In her book “The March of Folly”, prize winning US historian Barbara Tuchman poses the paradoxical question, “Why do governments and ruling bodies sometimes pursue policies which directly conflict with their own self-interests”? Tuchman’s work highlights the dilemma of “strategic self-harm”. Of course, it’s not just governments which sometimes take their countries and peoples down the path to folly. Every institution may be at risk of the same danger, especially in times of competitive disruption.
To become an effective game-changer, or to insulate the enterprise against game-changing moves of others, organizations need to have (at least) the 5 key things: –
- New CONVERSATIONS – that are driven by both quantitative and qualitative insights and that are emergent in nature
- New VOICES – that bring different points of view to the leadership table and that are diverse in generation, gender, thought process and experience. Don’t settle for anything less
- New PERSPECTIVES – that bring a different lens to key issues, and promote breakthrough thinking
- New OBSESSIONS – that have a robust and relevant business logic which connects to future opportunities
- New EXPERIMENTS – that are “no regret moves” and create the first symbolic “bridges to the future”.
However, just when an enterprise most needs new game thinking and insights, what happens if executives become “prisoners of the past”? Which of these symptoms have you experienced in an organization?
- A leadership group increasingly disconnected from new realities
- Incapacity to sense, see, hear and translate the signals of profound change until too late – leaders high on IQ but low on SQ (strategy quotient)
- Tendency to distort information to fit outdated or erroneous views of the competitive environment – poor translational capability
- A set of unquestioned assumptions deeply shared with like-minded people
- A flawed view of existing resources, capabilities, and vulnerabilities
- Limited ability to understand patterns and connections between dimensions of change – only single factors considered, which oversimplifies the challenge of competing in complex, dynamic markets
The integrated work of HR and business strategy executives should, amongst other things, enable organizations to avoid the “March of Folly”. So why, despite the best qualified, most informed, and professionally developed executives in history, do some institutions in various industries still experience this fate? Recent cases in banking, energy, airlines, and telecommunications provide lots of relevant examples.
ACCURACY OF DATA VERSUS VALIDITY OF ASSUMPTIONS
Our diagnostic toolkits in HR and Business Strategy offer many possible reasons such as:-
- poorly designed organizational structures
- inappropriate measurement and reward systems
- important skill and knowledge deficiencies
- dysfunctional corporate cultures (see our Blog 4)
- lack of external governance pressures and influence
All of these may contribute to the phenomenon. But the missing ingredient is largely invisible. It is the role of “mindset”. That collection of mental anchors, cognitive frames of reference, and deep-rooted assumptions which send signals to executives about, what is happening around them, what the issue is and what to do about it.
There is a revival of interest in the mindset idea. But compared to other HR and strategic toolkits we arguably lack solid, empirically based analytics to explain in detail what mindset is, what its key components are, and how to alter them.
The concept and practice of reengineering has become a standard management practice in recent years. But what needs to be reengineered to ensure future competitive success? As long as the central question of strategy was “how do we play existing competitive games better?” (see our Blog 1) then the focus was on reengineering some key processes for higher operational efficiency. But if the key strategic challenge is becoming how to shape and access new games and rules, then reengineering leadership mind sets becomes a paramount issue. This is crucially important if strategy is regarded as an executive thinking system, not just an organization planning process.
THE TYRANNY OF “DOMINANT LOGIC”
The late CK Prahalad and Gordon Hewitt adapted the concept of “Dominant Logic” to this challenge. Dominant Logic explains the process by which a few things happen –
- Key assumptions about the market, nature of competition, value creation, features of the business model, organisation resources and capabilities become connected and stored in the executive brain as “mental models” to the point where they are implicit and invisible
- They become part of the organisation’s DNA code and collective programming of the human brain
- They display more visibility when they are made explicit in key organisational practices and “industry orthodoxies”, such as check in/checkout times in hotels, or how airlines measure punctuality, or how insurance companies compute the risk/price basis of car insurance, or why supermarkets provide shortest wait times for lowest spending customers.
VALIDATING/CHALLENGING DOMINANT LOGIC
The March of Folly may start when executives lack a healthy, on-going, internal forum and process to diagnose and validate their Dominant Logic in the context of game-changing competitive dynamics. This is where both HR and Strategy leaders should be able to add real value based on a deeper understanding of mind set components and the potential tyranny of Dominant Logic. So at a future executive “away day”, facilitate a discussion around these three questions:
- What are the core assumptions and orthodoxies in the current Dominant Logic of our business? What is the rationale behind them?
- Which of these are vulnerable to the changes in our competitive system and will make it difficult for us to access new profitable growth opportunities? What are our “anchors of inertia”?
- As leaders, how will we adapt our Dominant Logic to new competitive realities? What business orthodoxies in our mind set and practices do we need to alter so that over time they become our new normal?
The whole exercise of Dominant Logic management will enable leaders to understand some key dimensions of mind-set especially in a new game context. They will gain valuable insights into executive capacity for:-
- SENSING the phenomenon of “weak signals” at the perimeter of the industry- the origin of most disruptions – rather than reading power points conveying publicly available data about the known market core
- DECODING the change signals into first, second, third round implications – the “so what for us” questions
- PROCESSING and TRANSLATING why and how specific existing Dominant Logic assumptions are at risk
- DEFINING the first stage agenda to deeply embody new mind sets into the organisation by altering some symbolic “orthodoxy” entrenched in existing Dominant Logic
This series of blogs was focused on suggesting a new logic and relationship to connect HR and Business leaders, aimed at creating real organizational value in a new game global business system. As Professor Dave Ulrich perceptively argues, HR is not about HR but about the business. So too is strategy, but as a thinking system it is not just about processes but organisational capabilities.
Perhaps it is time for both HR and Strategy to examine the roots and features of their own Dominant Logic, and to decide which elements are constraining them from leveraging their full potential, and connecting in new ways on a shared value creation agenda. Often, “best practice” may be insufficient or irrelevant practice. We need HR and Strategy leaders to jointly guide enterprises on the path to future glory, and avoid being unconscious aids on the March of Folly.
Are you ready to get to work on REENGINEERING MINDSETS in your organization? Are you ready to start challenging the DOMINANT LOGIC within your leadership teams? Do you need a partner to work alongside you to take your leadership on the journey of identifying game changing competitive risks?
Audrey and Gordon together deliver Executive Briefing Sessions and Strategy Workshops with CEOs and HR Leaders on New Game Strategy Development and Execution. Message Gordon at firstname.lastname@example.org or Audrey at email@example.com.
Gordon Hewitt is one of the world’s most sought-after executive educators and advisors and has been on the faculty at the Ross School of Business, University of Michigan, for over two decades also consults and teaches on top corporate programmes at the Said Business School, University of Oxford. As a consultant, he has extensive experience for over 25 years of working at CEO and Board level with many global corporations.
Audrey McGuckin works with a broad spectrum of clients to solve their toughest and most complex talent and leadership challenges. Her unique background enables her to help clients realize their strategic human capital ambitions in a practical, ‘no nonsense’ way. She has an uncanny ability to interpret business strategies and unbundle these into actionable HR and Talent Strategies that deliver tangible results for her clients.