The Strategic Imperative

It seems like everyday we’re treated to a business news story that just a couple of years ago would’ve seemed fantastic, but now is just taken in stride. Many of the pillars of American industry have either gone bankrupt or been acquired at fire sale prices, more than one quarter of all residential mortgages are under water, unemployment is at ten percent and could stay that high for years, and even Harvard has been forced to cut back because of the thirty percent drop in the value of its endowment.

All of these are just examples of what economists tell us is structural, not cyclical change. The business world is now a fundamentally different place, and things are not about to return to the way they were. In my day job, I see lots of pain out there, which drives an intense focus on cost reduction and a strong aversion to risk trying anything new. While it’s understandable that in such times people would just hunker down, I fear this is exactly the opposite of what needs to be done.

When a crisis hits, our fight or flight reaction kicks in, narrowing our vision to what it takes to survive. But the unexpected and painful event can also stop the automatic processing of the brain and change the way we look at things. We become more willing to change, and with a fresh perspective, we become more innovative and recognize new opportunities. How we respond is a conscious decision.

At the same time our economy is being transformed, so too is our understanding of how our minds work and how we make such decisions. We’re learning about how our perceptions shape the world we live in, how much our actions are driven by emotion and not logic, and how big ideas change the way the mind works. These and other findings of brain science challenge the conventional wisdom on how to conduct business.

The changes roiling the economy and the latest brain research combine to create an imperative for every company to fundamentally rethink their business. Customer needs have changed, but now we have better ways of understanding what they are. Costs must be controlled, but there are new management practices and organizational designs that ensure greater efficiency. Fundamental change is now a fact of life, but we have the tools to help people prosper from it.

Perhaps the most fundamental lesson of brain science is that the world is only what we think it is, but our thoughts will determine our actions. My bet is that those that see the present as an opportunity are going to take the bold action needed to flourish. Those that don’t will be yesterday’s news.

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Thinking Upside Down

In my day job, I’m coaching an extremely capable executive in a high technology company. During our first meeting, I asked him to explain his business. It took no more than thirty seconds or so before I was absolutely lost.

My first thought was that this was a much more complex business than I had ever encountered. Just as I despaired of ever getting a handle on it, he made a statement that brought it all together.

But then his explanation moved back to a level of detail that had me lost again. After a couple of minutes, another statement clarified everything. Clearly, there was a pattern here.

The best way I can describe it is by distinguishing between inductive and deductive thinking. Inductive thinking is the basis of scientific method—it builds from empirical evidence to a general idea that encompasses the evidence. In contrast, deductive thinking starts with the general idea and then reasons back down to the experience.

It’s only to be expected that a highly trained engineer would favor inductive thinking and feel at home in a world of technical detail. But the business world prefers that information be presented deductively: tell me what you’re going to tell me and then fill in the details.

When my client was explaining his business, I got lost in the trees.  It was only periodically that I would catch a glimpse of the forest.

Smart, well-trained engineers are the lifeblood of high technology companies, but without a strong business focus, there will be no company. Often, there is a split down the middle of the company, with the engineers on one side and the business people on the other.

Neither are terribly enamored of one another. Not speaking the same language, each has a hard time understanding what the other is saying. The cooperation that is essential for the success of the company is elusive.

One way to bridge the gap is for each to recognize they need to turn their thinking upside down. Going against their nature, the engineers need to present their conclusions first, and only then back them up with the detailed logic they’re so good at.

Likewise, the business people need to turn their thinking upside down and present the logic that leads to their conclusions. It will enhance their credibility with their more technical colleagues.

When both try to think like the other, communication and cooperation will improve. It’s not a bad approach to take whenever we’re confronted with people different than ourselves.

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Dissonance Not to Be Wasted

The day I landed, the earthquake hit. The island is only ninety miles from Haiti and we felt the tremor.

I wasn’t in the Caribbean for a vacation. A Latin American client was looking for a place to hold an executive offsite, so I suggested the island I had lived on for four years. With tourism down, both travel and rooms were inexpensive, and the location of the island relative to the company’s offices made it very cost effective to hold our meeting there.

I had put together a very aggressive agenda for this meeting and we found ourselves working 12 to 14 hours a day. When I’m facilitating, I am totally immersed in my work and can barely even find time to respond to emails. let alone surf the news websites. So to be frank, I didn’t even realize the magnitude of what was going on in Haiti.

This island has a large Haitian population, so little by little the news leaked into our meeting room. It wasn’t cleaned our second day because the housekeepers were Haitian and too consumed with worry about their friends and family to show up for work. The third day a relief benefit was held in the building next to ours. By the fourth day, we had all had a minute or two to read about the catastrophe and were quickly becoming aware of the scope of the disaster.

I have many friends on the island from Haiti and had long heard the tales of the horrendous conditions in the country. Several month ago, I wrote a post about Charles, who had survived a harrowing boat trip as a teenager to escape the poverty. One morning two years ago, I had woken up and looked out my window, only to see the coast guard fishing a body out of the ocean. A sloop from Haiti full of people looking for a better life had capsized just a few hundred yards from shore. An estimated eighty bodies were never even found.

With our meeting over and an acknowledged success, I flew back to the U.S. Finally, I had a chance to catch up on the news I had missed. It was even far worse than I could have imagined. The numbers of the dead and displaced were incomprehensible. Gut-wrenching pictures of injured children were all over the major internet news sites. The day I returned, a 6.1 aftershock hit the island. There was not much additional physical damage, journalists reported, but the psychic trauma to an already shaken people was huge.

Such calamities stop us in our tracks. They halt the automatic processing of our brains and activate the areas responsible for seeing the whole. We’re pulled back to a vantage point that changes our perspective on everything. The dissonance primes us for a change in what we value and how we behave.

I have felt numb since my return and nothing seems quite the same. I look around my house and wonder why I ever thought I needed all of the stuff I’ve accumulated. I listen to my daughters bicker as close sibling will do, and question how I ever could’ve been irritated by it. I reflect on the worries that used to seem so all consuming and feel ashamed.

This morning I read about the debate over whether we should send more financial aid to Haiti–we currently give about 97 cents per American. Many feel the country is so far gone that it’s just a waste of money. Others write that such handouts diminish the spirit of industry needed to turn the country around.

I also read about Goldman Sachs’ near record profit, just a small fraction of which, if invested in Haiti, could transform the lives of its people.  I then thought about Lloyd Blankfein’s comment that the firm was doing God’s work.

Later when I was driving my daughters to school, I must have committed some heinous traffic sin, for another motorists made an obscene gesture. When I then pulled up at a light next to him, he refused to look in my direction. When eye contact is made, it’s hard not to empathize and see the other person as a human being like yourself.

Haiti’s earthquake is one of Obama’s “teachable moments.” It should change everything, from the tone of our political debate over issues like healthcare to the unproductive squabbling in our business organizations. We need to focus on what’s fundamentally important to us as human beings.

First, though,we need to stop and look each other in the eye.

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