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.