01 December 2013

A Leadership Parable

Back in the third century A.D., the King Ts’ao sent his son, Prince T’ai, to the temple to study under the great master Pan Ku. Because Prince T’ai was to succeed his father as king, Pan Ku was to teach the boy the basics of being a good ruler. When the prince arrived at the temple, the master sent him alone to the Ming-Li Forest.

After one year, the prince was to return to the temple to describe the sound of the forest.

When Prince T’ai returned, Pan Ku asked the boy to describe all that he could hear. “Master,” replied the prince, “I could hear the cuckoos sing, the leaves rustle, the hummingbirds hum, the crickets chirp, the grass blow, the bees buzz, and the wind whisper and holler.”  
When the prince had finished, the master told him to go back to the forest to listen to what more he could hear. The prince was puzzled by the master’s request. Had he not discerned every sound already?

For days and nights on end, the young prince sat alone in the forest listening. But he heard no sounds other than those he had already heard. Then one morning, as the prince sat silently beneath the trees, he started to discern faint sounds unlike those he had ever heard before.
The more acutely he listened, the clearer the sounds became. The feeling of enlightenment enveloped the boy. “These must be the sounds the master wished me to discern,” he reflected.

When Prince T’ai returned to the temple, the master asked him what more he had heard. “Master,” responded the prince reverently, “when I listened most closely, I could hear the unheard—the sound of flowers opening, the sound of the sun warming the earth, and the sound of the grass drinking the morning dew.”
The master nodded approvingly.

“To hear the unheard,” remarked Pan Ku, “is a necessary discipline to be a good ruler. For only when a ruler has learned to listen closely to the people’s hearts, hearing their feelings uncommunicated, pains unexpressed, and complaints not spoken of, can he hope to inspire confidence in his people, understand when something is wrong, and meet the true needs of his citizens.
"The demise of states comes when leaders listen only to superficial words and do not penetrate deeply into the souls of the people to hear their true opinions, feelings, and desires.”


© W. Chan Kim is associate professor of strategy and international management, and RenĂ©e A. Mauborgne is research associate of management and international business at The European Institute of Business Administration (INSEAD), Fontainebleau, France.

 
(C) Bredholt & Co.
 
 

01 November 2013

The Power of Encouragement

"Correction does much, but encouragement does more." 

--Johann Wolfgang von Goethe

One of my favorite Peanuts' cartoons is where the gang is sitting in a row, heads down, baseball gloves in hand.  It's obvious their team lost the big game with discouraged looks on everybody's faces. 

(C) Peanuts Worldwide LLC

The pain of that loss is so intense no one dare say anything, and the silence remains until the fourth and final frame.  Finally, Lucy speaks up and says, "That's okay Charlie Brown.  Anyone can make 22 errors in one inning."

Is that encouragement?

Just a word

Recently I stopped to talk with the maintenance crew that tends the common area near our home.  "I've never seen the place look better," I said.  "Keep up the good work."

One of the men, somewhat startled, replied, "Thanks.  No one ever says anything like that to us."


My guess is a lot of workers, all over the organizational chart, including CEOs, go through daily routines receiving little, if any, encouragement.  The kind of support that might boost morale or provide additional incentive to finish a difficult task.

In addition to 360s, annual reviews, and project post-mortems, everyone could benefit from a little more inspiration throughout the year. 

Encouragement defined

One online dictionary says that encouragement is "the action of giving someone support, confidence, or hope."  Perhaps "action" is the operative word in that definition.

Encouragement is different than "happy talk."  A cheerful remark might be helpful but tends to be short-lived.   On the other hand restoring someone's confidence, with carefully chosen words, can be a profound moment, and potentially life-changing.
 
(C) Lori Ferguson



 


No suggestion is being made to remove personal responsibility for doing what needs to be done.   Work is work.  Yet offering support at an appropriate moment might make it possible for a friend, co-worker, or family member to keep going when faced with challenging circumstances. 

Nor is this a call to pull back from instruction and necessary correction.  Both are needed from time to time.  Sub-par performance is a way to jeopardize one's job and needs to be identified and dealt with as soon as possible. 

However, inserting the right words at just the right time and place can make a big difference in an individual's personal or professional life.  The truth be told some are gifted at this while the rest of us need more practice.

A turnaround at Ford

One way to look at the depths of Ford Motor Company's problems is to track the price of its stock.  Maybe you were one of the prescient few who purchased Ford shares when they bottomed out at $1.01 on November 20, 2008. As of this post Ford's stock is just over $17 per share.  That's nearly a 1,600 percent return on investment.

According to the Wall Street Journal, Ford made $1,683 in operating profit per vehicle in the third quarter of 2013 up from $1,335 a year earlier and raised its full-year operating-profit forecast to more than $8 billion, ahead of 2012.  

What happened?

The single biggest factor in that report may be the decision by William Ford, Jr., now executive chairman and great-grandson of founder Henry Ford, to step down as CEO and bring in Alan Mulally from the Boeing Corporation to head up the company.  Mulally helped lead the turnaround of the commercial airline division at Boeing and was looking for a new challenge when chairman Ford came calling in 2006.
 
It proved to be the right decision as Ford, along with General Motors and Chrysler, nearly went out of business during the Great Recession.   From 2006-2007, Ford lost $30 billion alone.

GM and Chrysler filed prepackaged bankruptcies with the United States government (taxpayers) providing funds to keep the two automakers alive. Ford, which also received tax subsidies and incentive packages, chose not to go into bankruptcy instead mortgaging nearly all its assets, including the blue Ford Oval, for $23 billion.  Alan Mulally refers to that transaction as "the largest home improvement loan in history." 
 
 
What were the other factors which kept Ford from its near-death experience?

There was Mulally's four-point plan which he preached often to anyone who would listen.  The board of directors.  The management team.  The investment community. The union workers.  The Ford family.  The salaried employees.  And suppliers.  

Here's the plan:
  1. Aggressively restructure to operate profitably at the current demand and changing model mix.
  2. Accelerate development of new products our customers want and value.
  3. Finance our plan and improve our balance sheet.
  4. Work together effectively as one team.
"Mulally's plan was predicated on a sweeping transformation of Ford's entire product portfolio," according to Bryce Hoffman in his book, "An American Icon." 

Other factors include instituting the now famous Thursday Business Plan Review meetings in the Thunderbird Room at Ford's World Headquarters in Dearborn, Michigan.  This process worked for Mulally at Boeing. 

He found this form of accountability to be effective in keeping the plan on course, sharing knowledge, monitoring problem areas, and making timely adjustments.  The meetings, which continue to this day, are an example of how practical leadership development can be.

Alan Mulally would be the first to say he was not alone in this effort.  In fact, it took hard work and sacrifice on the part of thousands of employees, a narrowed list of suppliers, support from the board and Ford family, as well as luck to pull off this "Motor City" miracle.

Not to be overlooked are Ford's customers who purchased the new and improved vehicles, making everything else possible.

Role of personal attributes

There were two additional components of the turnaround that need to be mentioned and should not be underestimated in contributing to Ford's success.

Alan Mulally, President and CEO of Ford Motor Company

The first was Kansas-born Mulally's trademark smile.  It hardly ever disappeared from his face, even in the darkest moments of the crisis, according to those who worked with him.  And there was intelligence, experience, and toughness to back up the grin. 

The second was being the CEO--"chief encouragement officer."

From the beginning of his tenure in 2006 Alan Mulally promised his team that the ride back up from the bottom would turn out to be "a lot of fun."

His primary means of motivation, according to Hoffman's book, was a shared vision.  Mulally would hug people in the hallway telling them they were going to make it if they would stay together and follow through on the plan. 

It's not surprising that a cult of personality has developed around the Ford CEO.  Says, Hoffman, who had access to Ford leadership in writing the book, "Men and women stand and cheer him when he enters the room.  They blush when he hugs them and shyly ask for his autograph. After all Mulally helped save Ford, and their jobs."   

In all this adulation Alan Mulally never ceased talking about the "team" and the importance of being "One Ford."

A call for encouragers

Do you know anyone short on support, confidence, or hope?  I'm sure you do. 

Whatever the need, listening carefully and offering encouraging words may be one of the better gifts you can give this holiday season.  Acting to help, not just talking, is the ultimate display of caring and generosity.

"In everyone's life, at some time, our inner fire goes out. It is then burst into flame by an encounter with another human being. We should all be thankful for those people who rekindle the inner spirit."  

So observed medical missionary and Nobel Peace Prize winner, Albert Schweitzer. 
Be encouraged--and give thanks for those who lit the flame in your life.  And consider doing the same for somebody else.
 
 
(C) Bredholt & Co.

 

 
 



 

  



  



01 October 2013

What's Your Strategy IQ?

“The essence of strategy is choosing what not to do. ”  

Michael E. Porter

Ever notice how at just the right time the right people providentially come into your life?

So it was in the 1990s, during a study on thinking strategically, that Michel Robert, a co-founder of Decision Processes International, became a valuable resource for us.

The genesis of the affinity is found in his book, "Strategy Pure and Simple."

It was Mike Robert (pronounced Colbert) who underscored the benefits of making a clearer distinction between thinking and planning.  He even put the word "critical" in front of thinking which is sometimes a problem for those who score high on "positivity."  When placed in the context of asking the right questions, critical thinking (purposeful, reflective judgment) is foundational to positive outcomes. 

Mike's teaching derives from the writings of Benjamin Tregoe and John Zimmerman (Top Management Strategy) with real-time illustrations from his consulting practice at DPI. 

Three ideas stand out:

-Strategy as framework.  If strategy is about making choices then what do leaders use to guide them in making decisions about the nature and direction of the company?   What's needed is a framework or future look to guide the process.  This is preferable to an open-end arrangement that's undisciplined and could lead to a momentary attraction.

-Driving force.  Other than the givens such as "profits," select from the major components of the business ( i.e., product, customer base, technology, production, distribution) one ingredient that can be the driving force, propelling the enterprise into the future.  It needs to be something the business does well.  If this were theatre think lead actor and supporting players.

-Concept of the business.  Most mission statements have little meaning. They tend to be constructed imitations lacking original thought.  To get everyone on board statements often  reflect the lowest common denominators, a commodity more than a distinct position of strength.  The book stresses that in a few sentences, no more than a paragraph, everyone in the organization should be able to describe what the business is and how it plans to be successful in its chosen markets. 

Whatever gives your company a distinctive and sustainable advantage over competitors needs to be identified, widely known, and applied consistently to decision-making.

"Positions can't just be established or defended.  The company has to keep finding new and unexpected ways to create value."

What's your IQ?

No, not your intelligence quotient although that's important.  We're referring to the organization's "strategic quotient."  If you want to assess your strategic position, share this brief survey from Mike's book with the leadership team to check for clarity or gaps in strategy and execution:

1. Do you have a well-articulated, clear statement of strategy and business concept?
 
     Yes [  ]   No [  ] 

2. Could you write a one- or two-sentence statement of that strategy/business concept?

     Yes [  ]   No [  ]

3. Do your key subordinates understand that strategy/business concept?

     Yes [  ]   No  [  ]   Somewhat  [  ]

4. Could each of your subordinates write a one- or two-sentence statement of that strategy/business concept without consulting you or each other?

     One person could  [  ]   Some could   [  ]   None could   [  ]

5. Do they use this statement as a guide for the choices they make in pursuing new products, markets, and customers?

     Use frequently  [  ]   Use sometimes  [  ]   Never use  [  ]

6. Is it used as a filter to choose or reject products, markets, and customers?

     Yes  [  ]   Sometimes  [  ]    No  [  ]

7. Have you ever sat down as a management team to try to obtain consensus as to the future direction of your firm?

     Yes  [  ]   No  [  ]

8. Was consensus obtained or are there still different visions of what the organization is trying to become?

     Total consensus  [  ]    Single vision

     Some consensus  [  ]   Single vision

     Little consensus   [  ]    Different visions
      
9. Is the organization moving in a clear direction?

     Yes  [  ]   Not sure  [  ]   No  [  ]

10. Do you have a separate process of strategic thinking to determine what you want to become as opposed to how you get there?

     Yes  [  ]  No  [  ]

11.  In a brief paragraph, what is your strategic business concept? 




www.strategist.com

(C) Bredholt & Co.
    



01 September 2013

Leadership Agenda: Stryker Corp.

Growing up in southwestern Michigan in the 1950s and 60s, I remember The Upjohn Co., a pharmaceutical manufacturing business, as the dominate and benevolent corporate presence in Kalamazoo, Michigan.  A great company and community citizen.

There were others who contributed in positive economic and social terms including General Motors Corp. (Fisher Body plant), Checker Motors Corporation (taxis), and respected Western Michigan University.  (Of the four mentioned, only the University survives with nearly 25,000 students. GM is now a restructured General Motors Co.) 

The Upjohn Co., founded by University of Michigan graduate, Dr. William E. Upjohn in 1886, was noted for its "friable pills" which were powdered and supposedly easy to digest.

A long run

As with many corporations The Upjohn Co. came to an end in a 1995 merger with Pharmacia, later called, Pharmacia & Upjohn.  What remained of Upjohn, after a second merger with Monsanto and Searle in 2000, was consolidated by Pfizer Corp. in 2003. 

Pfizer is a major presence with an expansive global manufacturing facility on the former Upjohn site and an animal research center downtown Kalamazoo.  

In 2007 the Frank Lloyd Wright-inspired Upjohn administrative office, officially known as Building 88, and sometimes referred to as the "Taj Mahal," was demolished, much to the dismay of many observers.

A transition


However, clearing away The Upjohn Co. office artifacts and debris made it possible for Stryker Corp., founded in 1941 by Dr. Homer Stryker, also a Michigan graduate, to fulfill a role as Kalamazoo's leading "corporate" citizen with its world headquarters, three major business units, and 2,400 local employees. 

For perspective Stryker is a Fortune Magazine "most admired" company; is currently ranked 305 on the 500 list; has 33 international facilities; and sells higher-end medical-related products in 100 countries.  Its total global employment is 24,000. 

Setting the agenda

In October of last year, Stryker, with sales in 2012 of $8.3 billion, promoted from within and named 47 year old Kevin A. Lobo to be its president and CEO.  The change came after former Chair and CEO, Stephen P. Macmillan, resigned over a personal family matter. 


Stryker CEO Kevin A. Lobo  (MLIVE)

Approaching a one-year anniversary as CEO, Mr. Lobo recently gave the Kalamazoo Gazette an extensive interview.  He offered up a leadership agenda (themes) for growth consisting of four areas critical to Stryker's long-term success:
  • Globalization
  • Collaboration
  • Innovation
  • Cost optimization
While most attention in organizational life is given to "strategic planning," Stryker's CEO has cooperatively developed a company-wide agenda which communicates priorities, internally and externally.  The goal of this or any other leadership agenda is to give the planning process direction and build on the strengths of the company.  

What's important to Mr. Lobo should matter to all Stryker associates, shareholders, current and prospective customers, as well as competitors.  

The agenda was not created in a vacuum as Mr. Lobo appears to place a premium on listening.  "You listen, learn, engage the teams, be transparent and open, identify areas of opportunity," the CEO offered in the interview. 

A clear No. 1

Having a list does not mean all things get equal attention at the same time.  For example,  globalization, which may be the number one priority, received the greatest attention in 2013 and made the most progress according to the Gazette interview. 

The globalization emphasis indicates an agenda should be treated as something dynamic, not linear, as new opportunities (or problems) emerge that were not thought about or present when the list was created.  New leaders at the top soon discover that market forces demand flexibility in managing anything, including a list of strategic priorities.

On the global checklist was a first acquisition in China with the $764 million purchase of Trauson Holdings Co. a lower-end manufacturer of medical equipment and devices.  "Long term, emerging markets are very important and the fastest growing," Mr. Lobo said.   

A turnaround was needed in Europe so that's where more of the CEO's time was given, concentrating on getting the right leadership in place.

Getting things done

No doubt the president and CEO spends a lot of time communicating his messages inside Stryker.  The two Gazette articles are must-reading for employees and investors as the proposed path to the future is laid out clearly for all to see.  

Although Upjohn, GM, and Checker Motors lasted a combined average 88 years, the fact they no longer exist is a reminder that corporate life comes without a guarantee.

To illustrate:

-Of the Fortune 500 companies that appeared on the first list, in 1955, only 71 hold a place on the list today. (The 1955 list included industrial companies only, whereas today's list also includes service companies.) 

-Nearly 2,000 companies have appeared on the list since its inception, and most are long gone from it.
 

When the CEO has a moment perhaps someone could take him by the former Upjohn administrative office site on Portage Road, not too far from the Stryker headquarters building next to Kalamazoo/Battle Creek International Airport.   What he would see is a grassy knoll, with no sign of the Bruce Graham-designed building completed in 1961.  

The empty lot is a reminder to continually have the right leadership agenda in place; work through the right people to have it successfully implemented; hold to core values; and adapt to market opportunities and changing customer demands.  

With hard work, and some luck along the way, Stryker Corp., now in its 72nd year, could achieve what The Upjohn Co. did and hit the century mark, even though there are no assurances that will happen. 

Yet for CEO Kevin Lobo, and everyone at Stryker, aging profitably is something a medical devices business, featuring orthopedic products, should know how to do.


(C) Bredholt & Co.

www.strategist.com

01 August 2013

Speaking in Plain Language

Ready for some straight talk from your boss?  Politicians?  The educational system?  Anyone?

Here's what happened recently in a New York City courtroom:

"Have a heart," said U.S. District Judge Katherine Forrest, as she warned the lawyers at the beginning of the Securities and Exchange Commission civil trial of former Goldman Sachs executive, Fabrice Tourre.   The federal jury is hearing a case that involves nearly $1 billion lost by investors tied to housing loans ahead of the 2007 financial crisis. 

Due to the complexity involved, Judge Forrest told attorneys representing both sides in the case that they should avoid industry "lingo" (group jargon) that might confuse the nine-person jury.  

After all, she said, "These people had the misfortune to have jury duty during the summer." 

Maybe Judge Forrest, herself a straight-talking jurist with an obvious sense of humor, should issue that same "lingo" warning to organizations everywhere as employees are often required to put up with a steady diet of "babble"
(incomprehensible sounds) in order to get their paychecks.

Who's responsible?

Groups are groups because they share something.  Mission.  Values.  Processes.  Policies.  Stories.  Myths.  Goals.  These areas of organizational life, and others, hold together by common language and understandings.  All contribute to and help create corporate cultures. 

From start-ups to centuries-old companies, organizational systems come apart without the glue of shared meaning.  

The problem arises when those in positions of influence start importing and using catch-phrases (core competency, deep dive, game changer) as a substitute for simple and culturally meaningful language. Some feel pressure to join in the fray since not using a similar vocabulary sounds as though you are outside the inner circles. 


It's at this point distinctiveness starts to melt away as one group, uniquely formed, begins sounding similar to others who are using the same language, but often with different contexts and interpretations.

Without meaning

While it's easy to use buzzwords and slogans, it's hard to articulate a cause or vision in a way that motivates people to give their lives toward its fulfillment.  This may explain why there tends to be so much glibness (fluency with insincerity) when leaders speak or write.
 

The list of buzzwords (fashionable terms) is long and getting longer (alignment, big data, collaboration, sustainability, downsizing). 

Incorporation of new terms can sometimes be placed at the feet of consultants and the publishing industry pushing trendy ideas or theories to sell books (excellence, best practices, incentivize, low hanging fruit). 

Does any one really know what buzzwords mean?  Do prospects and customers understand what is being said to them?

Businesses, nonprofits, higher education, the military, and government agencies create "shorthand" to communicate internally--a widely accepted efficiency.  Buzzwords become an expedient way to expand an organization's lexicon but often without adding any contemporary meaning to the purpose of the enterprise (benchmarking, empowerment, value proposition). 

What's annoying is how empty words and phrases become with indiscriminate use (granularity, bandwidth, team, at the end of the day).

Do executives go home and talk like this around the dinner table or while on vacation (pre-plan, going forward, brain shower)?

Benefits of plain language

In the book, "Why Business People Speak Like Idiots," published by Free Press, the authors come right to the heart of the matter by identifying "fear and peer pressure" as the main reasons employees get into this habit.  The need for clarity gets pushed aside for a corporate trendiness that has little long-term value. 

The book says a way out of this trap is by:

-Standing for something and telling co-workers what that is

-Being imperfect since overly scripted messages often fail

-Avoiding the tedium trap with something different

-Using simple stories to underscore your message


On this last point the authors remind us that:
 

  • “Leading Change” by John Kotter sold 210,000 copies--theory
  • “Who Moved My Cheese” by Spencer Johnson sold 14 million copies--story

  • A paradox

    Some additional thoughts on our communications from a Wiki post on "plain talk:" 

    -Plain talk does not forbid jargon

    -Plain talk allows for the expression of complexity

    -Plain talk does not have to be rough, or rude

    -Plain talk does not have to be understandable by everybody

    -Plain talk does not have to be condescending
     

    An example

    The goal of plain speaking is being understood.

    Here is an illustration.  It comes from the farewell of Lou Gerstner, ending his time as Chair and CEO of IBM in 2002, expressing his gratitude to everyone during an extremely difficult time in the life of this historic company...

    "Thanks--320,000 thanks--to all my colleagues in this magnificent company.  No matter what the challenge--from IBM's own near-death experience, to Y2K, to dot-com mania, to recession, to 9/11--IBM employees blessed all of us with their grit, their passion, their compassion and their class.  I'm proud to have served with all of you.  I'm grateful for all that you've taught me, and for sharing with me the business opportunity of a lifetime."

    Words are plentiful

    Writing in "Psychology Today Online," Donna Flagg makes this observation:

    "I find it fascinating that of all the words we have to choose from, we make up even more....it seems that what we have just isn't sufficient to convey the dynamics of this thing we share called work."

    Simple is good

    Have sympathy for the jurors in the Goldman Sachs trial in lower Manhattan.  Even though Judge Forrest admonished against "lingo" the opening statements by the lawyers used jargon at times in an attempt to explain to jurors the terms in the case.

    If defining terms were a requirement for using buzzwords (which itself is a "buzzword"), maybe there would be less jargon and more plain language in our communications. 

    That, in turn, could improve working relationships, productivity, and results as everyone would be "on the same page."  

    This, of course, would be a "win-win" for all concerned.  


    www.strategist.com

    (C) Bredholt & Co.

    01 July 2013

    Getting the Best Out of People

    One of my favorite TEDTalks is Sir Ken Robinson

    Who is Sir Ken Robinson?

    He is a educationalist from the United Kingdom (now living in the USA), with an engaging combination of clarity, insight, and wit.  It's this last characteristic that in many ways is the most charming.  Sir Ken is a skillful communicator appearing at the right time for those ready to learn more about nurturing those around you.

    How else do you explain nearly 17 million views on TED website--and counting.  Add to this an estimated 300-million viewing audience through repeat showings at conferences, according to a recent article in TIME magazine. 


    His focus--the relationship between education and creativity.

    So why aren't we getting the best out of people?

    Sir Ken Robinson argues that it's because we've been educated to become good workers, rather than creative thinkers. Students with restless minds and bodies -- far from being cultivated for their energy and curiosity -- are ignored or even stigmatized, with terrible consequences.

    "We are educating people out of their creativity," Robinson says. It's a message with deep resonance. Robinson's TEDTalk has been distributed widely around the Web since its release in June 2006. The most popular words framing blog posts on his talk? "Everyone should watch this."

    A visionary cultural leader


    Sir Ken led the British government's 1998 advisory committee on creative and cultural education, a massive inquiry into the significance of creativity in the educational system and the economy, and was knighted in 2003 for his achievements.

    His latest book, The Element: How Finding Your Passion Changes Everything, a deep look at human creativity and education, was published in January 2009.

    "Ken's vision and expertise is sought by public and commercial organizations throughout the world."


    --BBC Radio 4




    Click here to view Sir Ken Robinson.  The presentation on education and creativity is worth your time.





     (C) Bredholt & Co.

     

     

    01 June 2013

    Play It Like Steve Jobs: Three Questions for Business Leaders to Ask When Surprise Hits

    Guest Bloggers:  Milo Jones and Philippe Silberzahn
                             
    Despite tremendous developments in business strategy over the last fifty years, businesses and governments keep being disrupted by events that they might have seen coming, but didn’t. In other words, they get surprised… and not in a happy, surprise party kind of way. Think 9/11, the Arab spring, Fukushima or the launch of the iPhone for Nokia.
     
    Such events often have consequences far beyond their immediate environment that make many firms suffer, and require a response that isn’t in anyone’s existing playbook.  The late Steve Jobs – no slouch when dealing with disruption in the marketplace – once replied that his strategy was to “wait for the next big thing.”
     
    Should you be doing the same?
     
    When confronted by a surprise – however freakish it may be – there is a tendency to rush to action. It’s natural to ask: “What should we do?!”
     
    US President Jimmy Carter, for example, was recalled from vacation in the summer of 1979 by the urgent and disturbing news that an elite Soviet commando unit had been spotted in Cuba. What were the Soviets up to? Did this mean a new Cuban Missile-style crisis?
     
    US armed forces were put on alert, and Defense Department experts assembled in a War room… until someone reminded the participants that the Soviet commando brigade had pretty much always been there. Indeed, their presence in Cuba had been agreed to by JFK in 1962. In short, a problem did not exist, and the rush to “do something” by someone learning a fact for the first time manufactured a crisis out of thin air.
     
    A puzzled Russian ambassador asked his US counterpart: “How am I supposed to explain this to my government?”
     
    Nobody wants to be like the (still-unnamed) guy in the White House who acts before thinking, but how specifically should you act in the face of a surprising fact or shocking event? We suggest three simple questions to be your guide.
     
    #1 What’s going on?
     
    There will always be voices saying “Act, do something, respond”, but nine out of ten times, it pays to explicitly ask the question What’s going on?” and even perform some rapid analysis before doing anything else. In other words, when surprises happen, take a moment to untangle what you actually know from what people are assuming and from what is still unknown.
     
    Better still, poll a few other executives for their take on what is going on. Are their assumptions the same as yours? Do they agree on what is still unknown? Do they know someone who could help fill in the gaps?
     
    If there really is a crisis, and you’re not facing a Carter-like moment, getting such basic agreed facts written up on a whiteboard in a ’war room’ is the beginning of effective crisis management. If the surprise involves a natural disaster or other crisis covered by TV, we recommend that you keep the TV on, but turn the sound off: news channels will have whoever is to hand (or good-looking and was free to get on a plane) blathering on about this or that rumor, or doing endless recaps of the obvious (preferably with an emotional, ”human-interest” spin).
     
    If you’re after information about what’s really going on however, just watch the scene and make logical deductions when the cameras pan out. Is smoke rising from the ruins? Can you see panicked crowds, or do the police look like they’re maintaining control? In other words, interrogate the images to help figure out the first key question “What’s going on?”
     
    #2 What does it mean?
     
    Once you have some clarity about what you know (and what you don’t know), you can ask the next question: “What does it mean?” Specifically, you can ask “What does it mean for us?” In other words, as the outlines of a surprising event come into focus, you can begin to think through the implications of the event for your firm.
     
    Typically, people employ two mental tools to answer this question.  Whether they know it or not, the first tool that people instinctively use is an event cascade. An event cascade is simply a chain of cause and effect, or “If this, then that” reasoning. If there has been a volcanic eruption in Iceland, then the ash may disrupt air travel; if air travel is disrupted, airline profits will suffer, logistics chains may break or slow down, etc.
     
    Typically – and again, whether they know it or not – the second tool people use to understand the meaning of a new situation is analogies. Say your industry is crippled by a disruption caused by the Internet. People will often mention a similar industry having undergone a comparable disruption, and then point out the similarities and draw lessons.
     
    Here, we recommend that you be careful – analogies can be seductive. You should ask not only what is similar about your situation, but also what is different. Looking for similarities and differences across several analogous situations should tell you a lot about what the present situation means for you.
     
    #3 What should we do?
     
    Then, and only then, should you ask our third key question following a surprise: “What should we do?” Here, we recommend a couple of techniques to make better decisions. First, like a good chess player, “Think several moves ahead”. Draw on event cascades again and think move/counter move.
     
    Second, look at your firm from the outside, and with perspective. Keep in mind President Kennedy’s benchmark during the Cuba missile crisis of 1962: “How will the world judge our decisions when it’s over?” Finally, if you are struggling to reach a consensus about what to do (and no one has the authority or will to impose a decision), try agreeing on the mirror image of this question “What should we not do?”
     
    Active discussion about what not to do frequently airs new opinions and prompts further thought about what you should do.
     
    Iteration and patience
     
    Finally, in thinking about what to do, remember that you always have the option to wait, the option to do nothing. There are situations where, simply put, it is better to do nothing, either because action would be counter-productive, or simply because there isn’t much to do anyway. In that case, you keep working on the first two questions; “What is going on?” and
     
    “What does it mean?”
     
    If that sounds like a cop out to you we refer back to the late Steve Jobs, who when asked by Professor Richard Rumelt about his strategy in 1998, simply replied: “I’ll wait for the next big thing”. When Jobs then saw it, Apple pounced and came up with the iPod.
     
    But in the meantime, in the face of a lot of disruptive change and surprises in the IT industry, Jobs was thinking “What’s going on?” and “What does it mean for us?” It’s no easy task, but when faced with a surprise, real courage is sometimes best displayed not by answering the question most people are asking, “What should we do?”, but by working harder to figure out the other two questions. 
     
    Reposted with permission from authors.

    The article is also on Forbes.com.
     
     
    (C) Bredholt & Co.