What do these brands have in common?
Yes they misread the market famously. Of course it is easy to point fingers, but the point of this illustration is that even the best get it wrong.
- IBM failed to see the potential of the personal computer
In the late 1980s, personal computers had been around for 10 years or more. IBM as a group remained largely disconnecting from the fact that computing power was increasingly being distributed away from mainframes.
IBM actually developed a scenario conversation at this time but this produced forecasts, summarised in demand lines for worldwide computer capacity. The scenario conversation focussed on the unchallenged assumption that demand would continue to be for mainframes. PCs were ignored. Those who saw how the game was changing could not make themselves heard in the scenario conversation.
- Microsoft failed to appreciate the potential in the internet (at first).
- Motorola’s failed to recognise the shift from analogue to digital technology
- Research In Motion (RIM) misread the launch of iPhone. CEO Jim Balsillie said, “it’s just another entrant into a busy market in which Blackberry and BBM are unassailable” Five years later he was to admit they were killed by iPhone.
These are just a few of the examples of organisations we thought would know better. If you google “misread the market’ you will see stacks more.
But how does a savvy executive team get this so wrong?
As a leader, developing your Business Idea for the future is a core responsibility. To do this well you require unique insights to innovate and models to test for a distinctive offer. You also require execution. You require action from an organisation aligned around a clear strategy. Our actions are governed by our internally constructed version of reality.
For success, the internal reality of everyone in your organisation must be aligned, and must reflect the reality of the environment in which you operate.
And here we run into the first difficulty. Because each one of us filters signals from the external world of reality before they reach our consciousness. I have written about the ladder of inference and this note applies here.
However there is more:
Even the information that makes it through the unconscious filters must catch our attention if it is to be nurtured. It must be considered relevant. Filters for relevance have various dimensions such as:
- Time: The threat of immediate impact outweighs the “important yet not urgent”.
- Proximity: We are more interested in what affects those whose welfare is important for our welfare than in distant events.
- Urgency (try speaking to someone who is engrossed in a TV programme)
- Signal strength: Weak signals are more easily overlooked.
- Aspirations: The organisation with a strong sense of purpose will not be changing lanes frequently. However, they may miss the “opportunity offramp
- Cognitive pattern: By far the most powerful relevance filter is matching current patterns. If the new information does not relate to any structures currently in our mind we don’t even see it
- Change: We express the new in terms of our language of the old. There is an upper limit to how much old structures can endure change before the ‘scaffolding’ collapses. Your history determines what you can make sense of.
- Our current success: It is difficult to argue with success. This is exacerbated by the Fundamental Attribution Error (We attribute our success to our skill and our failure to our environment – and – we attribute others’ success to the environment and their failure to their lack of skill. We all do this). Change does not happen easily in smoothly running organisations. But, just like a London bus, there is always another upset in organisations.
But how can we find a path through these obstacles? The answer lies in the stories we tell each other. Developing scenarios will provide the unique insights that underpin innovation. But the strategic conversation through which the scenarios unfold can align your organisation towards the actions to execute the innovation.
And how does this happen?
How does scenario conversation support learning in your team?
As an organisation you can cope with uncertainty through learning.
- You take action and your experiences deviate from what you expected.
- You pause to reflect on these deviations. You talk about them as a team.
- You research the reasons for differences.
- You synthesise your reflections on the experience with the findings of your research to create a new perspective on your environment as well as an updated plan of action.
- You carry out the new plan of action and record your experiences.
This process is described in the posting on “How we learn”.
Scenario conversation supports strategic learning in the following ways:
- Scenario conversations broaden the perceptions to embrace perceptions from beyond the usual strategic conversation. Organisations get to talk about what is going in the ‘space adjacent’ to their usual deliberations.
- Scenario conversation enriches the lexicon of strategy for each organisation. Just as Strategy Map provides teams with a common vocabulary for their Business Idea, so Scenario conversation allows them to create their own unique terminology.
- Scenario conversation creates trust in the team’s ability to navigate the future. Just as we make sense of the present by reflecting on historical accounts of the past, so by telling stories of the future we can highlight components of the present on which to focus in order to navigate the future(s) we see.
- Scenario conversation aligns your rich resources. Organisations are bigger than the sum of the individuals. By engaging the organisation in telling the stories of the future all those who contribute to the stories build a common view of what could be and therefore what should be now.
So what stories are you all telling each other at the water-cooler and in your strategic project meetings?
Is it not time for a good scenario conversation?