World Monitor Mag WM_June 2018 web - Page 94

additional content In that context, the task of a strategic leader is to do what Bailey did: relabel those messages (becoming aware that they’re simply messages, not reality), reframe them (substituting new, more wholesome, and more accurate messages), and refocus leaders’ attention, again and again, on the new and more accurate messages until they, too, become second nature and part of the culture. This difficult task is made a little bit easier because many deceptive organizational messages are prevalent in multiple organizations. Below are four of the most common categories. 1. Misperceptions of Risk “Again and again,” wrote economists Carmen Reinhart and Kenneth Rogoff, “countries, banks, individuals, and firms take on excessive debt in good times without enough awareness of the risks that will follow when the inevitable recession hits.” The title of their book, This Time Is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009), was a reference to the deceptive message voiced during the buildup to the financial crisis of 2008, and before similar crises throughout history: “We are doing things better, we are smarter, we have learned from past mistakes,” wrote Reinhart and Rogoff, paraphrasing mistaken assessments of risk. “The old rules of valuation no longer apply.” Overconfident exceptionalism of this sort, in which executives underestimate the riskiness of their activity, has led many companies into complacency, and then to failure. We don’t have to worry about losing customers, executives say when faced with an upstart competitor. They have nowhere else to go. Sometimes this type of deceptive message arises around a narcissistically heroic leader. Our CEO takes chances and always comes out on top. If the 90 world monitor exceptionalism extends to the entire company, then managers get into the habit of overstepping boundaries or fudging numbers, growing bolder and bolder until the risks catch up with them. The flip side of overconfident exceptionalism is excessive risk aversion. This can be equally debilitating, especially when it becomes a way of life. We must prevent — or at least prepare for — every possible failure. Excessive risk aversion often takes the form of accumulating as much support for a decision as possible before granting approval. It looks OK to me, but we can’t take any chances. You’d better ask these other two people as well. It can also show up as “analysis paralysis” — refusal to move forward without considering every possibility in detail. As a result, decision makers shut down entrepreneurial decisions and forgo valuable opportunities — including the opportunity to learn from risky situations and build up their own capacity for judgment. Excessively risk- averse companies unintentionally take the greatest risk of all: being left behind because of the time spent in collective rumination. As they did at Transpacific Industries, these two deceptive messages can coexist. Underlying them both is the perception that the decision maker’s comfort level is an accurate indicator of risk. In reality, comfort levels are problematic indicators: They are derived from past experience with success (which might not continue) or painful failure (which need not happen again). Though the skill of risk assessment is fundamental to strategy, it is difficult to develop in the face of these deceptive organizational messages, especially when they aren’t recognized as such. 2. Misperceptions of Value Deceptive messages involving value provide a misleading idea of the potential worth of current endeavors. Often, these misperceptions are manifested as perfectionism, or all-or-nothing thinking: It should be completely flawless, or it won’t have any value. A functional team might decide not to propose an interesting idea because they fear it isn’t good enough. A research group might second- guess an innovation, drag it down with extra features, and delay it until it’s eclipsed by rival offerings. A supervisor, considering promotions for the staff, might oscillate between extremes — treating a direct report as a star one year, but deeming that person a total screwup the next. The opposite of all-or-nothing thinking is “ticking the box”: accepting suboptimal work, as long as it complies with specifications. It’s close enough for government work is a deceptive message of this sort. This type of message leads people to under-promise so that they can under-deliver without penalty, to dismiss improvement efforts as not worth the cost, and to look the other way when their colleagues cut corners. Misperceptions of value often reflect a perspective that Stanford psychologist Carol Dweck calls the fixed mind-set. If everyone’s basic worth is fixed in place by the time they come of age, limited by the talent, intelligence, and circumstances they have inherited or acquired as children, then static judgments of value make sense. As Dweck points out, a more accurate view is the “growth mind-set,” or the idea t BVR66vR&G2G&66VBƖ֗G2BWBFV 6&ƗFW2F&VvWBFV"ƗfW2खFVVBVR6FVǒFF0F&Vv6VbF&V7FVBWW&7F6GFWf7W2FV"GFVFfW"@fW"vFB'VG2Wr&G0'WF6rWrWW&Fv2FR'&bR&VƖWfRFRw&wF