Three beliefs that hold companies back in the face of crises

How do we make decisions in an uncer­tain world? We can only devel­op a strategy based on hypo­theses. Over time, they stick and become men­tal mod­els. The prob­lem is that we live in a time that is becom­ing less and less pre­dict­able. An increas­ing num­ber of unex­pec­ted events means that some of our beliefs become obsol­ete more quickly. What makes the dif­fer­ence, then, is the abil­ity to identi­fy our mod­els to ques­tion them. This is dif­fi­cult and often costly. But the sur­viv­al of a busi­ness may depend on it.

Here are three points where men­tal mod­els can become entrenched. And three ways to avoid becom­ing trapped.

The trend towards hav­ing a rais­on d’être has put iden­tity back into the centre of the game. “Who are we?” almost takes pre­ced­ence over “what do we do?” But the two ques­tions come togeth­er into one: com­pan­ies are human soci­et­ies, and each has its own iden­tity. Rely­ing on this iden­tity makes it pos­sible to mobil­ise the troops, to draw up a strategy and to focus on the fun­da­ment­als. It does­n’t mat­ter wheth­er we emphas­ise val­ues or the core business.

The prob­lem is that iden­tity is also a trap. More pre­cisely: it becomes a trap if it is centred around the obvi­ous and ready-made for­mu­las. In the face of an exist­en­tial crisis, cling­ing to this routine iden­tity can be fatal. Con­versely, sal­va­tion can be found in re-explor­ing this iden­tity. Two examples illus­trate this per­fectly, the first often cited, the second less well known.

Iden­tity becomes a trap if it is centred around the obvi­ous and ready-made formulas.

Kodak’s mis­ad­ven­tures are a par­able of what not to do in the face of a major paradigm shift. It was at Kodak in Rochester in the 1960s that an engin­eer inven­ted digit­al pho­to­graphy. But the com­pany missed this revolu­tion because its core busi­ness was photo paper. The men­tal mod­el here was its busi­ness mod­el. A busi­ness mod­el so prof­it­able that it had no interest in ques­tion­ing itself… until the day the mar­ket dis­ap­peared, and the com­pany with it.

Kodak’s less­er-known counter­example is its com­pet­it­or Fuji­film. Shaken by the same revolu­tion, the Japan­ese com­pany was able to ques­tion its iden­tity and go bey­ond the obvi­ous. From this self-ques­tion­ing arose a dis­cov­ery: the busi­ness of photo paper is not paper, nor pho­to­graphy. It’s the chem­istry. It is by redeploy­ing this iden­tity as a chem­ist that Fuji­film has been able to invent a future for itself.

To get away from the obvi­ous, Fuji­film’s man­agers and employ­ees had to make the effort to reflect. They had to dis­tance them­selves from their activ­ity, from the image they had of it. And admit to them­selves that they were going to hit a wall. It is not easy to tell the King he has no clothes! Who will be the first to say it?

The under­ly­ing issue here is that of con­sensus. It also has many advant­ages in good times: when we get along well, we work bet­ter and faster, without wast­ing time arguing or hav­ing to jus­ti­fy everything. In dif­fi­cult times, it also allows the organ­isa­tion to come together.

But in the face of uncer­tainty, in the event of a ser­i­ous crisis, a major dis­rup­tion, in short, when we move from the con­tinu­ous to the dis­con­tinu­ous, con­sensus becomes dan­ger­ous, and poten­tially dis­astrous. Here is a his­tor­ic­al example of how a con­sensus reached a little too quickly could have had ter­rible consequences.

In 1962, the Amer­ic­an admin­is­tra­tion was faced with an exist­en­tial threat as a res­ult of the Cuban mis­sile crisis: the USSR sent nuc­le­ar mis­siles to the island and the ships were on their way. The com­mit­tee con­vened by Kennedy quickly agreed that the only effect­ive, albeit ter­rible, option was to raze Cuba to the ground. The pres­id­ent then spoke: « I hear you. But how will our chil­dren judge us? Then he left the room. This moment is fun­da­ment­al: by leav­ing the room, the pres­id­ent allowed for anoth­er group dynam­ic to be cre­ated, which would allow dif­fer­ent solu­tions to emerge in a few days, includ­ing the block­ade, which was finally adopted.

Kennedy’s actions changed the game, by alter­ing the frame­work of the dis­cus­sion. Alfred Sloane, the legendary head of Gen­er­al Motors, had made it a rule not to let a con­sensus be estab­lished too quickly. “Does every­one agree?” he would say. “Really? Then I’ll post­pone the decision until next week.” And in the mean­time, some of his staff would come to him with new ideas. 

Kennedy and Sloane were not tim­id per­son­al­it­ies afraid to make decisions. They offer us a les­son: beware of con­sensus, and do not hes­it­ate to call it into ques­tion if it forms too quickly.

Jeff Bezos, the boss of Amazon, is known for being tough and stub­born. But he almost always forces him­self to be the last per­son to speak in a meet­ing, oth­er­wise the dis­cus­sion would quickly become focused on his ideas. Here we see a cha­ris­mat­ic lead­er who is wary of his own author­ity and who, in the same spir­it as Kennedy or Sloane delays con­sensus, holds back from express­ing his ideas in order to encour­age his col­lab­or­at­ors to express themselves.

Because lead­er­ship is also a men­tal mod­el, all the more com­plic­ated because of the com­bin­a­tion of a per­son­al dynam­ic (an indi­vidu­al clings to a mod­el, for example because it has been suc­cess­ful in the past) and a social dynam­ic (the lead­er­’s man­age­ment style ends up being com­mu­nic­ated to the organ­isa­tion). True lead­er­ship is both about cul­tiv­at­ing this mod­el, which is a source of effect­ive­ness, and about not let­ting it stag­nate. There is an art to learn­ing to extract your­self from your own lead­er­ship model.

There is an art to learn­ing to extract your­self from your own lead­er­ship model.

This does not mean doing without it, and again, there are no good or bad mod­els. Let’s take the “ver­tic­al power” mod­el, which has been revived by some polit­ic­al lead­ers over the last twenty years. As we know, the top-down nature of the decision ends up ham­per­ing the feed­back pro­cess. How­ever, this mod­el also has its advant­ages: a ver­tic­al com­pany can also be very innov­at­ive because the boss pro­tects his sub­or­din­ates. This was the case at Apple under Steve Jobs.

But prob­lems arise when the mod­el becomes self-evid­ent, and we no longer know how to ques­tion it. A Brit­ish boss, for example, told me his prob­lem: not enough ‘team engage­ment’. He admit­ted that he did not ask his employ­ees for their opin­ion but jus­ti­fied this by explain­ing that he did not want to under­mine his lead­er­ship. He was anxious to be respec­ted and had allowed him­self to be trapped in a men­tal mod­el from which he was unable to escape. He was still able to see that it was not work­ing! Simple adjust­ments or tech­nic­al solu­tions are not enough to cor­rect this type of dys­func­tion. It is the mod­el itself that needs to be set aside.

Any lead­er­ship mod­el would bene­fit from being “brought to the table” from time to time. Or at least to be taken out of its com­fort zone. A good way of doing this is to move away, some­times phys­ic­ally. Oth­er things will be said, oth­er things will be observed. Try hold­ing a meet­ing in a fact­ory and not in the board­room, for example. Anoth­er meth­od is to encour­age a form of diversity – not so much ‘mor­al’ as cog­nit­ive – in delib­er­a­tion and decision-mak­ing bod­ies. Dif­fer­ent back­grounds, people who have been tested in the field, will be an asset on a board.

Lead­ers and organ­isa­tions that have man­aged to emerge from ser­i­ous crises have been able to identi­fy their mod­els, to ques­tion their iden­tity, to break the con­sensus to reopen the game. Men­tal mod­els are habits that we no longer pay atten­tion to. They are use­ful… right up to the point where we for­get about them. It takes a bit of prac­tice not to get trapped in them.