizations develop vigilance capabilities and cultivate foresight throughout the entire enterprise. See Sooner-Act Faster draws lessons from a wide range of cases, including Adobe's move to the cloud, Shell's investments in clean energy, and MasterCard's early recognition of digital challenges for cash users. Importantly, we also describe how to allocate that very precious resource of leadership attention in order to detect weak signals sooner, both outside and inside the organization. As the self-inflicted wounds of Volkswagen, Wells Fargo and Boeing remind us, problems can fester for long time inside the organization's belly but eventually become ticking time bombs. Vigilant leaders have the right tools and mindsets to defuse them before they explode.

The payoff for exploring anomalies and other weak signals inside the firm as well as outside is enormous. Leaders who can truly listen to what other people are telling them, or to what the future is whispering in their ears, will be amply rewarded. Research shows that such firms will enjoy stronger market positions, higher profits and growth, better motivated employees, and enhanced organization longevity.

Published on: Sep 30, 2019
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