Rob-Jan de Jong, ANTICIPATE: The Art Of Leading By Looking Ahead
“What I have learned is the power of a compelling vision,” Allan Mulally, the former CEO of Ford Motor Company, stated in an interview with Forbes in 2012. Mind you, he didn’t learn this from a textbook; he had put it into practice, witnessed the results, and reflected on how he’d brought Ford from near death to profitability in a three-year time span.
We all love dramatic stories such as this: man against the odds, a gripping vision, an exceptional outcome realized. Steve Jobs’ incredible turnaround of Apple from near death to the most valuable company on the planet in little over a decade fits in the same category. Heroic, unconventional, legendary.
Wouldn’t we love to hear similar stories of a bellwether that revolutionized the energy market? Or a corporate hero that spearheaded the next generation of banking? Or… but wait a minute – we did. Wasn’t the energy giant Enron en route to revolutionize the energy market with a gripping vision? It was voted America’s most innovative company seven years in a row – right before its demise in 2001. Wasn’t Fred Goodwin, CEO of Royal Bank of Scotland and still called Sir Fred Goodwin at the time in 2007, following through on the ‘inevitable’ vision of a consolidated European banking sector by forming a consortium of three banks to acquire ABN AMRO Bank of the Netherlands and become the first pan-European large-size player? But instead, he left the company in shambles and poised for government intervention twelve months later.
The stories of Enron and RBS have a vastly different outcome, costing thousands of people their jobs and ten thousands of small-time investors their savings and pensions. Apparently it is not all rosy on the “compelling vision” front. This confronts us with the question: when is a vision so powerful that it induces positive, desirable change, and when is a vision so powerful that it puts those involved out of touch with reality?
It’s impossible to devise an algorithm for assessing good and bad visions; absolute truths are hard to find in the leadership and strategy domain. We can, however, identify three warning signals that indicate a vision – your vision, perhaps – might be putting you at risk of tunnel vision.
First of all, there is the phenomenon of misaligned incentives. Don’t underestimate the power of incentives. Strong financial incentives get otherwise sensible and balanced people to alter their world view and adopt one that nicely aligns with the luring bonus. The bonus-driven culture got well-educated bankers to believe that the housing market could only go up, which rationalized the practice of lending blue-collar workers a mortgage for their second, third, or even fourth house. Weren’t they thinking? No – because the incentives drove their behavior, and distracted them from the reality that house prices can go up, but they can also go down; a truism they teach you in the most elementary economics course. Companies like Kodak did not transition into the digital age, and this was not because digital cameras happened unexpectedly overnight. No, Kodak was very aware of the possibility and disruptive potential of digital cameras. But margins on film rolls were 60% and margins on digital cameras were 15%. Seeing – and transitioning to – the new reality can be strongly discouraged within a corporate setting when incentives are attached to reporting strong quarterly results.
A second factor to be wary of is groupthink, a term coined by Irving Janis in 1952. Some of the symptoms of groupthink are self-censorship, the illusion of invulnerability, and direct pressure to conform. As a result, the group develops a strong positive bias toward the information that fits the seemingly unanimous opinion of the group. Of course, a high level of alignment and agreement can often be good for a group in executing its plans, but when conditions change – as they invariably do when the future unfolds and the vision is put to the test – the previously adopted worldview might need reconsideration. The problem with groupthink is that it prevents a group from reevaluating its options: it seemingly mindlessly carries on, even when that is clearly no longer a good idea.
The last strong indicator of a ‘bad’ vision is the presence of a narcissistic leader. These types of magnetic, glorified leaders have the ability to hypnotize their followers. They rally the troops, inspire and motivate, and they radiate the reassuring confidence that the future is safe in their hands. Effectively, they liberate their followers from having to do the hard work and think for themselves. In his classic HBR article Narcissistic Leaders, leadership consultant and psychotherapist Michael Maccoby rightly pointed out that these leaders are not always bad news: they can be very productive. They have the ability to challenge the status quo and realize massive, radical, and sometimes much-needed change with their overwhelming leadership persona. But – as Maccoby also points out – their successes feed their sense of grandiosity, which might eventually become their Achilles’ heel.
How do these three warning signals help us distinguish ‘good’ from ‘bad’ visions? Well, if an organization is adopting a radical, big-bet strategy; is holding assumptions as “truths”; is leaving no room for reconsideration, nor for raising and contemplating timely exit strategies; is headed by a self-absorbed leader surrounded by people who dare not challenge him (anymore); and is using strong incentives to motivate its people to follow the same vision… get ready.
These are the conditions that Enron and RBS shared, and that set them apart from Ford. Mulally’s vision was successful because it was based on an external orientation that took the practice of challenging assumptions seriously. The reinvention process Ford went through was led by a leader who is a far cry from being a narcissist; in fact, Mulally was driven by a strong personal desire to serve and be of service to others. He embraced and encouraged the art of looking ahead, opened the windows and got senior leaders at Ford to see and explore what was happening in the outside world – with a motivation based on rescuing Ford rather than on realizing a significant personal gain.
Check for misaligned incentives, groupthink, and narcissistic leaders the next time you’re in doubt. These three factors are not a guarantee, but they should surely set off alarm bells when evaluating a seemingly compelling vision.
About the Author
Rob-Jan de Jong is an international speaker, writer, and consultant on strategy and leadership themes. He is one of five faculty members in Wharton’s flagship executive program Global Strategic Leadership and author of ANTICIPATE: The Art Of Leading By Looking Ahead (AMACOM / 2015). de Jong also serves as an expert lecturer at Thunderbird School of Global Management, Nyrenrode Business University, and Sabanci Business University. He lives in Amsterdam, Netherlands.