Strategy Lesson: Listen To Weak Signals

Dear All

Thank you all for your reflections on last week’s letter. The Thabo Mbeki quotation that “no solution to current problems can be found unless we understand their historical origins” resonated with many of you.

It took me back to Albert Woodfox’s Solitary. Writing of the Louisiana State Penitentiary (Angola) he says:

“The horrors of the prison in 1965 cannot be exaggerated. Angola looked like a slave plantation, which it once was…originally one of six slave-breeding plantations owned by American slave trader Isaac Franklin, Angola was spread out over 18,000 acres of farmland…”

Pause for a moment to think of the pain that haunts that land. Transformation says that land should be handed to healing and rebirth, not to imprisonment.

Renewal of any kind must start with understanding history. This is true of society, of organisation and of self.

/ strategy

Last week, I promised a reflection on Columbia Business School Professor, Rita McGrath’s Seeing Around Corners. This book is filled with insightful anecdotes and observations, which makes it a useful read. It won’t radically alter your approach to strategy, but it’ll make you pause to think. That’s often the most important step.

Her book reflects on how businesses often miss the inflection points that signal the need for renewal. She argues that one needs to reframe the strategic orientation from an industry focus to thinking about the arenas in which one operates and looking for weak signals.

McGrath makes the point that, “In the unfair way in which life operates, the moment at which you have the richest, most trustworthy information is often the moment at which you have the least power to change the story told by that information”.

I often hear of projects killed by executives far from the business’s action because of ‘insufficient data’. In McGrath’s analysis, what they are missing is that the engineers, developers or salespeople are attuned to what she calls ‘weak signals’. There isn’t data, but there is discernably a shift.

She advocates building an early warning system to spot inflection points and a leadership style that fosters trust (so that people will tell you and you will truly listen).

She recounts the Blockbuster story that always makes me pause. In 2004, then CEO John Antioco, identified the risks that Netflix posed to Blockbuster. He initiated a series of actions to mitigate the risk. Many observers regarded his plan as powerful. However, it would depress short-term profitability. The Board rejected the plan. Antioco was forced out. His successor reversed his decisions. The business tried to cling to its historical margins. Blockbuster went bankrupt in 2010. Perhaps if the Board had taken the short-term pain, it could’ve achieved a different outcome.

In both instances, there is a failure to engage a changing world. McGrath entitles one of her chapters, “Customers not hostages”. The same is true for employees. Both exercise their right to leave when leaders lose their way.

Contrast this with the ongoing survival of Fuji (who once was locked in battle with Kodak. Kodak has since joined the Blockbuster pile). The Economist explains what happened under the leadership of Shigeta Komori.

“Having a longer-term vision, it invested a lot. This was “damaging” to the firm’s short-term profitability, in the words of Mr Komori, but the bet paid off. “We have more ‘pockets’ and ‘drawers’ in our company,” he explains—a metaphor for different technical areas that bring in revenue.”

Fuji confronted the pain of declining margins and actively diversified the business. Kodak clung to margins ignoring innovation in the corners of the company.

Going back to McGrath, she advocates “generating possibilities and opening your mind to what might happen, so that as evidence gets stronger you are ready to take action”.

She reflects that ‘habitual entrepreneurs are tireless in connecting with others’, they look for patterns revealing under-served segments, places of scarcity or frustration. They are perpetually curious.

She says “The key is being discovery-driven. Stop pretending you know all the answers”.

This, requires a leadership confident in themselves, deeply connected to their teams, who both trust and are trusted, able to set clear direction and hold the complexity of a fluid world.

You can’t suddenly become that leader in a moment of crisis, you need to lead that way. Always.

/ self

This period has been one of profound loss, of life, of ways of life and of livelihoods. I have been contemplating this passage from Andre Dubus’ Broken Vessels:

“We receive and we lose, and we must try to achieve gratitude; and with that gratitude to embrace with whole hearts whatever of life that remains after the losses.”

 / soul

Beauty helps us to embrace life.

Thomas Moore says in The Dark Night of the Soul, “Beauty nurtures the soul. Expose yourself to the beautiful, and let it do its work. It will accomplish what you could never dream of. All you have to do is trust it and be open to it”.

This 6-minute tour of New York’s Metropolitan Museum Sahel exhibition is packed with beauty from the empires that surrounded the Sahara Desert. It has the added beauty of a Toumani Diabaté soundtrack.

I was once blessed to see Diabaté perform at The Pan-African Space Station that was conceived, and run by the wonderful musician, composer, and intellectual Neo Muyanga.

The Met exhibition was opened with a performance by the extraordinary Baaba Maal. It’s the perfect backdrop for reflection on this Sunday.

Be sure to bring beauty to your life this week. From there, share it.

Karl

PS: Please forward this letter to friends and colleagues.

PPS: If this is the first time you received this letter, you can access some of the archive and subscribe here and you can learn a bit more about my approach to coaching here.

(This letter was first published on June 14 2020)