Organizational Attention
Being aware of decision biases due to cognitive, emotional and social factors is critical in managing people’s attention.
IN AN INCREASINGLY COMPLEX WORLD, the scarcest collective resource of the modern leadership team may just be the most important one: attention. In vigilant organizations, executive attention is leveraged for greater agility and advantage, whereas in vulnerable ones, misdirected attention creates blind spots, myopia and delayed reactions.
The contrast between vigilant and vulnerable organizations is striking. The leadership of vulnerable organizations — such as Blockbuster, Toys‘r’us, Kodak and many other now defunct companies — remains preoccupied with operational concerns and coping with daily pressures. As a result, most of their time is spent reacting to events, rather than shaping them and anticipating avoidable crises. This treadmill of ‘firefighting’ can easily become a downward spiral, with less and less time available to sense weak signals from the periphery or to probe them more deeply. In contrast, vigilant organizations recognize full well the limits of managerial attention and stay one step ahead.
Across industries, senior leadership teams face two pressing issues: How to expand their collective attention resource so that it doesn’t become a constraint on the ability to see threats and opportunities sooner; and how to best allocate such expanded attention to spotting weak signals of threats and opportunities from both inside and outside of the firm’s boundaries. In this article we will unpack these challenges in an effort to improve vigilance and lessen vulnerability.
The Psychological Limits of Individual Attention
Every leadership team is a collection of individuals, and as human beings, each team member has an inherently limited ability to pay attention, absorb and process information through their mental filters. Fortunately, a good deal is known about these limits and how they can be overcome. Much of the research on attention has emphasized individual constraints on how much (or little) information human beings can process at any one time, the varying degrees of control we have over what we notice, and the importance of motivation. Following are four valuable insights from this body of work that can help to improve a leadership team’s processing power.
INSIGHT 1: ATTENTION IS A FILTERING MECHANISM FOR BALANCING OUR INTERNAL CAPACITY WITH EXTERNAL Once stimuli present DEMANDS. themselves from outside — or from within, through reasoning or imagination — the question becomes, how to prioritize them. Clearly, our personal interests and dispositions influence what we pay attention to. If an urgent phone call is taken at work about a family issue at home, that quickly becomes our priority. It also matters how much emotion we have invested in the issue at hand and what else is competing for our attention.
Managerial work is often fragmentary and fast-paced, and is usually initiated by outside forces, putting executives in highly reactive modes. Just as the study of history has been summarized as ‘one damn thing after another’, the same can be said of managerial work. The array of problems vying for attention can be dizzying, and CEOS vary considerably in how and where they spend their time. At some point, we run out of mental capacity to handle it all, triggering a re-evaluation of what is more or less important. Some attention-allocation heuristics may be preprogrammed, in the form of corporate policies, priorities set by the boss and your own to-do lists, but many are determined in the moment.
In INSIGHT 2: WHAT WE SEE DEPENDS ON WHAT WE EXPECT TO SEE. human vision, the periphery is that fuzzy zone outside of the area we’re paying close attention to. As a result, for individuals as well as organizations, any weak signal emerging from the periphery is usually difficult to see, hard to comprehend, and ambiguous in terms of prescribed actions. Peripheral vision involves an interplay among sensing, interpreting and probing, and what we see is strongly influenced by what we expect to see. Individuals are often so intent on the task at hand that they become oblivious to a significant change in the environment because it is outside of their focus.
INSIGHT 3: THE ABILITY TO SENSE WEAK SIGNALS CAN BE ENHANCED. There is usually a cost involved in strengthening our peripheral vision, and companies must commit resources and make the development of these capabilities a priority. The challenge is to find the right balance between focal and peripheral vision. Consider Bill Bradley’s college basketball career before he became a U.S. senator: Bradley possessed an uncanny sense of awareness of other players around him on the court. His peripheral vision was found to be outside of an opthamologist’s 180-degree scale, with a range of 195 degrees horizontally. Although he may have been naturally gifted, he also cultivated his peripheral vision as a child. When walking down the sidewalk, he would look ahead, keep his head straight and then try to identify items in the shop windows to the right or left. Later, he would stand at various places on the basketball court with his back to the basket, turn quickly, and try to shoot blind as the net appeared in his visual periphery. In the end, he honed what one reporter described as a superb ‘sense of where you are’.
Our personal interests and dispositions influence what we pay attention to.
ININSIGHT 4: ATTENTION CAN BE (RE)DIRECTED. Because we can focus intently on only a few points of vulnerability or possibility at a time, weak signals of impending threat or opportunity need to be separated from the surrounding distracting noise. This entails asking probing and guiding questions about a few areas of high priority. Shell’s CEO did this by asking his team this question: “Pushed to the extreme, how quickly could electric vehicles come?” His attention had been caught by an alarming anomaly between 2014 and 2016, during which oil prices fell while electric vehicles doubled in global sales from 323,000 to 753,000 units per year. In the six years preceding 2016, the price of lithium-ion batteries used in electric cars had dropped 73 per cent.
Shell’s head of planning characterized the resulting challenges facing the company as ‘radical uncertainty’. To help leadership grasp the situation fully, his group laid out the range of plausible alternative futures by integrating two pivotal uncertainties to create four possible scenarios: (1) the total global demand for energy of any kind, and (2) the likely penetration of alternative energy sources such as solar, wind, tidal waves, biomass and others that would reduce the demand for fossil fuels.
A combination of low energy demand and high technological substitution describes a world in which demand for oil will peak around the mid-2020s. This scenario would cause the most upheaval for big oil companies, and Shell optimistically labelled it ‘the brave new world’. Shell actually has no idea which of the four combinations implied by its two guiding questions best describes the future, nor how quickly each scenario may arise. But its attention had been proactively broadened towards understanding the implications of digital and alternative energy technologies, preparing it to act as the future unfolds.
Allocating Attention
Effectively distributing the scarce attention of a leadership team is a trial and error learning process. We have found that firms are surprised by significant events from outside of the firm at twice the rate of surprises from inside, such as fraud, discrimination, bribery or reckless behaviour. Large firms with a global reach report they are surprised by outside events more than twice per year. These are only measures of the frequency of surprises — not the magnitude of the impact of the surprise.
Deconstructing the frequency and type of past surprises is a good place to start a productive conversation about the allocation of a team’s collective attention to each of the four cells of the Myopia Matrix (see Figure One). It helps to include examples other than just digital misfires because the aim is to understand where the overall organizational system itself may be deficient. Each cause identified, and remedied thereafter, serves to strengthen the organization’s capacity to be alert and stay ahead of trouble.
Each cell in the matrix is prone to attentional misfires that might have been avoided if closer attention had been paid. The key is to examine a representative sample of cases and treat each as an informative historical ‘stress test’. The challenge is to look inside those cases that will best surface deeper systemic weakness.
Following are some examples for each cell:
• SHORT-SIGHTEDNESS partly explains why Mattel’s Barbie doll lost one third of her market to the edgy and hipper Bratz doll. One reason was that the driving force at the top was a financial one. Also, Mattel’s organizational structure impeded the sharing of information among market segment teams. For example, Ken (the male doll) and Barbie were hardly on speaking terms, and Mattel saw too late that both were losing their appeal for older children.
• TUNNEL VISION is a common consequence of a narrow definition of the market served and an overemphasis on current operations. many global food companies like Kraft Heinz have suffered from this condition and were too slow to respond to the shift away from packaged foods (and toward the perimeter of the grocery store, where fresh vegetables, fruit, and meat are sold). They also seem to have missed the shift to meal kits such as those from Blue Apron, which are convenient and can lower grocery spending. These symptoms suggest some deeper systemic vulnerabilities.
• WILLFUL BLINDNESS happens when we become aware of something that we would rather not know and therefore ignore or unconsciously suppress. Widespread ignorance of internal threats generally arises not because they are secret or invisible, but because leaders turn a blind eye to them. When former Secretary of State George Schulz joined the board of Theranos, he got his grandson a job there. But this seasoned leader then refused to believe his own grandson when he confided that Theranos’s micro-blood-testing technology and claims were mostly lies. Schultz had played a key role in promoting the company, raising hundreds of millions for Theranos, and met weekly with CEO Elizabeth Holmes during 2014. His grandson’s warnings were apparently so devastating for him that he fell victim to willful blindness and never looked into whether the blood-testing technology was real or fake. Eventually, Theranos imploded and went from being worth billions to going out of business, with court cases piling up and many careers shattered.
• MISSED CHANCES can occur when the organization’s internal attention is focused narrowly without sufficient slack to explore opportunities at the periphery. Walmart prospered for years by placing cost-cutting at the centre of its strategy. Yet only when the firm made environmental sustainability a major priority did it realize that being environmentally minded could actually reduce costs significantly. Why were these opportunities missed at first? Although seeing such opportunities late is better than never, Walmart’s intense focus on saving costs made it slow to recognize the counterintuitive finding that being socially conscious makes for good business in terms of efficiency as well.
The inherent simplicity of our Myopia Matrix makes it a useful departure point for a strategic dialogue. The categories are familiar and easy to grasp at an intuitive level. This is especially true for the threat versus opportunity distinction. In practice, both are more like mental orientations than absolutes because this dimension is a continuum. Threats have a negative connotation, with the expectation of loss without gain and the likelihood of trouble if ignored. Judging a past surprise or a future issue as a threat leads to feelings of loss of control because others are imposing constraints. Conversely, opportunities have positive resonance because they imply a greater upside potential. The opportunity label highlights the upside (in terms of probabilities and payoffs), with the risk that downside risks are overshadowed or ignored.
Judging whether a past surprise was internal or external in origin is also dependent on people’s perceptions and frames. Some cases will be clearly external in nature — such as a new piece of legislation being introduced (without your company having had anything to do with it). Likewise, an emerging technology may gain ground in a setting far removed from your own company, such as the Internet in its early days or ongoing innovations by Google, Amazon, or other master disrupters.
Conversely, there will be cases in which the origin of an issue of concern is clearly internal, such as a fraudulent action by an employee or a manager treating employees inappropriately. Many cases will be more mixed. Cyberhacking, for example, is a pervasive external threat, but once your firewalls are breached, it may be deemed an internal failure by the media or the board.
Even when the triggering events are clearly external, the way the issue plays out over time introduces ambiguity. Suppose an external supplier signals to one of your employees that it would welcome more business from your firm and will make it worth your while. The possible wrongdoing here — namely, bribery or kickbacks — is clearly external, but its occurrence will at first only be known to one internal employee. If this person takes the bait and acts illegally, the problem will be viewed as the actions of a rogue employee, and if other employees get drawn in without anyone blowing the whistle, the issue may be viewed as internal in origin by reporters or the law, ignoring the reality that the precipitating event was external to the organization.
Firms are surprised by significant events from outside the firm at twice the rate of surprises from inside.
Avoiding past unpleasant surprises is only a starting point for finding a better distribution of collective attention because it is susceptible to two problems. First and foremost is the danger that recent traumas will dominate the span of attention at the expense of other challenges. For example, in the wake of its bogus accounts scandal, it’s understandable that Wells Fargo Bank focused first on repairing its toxic sales culture and then shifted to rebuilding trust. But it’s likely that changes underway will only make it look like every other bank and possibly endanger the bank’s ability to return to its previous growth path. It’s never easy to turn a heavy blow into an opportunity, but almost every crisis also opens the door to dramatic changes in culture, business models and competitive moves. This should not be ignored by Wells Fargo or by others encountering scandal or malfeasance.
The second challenge is that people cope with future threats by engaging in wishful thinking or resigning their futures to fate, both of which restrict the amount of information they explore and the solutions they consider. In contrast, framing an issue as an opportunity results in a more open information search and in more explicit evaluations of options. How issues are labelled and how they are described greatly influences people’s attention.
Research suggests that managers view strategic changes as threats unless there is strong evidence to do otherwise. Thus, the advice to view all challenging issues as entailing opportunities (as would be typical for proactive managers) may be far easier to give than to follow.
The Leadership Challenge
Leadership teams navigating digitally-enhanced turbulence must confront the sticky nature of organizational attention — and reorient people’s attention through dialogue, task assignments, incentives, training and investments in foresight activities. Here are four principles to guide your team:
1. Use available digital technologies to measure where organizational attention is high and low. For example, by analyzing work-related emails in a firm, suitably anonymized, leaders can track what issues are trending. Such textanalytic approaches are used widely to assess consumer
sentiment in the travel industry or for early detection of shifts in the appeal of political candidates. Sentiment-analysis software can handle massive amounts of data, from everything published in popular media about a personal matter to emails, intranet content or other corporate communication formats. Many will recoil, however, against this kind of intrusion by Big Brother, even if the scanning is anonymous.
2. Recognize that prior knowledge shapes the creation of new knowledge inside a firm. New information can only create value if it connects with existing know-how. The richer a firm’s existing knowledge base, the finer will be its sieve for catching new information about a topic. If leaders feel more attention should be paid to customer service, regulatory compliance, or some new promising technology, then they need to train people in those domains. This, in turn, will enhance the firm’s absorptive capacity in those areas and draw organizational attention there. As Louis Pasteur noted, chance favours the prepared mind, and various techniques — such as scenario planning, scanning exercises and war gaming — can help prepare the ‘corporate mind’ to get luckier or smarter.
3. Although focused attention is crucial to understanding new information, too much of it can backfire. Focusing intently on one area comes at the price of narrowing the peripheral vision of things happening elsewhere. To avoid running through red lights, leaders must create slack to explore beyond the firm’s field of vision. Leaders should encourage curiosity about relevant topics that may seem removed from present concerns. They can create task forces that counter the prevailing focus areas of the organization, such as forming a ‘red team’ to challenge whether a new strategy really is going to succeed. The red team plays the role of the loyal opposition, periodically reviewing the assumptions and progress of the blue team, which is tasked with executing the strategy. The benefit is a faster way of collecting information and tracking progress, with sufficient time to make midstream adjustments when needed — or to terminate the project entirely.
4. Encourage managers to develop a ‘third ear’ to help notice hidden cues or soft signals that matter. When meeting with customers or external partners, leaders should pay as much attention to what is not being said or what is being hinted at between the lines. When examining the murder of a horse trainer, fictional detective Sherlock Holmes embraced this principle by asking a local constable about the curious incident of a dog not barking in the night. Holmes deduced from this missing cue that the dog knew the murdered person.
In closing
In a business environment as complex and dynamic as ours, a deeper awareness about our own decision biases due to cognitive, emotional and social factors is critical in managing attention in an organization. As we have indicated, there are few challenges more important for today’s organizations.
Paul J.H. Schoemaker founded and served as CEO and Chairman of Decision Strategies International and recently launched Q2 Tech. He served for over a decade as Research Director at the Wharton School’s Mack Institute for Innovation Management. George S. Day is the Geoffrey Boisi Emeritus Professor and Senior Fellow of the Mack Institute. They are the co-authors of See Sooner Act Faster: How Vigilant Leaders Thrive in an Era of Digital Turbulence (MIT Press, 2019), from which this is an adapted excerpt. All full research citations appear in the book.