The abilities to anticipate, challenge, interpret, decide, align and learn helps leaders to think strategically and navigate the unknown successfully.
The storied British banker and financier Nathan Rothschild noted that great fortunes are made when cannonballs fall in the harbour, not when violins play in the ballroom. Rothschild understood that the more unpredictable the environment, the greater the opportunity — if you have the leadership skills to capitalise on it.
Through research at the Wharton School and at our consulting firm involving more than 20,000 executives to date, we have identified six skills that, when mastered and used in concert, allow leaders to think strategically and navigate the unknown effectively: the abilities to anticipate, challenge, interpret, decide, align and learn. An adaptive strategic leader — someone who is both resolute and flexible, persistent in the face of setbacks but also able to react strategically to environmental shifts — has learned to apply all six at once.
Most organisations and leaders are poor at detecting ambiguous threats and opportunities on the periphery of their business. Coors executives, famously, were late seeing the trend toward low-carb beers. Lego management missed the electronic revolution in toys and gaming. To improve your ability to anticipate:
Talk to your customers, suppliers and other partners to understand their challenges.
Conduct market research and business simulations to understand competitors’ perspectives, gauge their likely reactions to new initiatives or products, and predict potential disruptive offerings.
Use scenario planning to imagine various futures and prepare for the unexpected.
Look at a fast-growing rival and examine actions it has taken that puzzle you.
List customers you have lost recently and try to figure out why.
Attend conferences and events in other industries or functions.
Strategic thinkers question the status quo. They challenge their own and others’ assumptions and encourage divergent points of view. To improve your ability to challenge:
Focus on the root causes of a problem rather than the symptoms. Apply the “five whys” of Sakichi Toyoda, Toyota’s founder. (“Product returns increased 5 per cent this month.” “Why?” “Because the product intermittently malfunctions.” “Why?” And so on.)
List long-standing assumptions about an aspect of your business (“High switching costs prevent our customers from defecting”) and ask a diverse group if they hold true.
Encourage debate by holding “safe-zone” meetings where open dialogue and conflict are expected and welcomed.
Create a rotating position for the express purpose of questioning the status quo.
Include naysayers in a decision process to surface challenges early.
Capture input from people not directly affected by a decision who may have a good perspective on the repercussions.
Leaders who challenge in the right way invariably elicit complex and conflicting information. That’s why the best ones are also able to interpret. Instead of reflexively seeing or hearing what you expect, you should synthesise all the input you have. You’ll need to recognise patterns, push through ambiguity and seek new insights. To improve your ability to interpret:
When analysing ambiguous data, list at least three possible explanations for what you’re observing and invite perspectives from diverse stakeholders.
Force yourself to zoom in on the details and out to see the big picture.
Actively look for missing information and evidence that disconfirms your hypothesis.
Supplement observation with quantitative analysis.
Step away — go for a walk, look at art, put on non-traditional music, play pingpong — to promote an open mind.
In uncertain times, decision-makers may have to make tough calls with incomplete information, and often they must do so quickly. But strategic thinkers insist on multiple options at the outset and don’t get prematurely locked into simplistic go/no-go choices. They don’t shoot from the hip but follow a disciplined process that balances rigour with speed, considers the trade-offs involved, and takes both short and long-term goals into account. To improve your ability to decide:
Reframe binary decisions by explicitly asking your team, “What other options do we have?”
Divide big decisions into pieces to understand component parts and better see unintended consequences.
Tailor your decision criteria to long-term versus short-term projects.
Let others know where you are in your decision process. Are you still seeking divergent ideas and debate, or are you moving toward closure and choice?
Determine who needs to be directly involved and who can influence the success of your decision.
Consider pilots or experiments instead of big bets, and make staged commitments.
Strategic leaders must be adept at finding common ground and achieving buy-in among stakeholders who have disparate views and agendas. This requires active outreach. Success depends on proactive communication, trust-building and frequent engagement. To improve your ability to align:
Communicate early and often to combat the two most common complaints in organisations, “No one ever asked me” and “No one ever told me.”
Identify key internal and external stakeholders, mapping their positions on your initiative and pinpointing any misalignment of interests. Look for hidden agendas and coalitions.
Use structured and facilitated conversations to expose areas of misunderstanding or resistance.
Reach out to resisters directly to understand their concerns and then address them.
Be vigilant in monitoring stakeholders’ positions during the rollout of your initiative or strategy.
Recognise and otherwise reward colleagues who support team alignment.
Strategic leaders are the focal point for organisational learning. They promote a culture of inquiry, and they search for the lessons in both successful and unsuccessful outcomes. To improve your ability to learn:
Institute after-action reviews, document lessons learned from major decisions or milestones (including the termination of a failing project), and broadly communicate the resulting insights.
Reward managers who try something laudable but fail in terms of outcomes.
Conduct annual learning audits to see where decisions and team interactions may have fallen short.
Identify initiatives that are not producing as expected and examine the root causes.
Create a culture in which inquiry is valued and mistakes are viewed as learning opportunities.
Paul J.H. Schoemaker is the founder and executive chairman of Decision Strategies International (DSI) and the research director of the Mack Center for Technological Innovation at the Wharton School. Steve Krupp is the CEO of DSI. Samantha Howland, a senior managing partner at DSI, leads its Executive and Leadership Development Practice. © 2013 Harvard Business School Publishing Corp.