Tune your radar to spot new trends
Turning today’s uncertainty into opportunity
When Jack Welch was chairman and chief executive at General Electric Co. he was known to ask people “What’s new?”
He sprang that question on management consultant Ram Charan once when the two shared an elevator. Charan replied, rather desperately, “Zero working capital.” Intrigued, Welch demanded, “Did you make it up? Who does that?” Charan explained it was one CEO’s attempt to free up cash so his company could invest more in growth.
Welch visited that cash-conscious CEO, and ended up embracing the concept for all of GE’s operating units. That one conversation saved GE billions of dollars.
In today’s environment of rapid technological change and business disruption, every leader must find a way to peer forward into the gloom. Charan, one of the world’s top business thinkers and a specialist in new and practical leadership strategies, says the ability to scan your environment for unexpected threats and next-level opportunities is fast becoming an essential leadership tool.
In his book out this month, The Attacker’s Advantage: Turning Uncertainty into Breakthrough Opportunities, Charan writes that business survival and success will come from developing the “perceptual acuity” to detect changing market forces before your competition does, “so that you can position your business to make the next move first.” He says taking control of uncertainty is “the fundamental leadership challenge of our time.”
Of course, seeing trends and interpreting patterns is just the start. Charan says business leaders need to master four other challenges for their companies to thrive: A mindset to grasp the opportunities in chaotic markets; the ability to see a new path forward and commit to it; adeptness in managing the transition to the new path; and skill in making the organization steerable and agile.
First, however, you must believe that difficult, turbulent times are an opportunity to do things differently. “A world in flux creates new possibilities and lowers the entry barriers,” Charan says.
How do you scan the landscape to understand where your markets are heading? Charan says there are always clues for those who pay attention. For instance, the music industry thought its problems were over when Napster and other filesharing services were shut down in the early 2000s.
But he says the trends clearly pointed to digital distribution becoming standard. By building iTunes on the principle of 99¢ a song, Steve Jobs delivered the coup de grâce to high-margin CD sales.
“Perceptual acuity is your human radar for seeing through the fog of uncertainty,” Charan notes. He offers numerous ideas for how you can develop this:
Rise above your industry focus and look over the horizon to spot the big trends taking aim at your market. “People often miss these early warning signals because they’re flying at low altitude, immersed in the daily operating details of the business.”
Watch the “catalysts” who so often drive change. The late Jobs was such a catalyst, but so are the trend setters in sectors such as technology, automotive, retail, fashion, venture capital and the environment.
“Look for the larger significance of anomalies, contradictions and oddities. Things that depart from or challenge familiar patterns,” Charan advises. If you’re in the medicaldevice business, for example, you should have been following the development of smartphones, Fitbits and wearable devices that are changing the way people monitor, understand and improve their health.
Watch for accelerating trends, such as the surge of tablet sales that wounded some PC makers; extraordinary events like the recent success of more business-friendly leadership in India, where foreign capital has long awaited political stability; and potential scalability (Charan wonders whether the producers of fresh, preservative-free foods are ready to pounce on Amazon.com’s growing obsession with same-day delivery).
Embrace the 10-minute exercise. Many companies now set aside 10 minutes at weekly staff meetings to identify new trends and catalysts. “The rhythm conditions people to open their eyes and ears and get multiple sets of radar working,” Charan writes. “Structural changes are often misdiagnosed as operating problems when they first surface, so it’s a good idea to involve people at many levels of the company.”
Before each meeting, ask a staff member to research past, present or possible structural uncertainty in another industry. Why did it, or should it happen? “This exercise widens the lens of the whole team and sharpens their antennae.”
Create your own focus group. Charan cites “Clare,” a mid-forties CEO of a billion-dollar company, who reached out to other CEOs her age running sizable businesses in different markets. Their quarterly meetings and regular conversations “serve as a sounding board for each to cross-check thinking and provide a foundation for superb foresight,” he says.
What’s new? No one knows for sure. But with all these easy, lowcost ways to improve your earlywarning system, you can certainly get a jump on your competition.