How Do We Avoid Getting Caught by Surprise?

Why do we get caught by surprise at times? A competitor catches us off guard with an innovative new product launch. A new social trend emerges that shifts consumer tastes substantially. A sudden shift in workforce engagement and employee turnover stuns us. How can we avoid getting surprised by such changes?   

In a new study, Nir Halevy, Elizabeth Miclau, and Serena Lee argue that the traditional explanations may not suffice.  Conventional wisdom suggests that such surprises often occur because managers fail to gather, attend to, and evaluate information effectively.  They stick to pre-existing beliefs rather than adjusting their conclusions based on new data, or they dismiss those with dissenting views.  In short, people miss the signals because they are not processing information effectively.  Halevy and colleagues provide an alternative explanation.  In their paper, published American Psychologist, the researchers posit that, "strategic surprises emerge when individuals, organizations, and nations think too abstractly or too concretely during strategic interactions."  Stanford Leadership Insights summarizes the scholars' main argument:

"The researchers suggest that people and institutions can be caught off guard when they think too abstractly or too concretely about the information related to a particular situation. The quality of information matters, but so does the framework in which it is interpreted.  Overly abstract thinking relies on broad schemas that can lead decision-makers to apply poorly fitting mental models, misjudge possible threats or opportunities, or assume that others will behave in stereotypical ways. Concrete thinking, on the other hand, involves being deeply immersed in the minutiae of a specific situation, which can lead people to ignore broad trends." 

Thus, the scholars suggest that we shift between abstract and concrete thinking as we evaluate data about emerging trends, marketplace dynamics, and consumer preferences.  In so doing, we are more likely to arrive at robust conclusions.  You are less likely to get caught off guard.  

Becoming Vigilant & Detecting Early Warning Signs

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Wharton decision-making experts George Day and Paul Schoemaker have identified four strategies for becoming vigilant leaders who can detect early warning signs effectively.  They recognize that the best companies overcome tunnel vision, avoid complacency, and scan the environment successfully to identify opportunities and threats.  Here are their four strategies:

1. Assemble a diverse team of independent thinkers: "One way to scope is by assembling a diverse team of independent thinkers from both inside and outside the company who can, as one of our clients phrased it, 'tap into the organization’s paranoia' and invite everyone to voice hunches, concerns, doubts, or intuitions that would otherwise remain dormant."

2.  Ask questions that acknowledge the limits of existing knowledge:  Effective leaders admit what they personally don't know and where key gaps exist in the organization's expertise.  Day and Schoemaker advocate asking three types of questions: learning from the past, interrogating the present, and anticipating the future.  They write, 

One method for learning from the past is to use past successes to create watching and listening outposts in other markets by asking, “Who there has a consistent record of seeing sooner and acting faster?” and “What is their secret?” Many companies interrogate the present by monitoring blogs, social media sites, and chat rooms for signs of brewing trouble with customers, with an eye toward timely remedial action. Vigilant organizations pay special attention to customers’ evolving behaviors and needs. One way to do this is by studying “edge cases” that could suggest opportunities or threats. (In engineering, the term edge is used to describe situations that purposefully push the limits.) To prepare for what’s ahead, leaders can develop different scenarios that reflect how today’s uncertainties might play out in years to come. To stimulate scenario planning, leaders should pose guiding questions about the future such as “What surprises could really hurt us (or help us)?” and “What might be some future surprises as big as those that we saw in recent decades?”

3.  Use active environmental scanning techniques:  By that, the scholars mean that you should develop hypotheses and then use scanning to try to test those hypotheses.

4.  Employ the wisdom of crowds to choose which signals to amplify and clarify:  Scanning can identify many opportunities and threats.  The challenge, then, is to determine which issues on which to focus attention more closely.  One way to choose is to employ the wisdom of crowds - let a broader group of people voice their opinions as to which issues warrant further scrutiny. 

Do We Actually Want Some Dissatisfied Employees?

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MIT researcher George Westerman has written a provocative post on the MIT Sloan Management Review website. The title of his short article is, "The New Digital Mandate: Cultivate Dissatisfaction."  Westerman writes:  

The problem is that employee satisfaction can be a double-edged sword. While satisfied employees are good for current activities, that very satisfaction can inhibit innovation. Transformative innovation is difficult. It is far easier to stick with what we know works and tweak the current process than it is to start over. People who are satisfied with the current way of doing business are not likely to transform it.

People who transform their organizations must be aggravated enough with the current situation that they’re willing to bear the effort and risk to change it. Leaders who want their organizations to continuously transform must not only look for dissatisfaction on which to capitalize, but also be willing to cultivate dissatisfaction in their employees.

Westerman argues that there is a right and a wrong way to be "dissatisfied" in an organization.   A useful form of dissatisfaction involves a willingness to question the conventional wisdom and the commonly accepted ways of doing things.   It means protecting the organization against complacency.   The wrong type of dissatisfaction involves pointing fingers and blaming others for problems that arise, while not offering constructive alternatives.   

I agree wholeheartedly. A certain amount of healthy and constructive restlessness can be a powerful positive force in an organization. Andy Grove, long-time CEO of Intel, once argued that organizations need to have a few "helpful Cassandras" who can bring some healthy paranoia to the table.  Grove once wrote, "I believe in the value of paranoia. Business success contains the seeds of its own destruction."  Of course, what you do not want are naysayers who simply look for all the reasons a new idea won't work.  You don't want people who are stopping innovative ideas in their tracks.  You would like people who are looking broadly for potential threats to a firm's competitive advantage and are protecting against complacency.