All successful business leaders pay close attention to strong signals. But truly visionary leaders scan for ‘weak signals’ that can indicate irreparable damage – or unseen opportunity. Anthony Howard explains.
I started my career as a navigator in the merchant navy, and spent many hours at sea gazing at the radar – particularly during storms, in congested waterways, and when close to shore. As well as plotting a course and planning a journey, navigators are trained to find those things that don’t belong, that aren’t on the map, and that are hidden in the clutter.
Strong radar signals reflect from the land and other large vessels, confirming the course one is on and providing clear indication of obstacles to avoid. But the radar also detects ‘weak signals’ that rebound from small boats and hidden dangers. It’s not always easy to distinguish these weak signals from the background noise, and it takes a skilled operator to recognise the small signs that indicate a potential risk.
In business, all successful leaders pay close attention to the strong signals – revenues, profitability, market trends, competitive offerings, and so on. But familiarity with the terrain can breed a false sense of security, as new signals emerge that were not shown on the map, and were not there last time we were in a similar situation.
Truly visionary leaders also constantly scan for ‘weak signals’ that indicate possible hazards ahead. Let’s take the example of the banking industry.
In recent years, a convergence of forces such as shareholder activism, disquiet about executive remuneration, and cost-of-living pressures, has led to widespread consumer dissatisfaction with banks. One group feels they are bearing a cost burden while another is accused of enriching themselves at the former’s expense. None of this comes as a surprise to those who have observed the signals.
Combine this with rising interest rates, increased cost of funding, media outrage and a government that cannot risk losing votes, and the trap is loaded.
In recent months, the government, facing declining GST revenue and spiralling welfare costs, has indicated its willingness to impose a new resource tax on mining – an industry that enjoys considerable public support. Is it too much of a leap to imagine a similar ‘super profits’ tax on banking?
Although the banking industry failed to grasp the earlier weak signals, it would be wise to read the tea leaves and win the hearts of their constituents with a fresh strategy, innovative marketing and deep customer care. Failure to do so risks the industry being rendered uncompetitive by swiftly enacted and poorly thought out regulation that inadvertently favors big banks over small, and limits profit available for dividends, ongoing investment, and lending.
Creating less competition and reducing the amount of money in the system by diverting it to the government would unintentionally hurt the very people who are hurting the most – small and medium-sized businesses that rely on bank funding. To show surprise at such an outcome would demonstrate short sightedness and failure to read the signs.
A weak signal can be something as small as one person asking a penetrating question. Some years ago I saw a newspaper article about escalating health costs, and a few days later read an opinion piece where the author queried why she, as a taxpayer, should foot the bill for people who had failed to take responsibility for their drinking, smoking, diet and exercise. Will this become a groundswell? Will the provision of taxpayer-funded healthcare be linked to lifestyle choices? What implications would there be?
Observing weak signals can allow a business to take small steps early, rather than evasive action in a crisis, like the captain who makes a minor course alteration early in response to potential danger. There is no news in the journey safely travelled, but rather in the ships sunk and lives ruined. So too do we rarely observe business leaders fine-tuning their strategy in response to weak signals.
But we certainly note those who have failed to see the risks.
Business leaders need to develop the skill of observing weak signals, wherever they may arise. They can be found in conversation, discerned in the words of a newspaper article, observed in foreign cultures, detected in intuition. Get outside your industry, visit different cities and cultures, and read for insight, not for information. Acquire the habit of constantly asking questions like:
- What would our business be like if this were to happen in our industry?
- What am I actively choosing to ignore?
- Who is asking good questions that challenge our assumptions or cause us to reframe our thinking?
- What do we do that outsiders consider absurd?
- What do I observe that seems absurd to me?
- What will change your world?
The practice of watching for weak signals will elevate one’s leadership to an entirely new level of performance. By taking time to look intelligently at the radar and reflect on what you see, you’ll be better able to take charge of the future, gain competitive advantage, and be a source of insight to others.
Anthony Howard
Anthony Howard is CEO of The Confidere Group
Get the latest knowledge…
Learn more about Leadership at www.TotalExec.com.au
For your complimentary Total Executive 2011 membership valued at $495:00 click here
Performance●Productivity●Profit
No comments:
Post a Comment