Curious Leaders: Relentlessly Question How Things Work

Source: needpix.com

Adam Bryant has written a great article for Strategy+Business titled, "How to Think Like a CEO."   In it, he talks about a particular habit of mind of highly effective leaders.  He calls it applied curiosity.   Here's an excerpt:

Ultimately, I settled on a habit of mind that I call applied curiosity. Yes, curiosity is table stakes for anyone hoping to succeed. But it comes in many shades. Some people’s curiosity leads them to excel at crossword puzzles or to be champions on Jeopardy! Applied curiosity is a more specific variety.

People who have it engage in relentless questioning to understand how things work. And then they start wondering how those things could be made to work better. They approach everything with an inquiring mind-set — whether it’s making sense of shifting consumer habits or the global macroeconomic trends that are shaping their industry... 

What separates top CEOs from the rest is how much they question, probe, and then process what they are experiencing in order to look for insights and patterns. And in this wicked-problem world, the questioning mind-set has to be forward-looking as much as it is retrospective, sifting through what has already happened to look for lessons. If one old definition of wisdom is that it’s a sense that “I’ve seen this movie before and I know how it plays out,” then wisdom for leaders today increasingly means unlearning what they already know in order to explore what-if scenarios for an uncertain future.

I love the concept.  I've written before about how leaders often can become too beholden to the conventional wisdom, and even close-minded over time.  They become afflicted by confirmation bias, seeking data that confirms what they already believe, rather than being willing to consider how existing perspectives or mental models may be incomplete, or even wrong.  The best leaders acknowledge that the past is not necessarily a good predictor of the future, that what worked in the past may not work going forward.  They also understand that others may have vital information and insight that they do not possess, and they are open to listening to those perspectives.  Applied curiosity... we could use a lot more of it at the top of many organizations.  

The Xerox Bid for HP

This week, Fortune's Jonathan Vanian reports on Xerox's takeover bid for HP.   Vanian writes:

HP Inc.'s printing division was once the envy of Silicon Valley for its billions of dollars in annual revenue and supersized profits. But in the increasingly digital world, consumers and companies are printing less, causing HP's printing business to fade. Last week, HP Inc. confirmed getting an acquisition offer from copy machine giant Xerox worth over $30 billion, a premium to HP's market valuation. The massive deal would combine two venerable but troubled names in tech, in the hopes that they would be stronger together. The takeover bid highlights the difficult position HP Inc. is in. If it rebuffs the deal, or any rival offer, it risks continued decline, while combining with another troubled company is also dangerous.

I have a few thoughts on this takeover bid.  First, I'm not sure how the Xerox takeover addresses the fundamental weaknesses in the HP business.  The printing business, as Vanian reports, has been profitable, but declining for some time.  There is no obvious upturn in site for that business.  Vanian reports that the personal computer business has been a bright spot, in that HP's PC sales have risen substantially in recent years.  The firm has reached #2 in global market share, and it has received very favorable product reviews for its laptops recently.   Having said all that, Vanian does not note the one most obvious concern about the PC business, namely that the industry is incredibly challenging.   If we conduct a simple five forces industry analysis, we can see why margins are slim in the PC business.  The competitive forces are not attractive/positive (i.e. consider buyer and supplier power, for instance). Thus, despite HP's recent success, it faces an uphill slog in that market.   It may achieve strong sales and market share, but strong profits will be hard to come by. 

Second, the history of mergers between two weakened companies is not a positive one.  Generally speaking, putting two weak companies together does not make a strong organization.  In fact, the challenges of merging two organizations and cultures can actually distract management from many of the key strategic challenges that it faces.  Companies can become inwardly focused during a merger integration process, and rivals can take advantage of the distraction at the newly merged entity.  

Finally, as NYU Professor Melissa Schilling noted in a recent tweet about the merger, "Both companies are huge and unlikely to gain further economies of scale (HP: 21.4% share in printers; Xerox: 23% share in copiers)."  In fact, one could argue that they will face potential diseconomies of scale and scope due to the increased complexity of the organization.