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Great leaders do not simply know how to solve problems. They know how to find them. They can detect smoke, rather than simply trying to fight raging fires. This book aims to help leaders at all levels become more effective problem-finders. Embrace Problems Most individuals and organizations do not view problems in a positive light.

They perceive problems as abnormal conditions, as situations that one must avoid at all costs. Most managers do not enjoy discussing problems, and they certainly do not cherish the opportunity to disclose problems in their own units. They worry that others will view them as incompetent for allowing the problem to occur, or incapable of resolving the problem on their own.

In short, many people hold the view that the best managers do not share their problems with others; they solve them quietly and efficiently. When it comes to small failures in their units, most managers believe first and foremost in the practice of discretion. Some organizations, however, perceive problems quite differently. They view small failures as quite ordinary and normal. They recognize that problems happen, even in very successful organizations, despite the best managerial talent and most sophisticated management techniques.

These organizations actually embrace problems. Toyota Motor Corporation exemplifies this very different attitude toward the small failures that occur every day in most companies. Thus, it seeks out problems, rather than sweeping them under the rug. Toyota asks: Is this small failure symptomatic of a larger problem?

Do we have a systemic failure here? Navy aircraft carriers—entities that operate quite reliably in a high-risk environment. They view any lapse as a signal of possible weakness in other portions of the system. This is a very different approach from most organizations, which tend to localize failures and view them as specific, independent problems Experts attributed it to the vaunted Toyota Production System, with its emphasis on continuous improvement. If the problem cannot be solved in a timely manner, this process actually leads to a stoppage of the assembly line.

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This system essentially empowered everyone in a Toyota manufacturing plant to become a problem-finder. Quality soared as Toyota detected problems far earlier in the manufacturing process than other automakers typically did. Both the hospitals and Toyota learned that acting early to address a small potential problem may lead to some false alarms, but it proves far less costly than trying to resolve problems that have mushroomed over time. This attitude about problems permeates the organization, and it does not confine itself to quality problems on the production line.

It applies to senior management and strategic issues as well. In a Fast Company article, an American executive describes how he learned that Toyota did not operate like the typical organization. As he began reporting on several successful initiatives taking place in his unit, the chief executive interrupted him. We all know you are a good manager. Otherwise, we would not have hired you. But please talk to us about your problems so we can work on them together. We must make that issue visible. Hidden problems are the ones that become serious threats eventually.

If problems are revealed for everybody to see, I will feel reassured. Why Problems Hide Problems remain hidden in organizations for a number of reasons. First, people fear being marginalized or punished for speaking up in many firms, particularly for admitting that they might have made a mistake or contributed to a failure. Multiple layers, confusing reporting relationships, convoluted matrix structures, and the like all make it hard for messages to make their way to key leaders.

Even if the messages do make their way through the dense forest, they may become watered down, misinterpreted, or mutated along the way. Third, the existence and power of key gatekeepers may insulate leaders from hearing bad news, even if the filtering of information takes place with the best of intentions. Fourth, an overemphasis on formal analysis and an underappreciation of intuitive reasoning may cause problems to remain hidden for far too long.

Finally, many organizations do not train employees in how to spot problems. Issues surface more quickly if people have been taught how to hunt for potential problems, what cues they should attend to as they do their jobs, and how to communicate their concerns to others. Kids choose what type of bear they want. She has done so by delivering a world-class customer experience in her stores. Clark credits her store associates, who constantly find ways to innovate and improve. How do the associates do it? For starters, they tend not to fear admitting a mistake or surfacing a problem. She does not punish people for making an error or bringing a problem to light; she encourages it.

Clark credits her first-grade teacher, Mrs. Grace, for instilling this attitude toward mistakes in her long ago. As many elementary school teachers do, Mrs. Grace graded papers using a red pencil. However, unlike most of her colleagues, Mrs. Grace gave out a rather unorthodox award at the end of each week. She awarded a red pencil prize to the student who had made the most mistakes! Grace wanted her students engaged in the class discussion, trying to answer every question, no matter how challenging.

She gives this prize to people who have made a mistake but who have discovered a better way of doing business as a result of reflecting on and learning from that mistake. Failing to learn constitutes the bad behavior that managers should deem unacceptable. Clark makes that point clear to her associates. These firms certainly do not offer Red Pencil Awards. My colleague Amy Edmondson points out that such firms lack psychological safety, meaning that individuals share a belief that the climate is not safe for interpersonal risk-taking.

Those risks include the danger of being perceived as a troublemaker, or of being seen as ignorant or incompetent. In an environment of low psychological safety, people believe that others will rebuke, marginalize, or penalize them for speaking up or for challenging prevailing opinion; people fear the repercussions of admitting a mistake or pointing out a problem. However, they tend to apply a Band-Aid at the local level, rather than raising the issue for a broader discussion of what systemic problems need to be addressed.

Such Band-Aids can do more harm than good in the long run. Organizational Complexity In the start-up stage, most companies have very simple, flat organizational structures. As many firms grow, their structures become more complex and hierarchical. To some extent, such increased complexity must characterize larger organizations. Without appropriate structures and systems, a firm cannot continue to execute its strategy as it grows revenue. However, for too many firms, the organizational structure becomes unwieldy over time.

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People find it difficult to navigate the bureaucratic maze even to get simple things accomplished. Individuals cannot determine precisely where decision rights reside on particular issues. Information does not flow effectively either vertically or horizontally across the organization. Vertically, key messages become garbled or squashed as they ascend the hierarchy. Horizontally, smooth handoffs of information between organizational units do not take place. Critical information falls through the cracks. Various individuals within the federal government discovered or received information pertaining to the attacks in the days and months leading up to September 11, However, some critical information never rose to the attention of senior officials.

In other cases, information did not pass from one agency to another, or the proper integration of disparate information did not take place. Individuals did not always recognize who to contact to request critical information, or who they should inform about something they had learned. On occasion, officials downplayed the concerns of lower-level officials, who in turn did not know where else to go to express their unease. Put simply, the right information never made it into the right hands at the right time. The dizzying complexity of the organizational structures and systems within the federal government bears some responsibility.

Analysis was not pooled. Effective operations were not launched. Often the handoffs of information were lost across the divide separating the foreign and domestic agencies of the government. The agencies are like a set of specialists in a hospital, each ordering tests, looking for symptoms, and prescribing medications. What is missing is the attending physician who makes sure they work as a team. Sometimes, these individuals serve in formal roles that explicitly require them to act as gatekeepers.

In other instances, the gatekeepers operate without formal authority but with significant informal influence. Many CEOs have a chief of staff who serves as a gatekeeper. Most recent American presidents have had one as well. These individuals may serve a useful role. After all, someone has to ensure that the chief executive uses his or her time wisely. Moreover, the president has to protect against information overload. The chief executive can easily get buried in reports and data. If no one guards his schedule, the executive could find himself bogged down in meetings that are unproductive, or at which he is not truly needed.

Put simply, the gatekeeper function bestows a great deal of power on an individual. Some individuals, unfortunately, choose to abuse that power to advance their agendas. Practically all of the chiefs and their deputies interviewed considered such a role essential. In some cases, they simply make the wrong judgment as to the importance of a particular matter, or they underestimate the risk involved if the problem does not get surfaced at higher levels of the organization. They may think that they can handle the matter on their own, when in fact they do not have the capacity to do so.

They might oversimplify the problem when they try to communicate it to others concisely. Finally, gatekeepers might place the issue on a crowded agenda, where it simply does not get the attention it deserves. Dismissing Intuition Some organizations exhibit an intensely analytical culture. They apply quantitative analysis and structured frameworks to solve problems and make decisions.

Data rule the day; without a wealth of statistics and information, one does not persuade others to adopt his or her proposals. Top managers may dismiss intuitive judgments too quickly in these environments, citing the lack of extensive data and formal analysis. In many instances, managers and employees first identify potential problems because their intuition suggests that something is not quite right. By the time the data emerge to support the conclusion that a problem exists, the organization may be facing much more serious issues.

They fear that they do not have the burden of proof necessary to surface the potential problem they have spotted. The data pointed in the opposite direction of my hunch that we had a problem. I relied on the data and dismissed that nagging feeling in my gut. Their hunches often proved correct. They worried that they would be criticized for coming forward without data to back up their judgments.

Lack of Training Problems often remain hidden because individuals and teams have not been trained how to spot problems and how to communicate their concerns to others. That list made certain cues highly salient to frontline employees; it jump-started the search for problems. The hospitals also trained employees in how to communicate their concerns when they called a Rapid Response Team.

Many hospitals employed a technique called SBAR to facilitate discussions about problems. The acronym stands for Situation-Background-Assessment-Recommendation. It allows for an easy and focused way to set expectations for what will be communicated and how between members of the team, which is essential for developing teamwork and fostering a culture of patient safety. It also conducts training for its flight crews regarding the cognitive and interpersonal skills required to identify and address potential safety problems in a timely and effective manner.

The industry coined the term CRM—Crew Resource Management—to describe the set of principles, techniques, and skills that crew members should use to communicate and interact more effectively as a team. CRM training, which is employed extensively throughout the industry, helps crews identify potential problems and discuss them in an open and candid manner. Through CRM training, captains learn how to encourage their crew members to bring forth concerns, and crew members learn how to raise their concerns or questions in a respectful, but assertive, manner.

By most accounts, no one should have survived. However, the crew managed to execute a remarkable crash landing that enabled of the people onboard to survive. Chasing down all the information required to discern whether a signal represents a true threat can be very costly. False alarms will arise when people think they have spotted a problem, when in fact, no significant threat exists. Leaders inevitably must make tradeoffs as they hunt for problems in their organizations.

They have to weigh the costs and benefits of expending time and resources to investigate a potential problem. Naturally, we do not always make the right judgments when we weigh these costs and benefits; we will choose not to further investigate some problems that turn out to be quite real and substantial. How do the best problem-finders deal with these challenges? First, a leader does not necessarily have to consume an extraordinary amount of resources to surface and examine potential problems. Some leaders and organizations have developed speedy, low cost methods of inquiry.

Moreover, making someone feel bad for triggering a false alarm can discourage him from ever coming forward again. For the Rapid Response Teams, the hospitals train the experts to be gentle with those who call for help when no true threat exists. Instead, the experts work with people to help them refine their ability to discern true threats from less serious concerns. Perhaps most importantly, leaders must remember that problemfinding abilities tend to improve over time. As you practice the methods described in this book, you will become better at distinguishing the signals from the noise.

You will become more adept at identifying whether a piece of information suggests a serious problem or not. The nurses, for instance, told us that experience proves to be a great teacher. Over time, they learned how to discern more accurately whether a patient could be headed for cardiac arrest. Moreover, the Rapid Response Teams became more efficient at diagnosing a patient when they arrived at the bedside.

In short, costs of problem-finding do fall substantially as people practice these skills repeatedly. Keep in mind that problem-finding does not precede processes of continuous improvement. Learning does not follow a linear path. She does not always discover a problem first and then practice a new technique for overcoming that flaw. Sometimes, an athlete sets out on a normal practice routine, and through that process, she discovers problems that diminish her effectiveness. In sum, the processes of problem-finding and continuous improvement are inextricably linked.

A person should not focus on one at the expense of the other, nor should he expect to proceed in a linear fashion from problem discovery to performance improvement. We often will discover new problems while working to solve old ones. The following chapters explain the seven vital behaviors of effective problem-finders. Listen aggressively to the people actually doing the work. Emulate them. Do not simply ask people how things are going. Do not depend solely on data from surveys and focus groups. Do not simply listen to what people say; watch what they do—much like an anthropologist.

Go out and observe how employees, customers, and suppliers actually behave. Effective problem-finders become especially adept at observing the unexpected without allowing preconceptions to cloud what they are seeing. Focus on the efficacy of your personal and organizational processes for drawing analogies to past experiences. Search deliberately for patterns amidst disparate data points in the organization. Encourage people to take risks and to come forward when mistakes are made. Reduce the fear of failure in the organization. Help your people understand the difference between excusable and inexcusable mistakes.

Provide senior executives with training on how to encourage people to speak up, and then how to handle their comments and concerns appropriately. Learn about and seek to avoid the typical traps that firms encounter when they engage in lessons learned and competitive-intelligence exercises. Create opportunities for individuals and teams to practice desired behaviors so as to enhance their performance, much like elite athletic performers do. The Isolation Trap Problem-finders do not allow themselves to become isolated from their organization and its constituents.

They tear down the barriers that often arise around senior leaders. They reach out to the periphery of their business, and they engage in authentic, unscripted conversations with those people on the periphery. They set out to observe the unexpected, while discarding their preconceptions and biases. Unfortunately, far too many senior executives of large companies become isolated in the corner office.

They live in gated communities, travel in first class, and stay at five-star hotels. However, executives often find themselves living and working in a bubble. They lose touch with their frontline employees, their customers, and their suppliers. The isolation trap does not afflict only senior leaders. Leaders at all levels sometimes find themselves isolated from those who actually know about the problems that threaten the organization.

Yes, many leaders conduct town-hall meetings with employees, and they go on customer visits periodically. They tour the company factories or stores, and they visit supplier locations. However, these events are often highly orchestrated and quite predictable. People typically know that they are coming, which clearly alters the dynamic a great deal. Often, executives simply witness a nice show, put on by lowerlevel managers to impress them. Such isolation breeds complacency and an inability to see the true problems facing the organization. Problem-finders recognize the isolation trap, and they set out to avoid it.

They put themselves out there; they open themselves to hearing about, observing, and learning about problems. Problemfinders acknowledge and discuss their own mistakes publicly. They recognize that one cannot make great decisions or solve thorny problems unless one knows about them. They worry deeply about what they do not know. They worry deeply that they do not know what they do not know. We would like to especially thank Nancy Sanders, R.

Michael Howell from Beth Israel Deaconess for their support and cooperation in our research initiative. Parast, K. Leong, J. Coombs, K. Earnest, J. Sullivan, et al. For more information, see C. Reason Human Error. Cambridge, England: Cambridge University Press. In his book, Reason argues that organizational accidents represent a chain of errors in most circumstances. Reason likens the holes in the block of cheese to the weaknesses in those defenses. The holes in a block of Swiss cheese typically do not line up perfectly, such that one cannot look through a hole on one side and see through to the other side.

Unfortunately, in some rare instances, the holes become completely aligned. Reason argues that a small error then can traverse the block—that is, cascade quickly through the organizational system. In most cases, though, the holes do not line up. Thus, one of the layers of defense catches a small error before it cascades throughout the system. Wankel ed. See Sitkin, S. Cohen and L. Sproull eds. Thousand Oaks, CA: Sage. Osono, and Norihiko Shimizu. June: 96—; Spear, S. September: 96— San Francisco: Jossey Bass. Mishina provides an in-depth description of the Toyota Production System, including the procedure by which frontline workers can pull the Andon cord to alert supervisors of a potential problem.

Mishina also describes how and why the line actually stops on some occasions when the Andon cord has been pulled.

How Great Leaders Prevent Problems Before They Happen: Go from Problem-Solving to Problem-Finding

July—August: 74— For example, see Edmondson, A. Bohmer, and Gary Pisano. May: 23— In their research, they found that hospital nurses often fixed the problems they encountered on the front lines so that they could get their work done first-order problemsolving , but they often did not dig deeper to address the underlying systemic failures second-order problem-solving. This isolation impeded learning and meant that problems continued to recur. See Tucker, A. See Welch, J. Jack: Straight from the Gut. New York: Warner Business Books. See Rivkin, J. Roberto, and Erika Ferlins.

New York: W. Managing the White House. New York: Harper Row. Eisenhower, both as a general and as president. See Ambrose, S. Eisenhower: Soldier and President. New York: Touchstone. Warshaw, and Stephen Wayne. Instead, their intuition told them that the shuttle was not safe. The NASA culture tended to downplay judgments based on instinct, instead emphasizing quantitative evidence from large datasets.

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  5. For more on the Challenger accident, see Vaughan, D. Chicago: University of Chicago Press. For more on the Columbia accident, see Edmondson, A. Roberto, R. Bohmer, E. Ferlins, and Laura Feldman. Farjoun and W. Starbuck eds. London: Blackwell. Kanki, and Robert L. Cockpit Resource Management. London: Academic Press. For an academic interpretation of this particular incident, see McKinney, E.

    Barker, K. Davis, and Daryl Smith. Ferlins, and Laura Feldman Navy Arleigh Burke class destroyer. See Roberts, K. Bea, and D. Lessons from high reliability organizations. The planning of the operation began in May of that year, when reconnaissance imagery showed evidence of soldiers being held captive at Son Tay.

    The rehearsals attempted to mimic the actual conditions at Son Tay, with live-fire exercises conducted at a mock-up of the camp that was constructed at a Florida military base. Air Force personnel logged more than one thousand hours of flying time in preparation for the mission, which called for dangerous lowaltitude flying by MC aircraft under radio silence. Meanwhile, the U. Navy prepared exhaustively for an extensive diversion that they created in Haiphong Harbor on the night of the raid.

    President Richard Nixon ultimately approved the mission, and the raid took place in November. The soldiers landed at the camp in the middle of the night, ready to free the seventy POWs believed to be located there. Despite the danger, no soldiers died during the raid, and only two suffered injuries. In fact, the forces killed more than one hundred enemy troops—actually Russian and Chinese advisors located at a training school adjacent to the camp.

    However, when the special-operations forces searched the compound, they found no POWs. The North Vietnamese had moved the prisoners prior to the raid. The incident, despite the heroic efforts of the special-operations forces, became an embarrassing example of flawed intelligence leading to faulty decision-making.

    Decision-making regarding the Son Tay raid took place at the highest levels of the U. Brigadier General Donald Blackburn gave the green light for the planning and training to take place. By late summer, though, imagery seemed to show decreased activity at the camp. Nevertheless, preparations for the raid continued. In late September, Laird briefed President Nixon on the mission, who seemed to favor the idea. Laird informed Nixon about recent images that indicated decreased activity at the camp, while noting that experts continued to seek better photographs.

    As it turned out, many additional attempts to secure reconnaissance images during the autumn months proved unsuccessful. During this time, the planners lamented that they did not have human intelligence about the camp. At that meeting, Kissinger asked about the risks. At this meeting, Moorer and Laird did not bring up the evidence of decreased activity in the most recent photographs from late summer. Nixon gave the green light, hoping to free the prisoners and secure a boost in public support for the war and his administration.

    He also wanted to gain leverage at the negotiating table by showing that the U. I want this thing to go. They had been moved to another site. The source, a North Vietnamese bureaucrat, had worked with the U. However, the CIA did not disclose this source to General Blackburn and his staff during the many months in which they had been planning the raid.

    The CIA only asked the bureaucrat about Son Tay in the days just prior to the mission, after they learned that the planners had been unable to secure high-quality imagery of the camp recently. Blackburn still wanted to go ahead, but he did not know what to make of the contradictory intelligence. Laird and Moorer decided to proceed as scheduled on November Laird later said that he did not find the human intelligence credible, so he chose not to pass it along to the president. People at various levels in the organizational hierarchy filter information for various reasons. They do not pass along all the data they have received or collected.

    Instead, they make judgments about what information is required by their leaders to make key decisions. Leaders know that filtering takes place, and to some extent, they welcome it. After all, they do not want to become overwhelmed with data; they want their advisors to synthesize and analyze key information for them. However, leaders should worry that they may be shielded from key problems by this filtering process. The CIA chose not to pass along information about its human-intelligence source until the last minute. The agency sat on that information for months.

    Secretary of Defense Laird chose not to inform the president of the new information from that source indicating that the prisoners had been moved to another camp. The planners finally had the information that they craved for so long, yet they deemed it unreliable and chose not to pass it along to the White House.

    Through it all, Nixon chose not to probe deeper when given information that some recent imagery showed reduced activity at the camp. He made it very clear that he wanted to move forward with the mission, and he stated quite firmly that he would be disappointed if they had to cancel the operation. The president certainly never invited his advisors to come forward with any information that would disconfirm their existing view that POWs were being held at that location.

    He did not tell his advisors to filter out bad news, but he certainly did not create an atmosphere that welcomed discordant information. In sum, the Son Tay incident provides a vivid example of both the dangers of filtering and the leadership behaviors that can encourage the suppression of information about key problems—the bad news that no one seems to want to hear. Efficiency Concerns First, individuals choose to summarize and package information for senior leaders for the sake of efficiency. They have a limited amount of time to spend with top executives, and they must use that time wisely.

    Senior leaders have asked for assistance in decision-making; they want to see key data presented, synthesized, and analyzed. In others, they also want their subordinates to recommend a course of action that should be chosen. Individuals have to make tough choices about what information should be presented in the limited time frame available. Neither leaders nor subordinates want to spend time on information that is irrelevant or unreliable. Busy schedules and crowded meeting agendas certainly exacerbate the amount of filtering that takes place. Given the fast pace within most organizations, individuals know that they must get to the point in meetings.

    Many people fear that they will appear weak or, worse yet, incompetent if they bring a problem to a higher level in the organization. Pressures for Conformity Individuals also filter information when a group of senior leaders has arrived at an apparent consensus fairly quickly. In those cases, individuals may feel pressure to conform to the majority viewpoint.

    Subordinates often do not want to be perceived as rabble-rousers, intent on upsetting the apple cart at the final hour. Leaders create pressures for conformity whenever they foster the impression that they have already made up their mind. If they stop demonstrating a genuine curiosity and a desire to learn more about a situation, they encourage filtering of discordant information. He did not seem concerned when told that the later images showed decreased activity at the camp. People involved in the White House meetings indicated that he did not seem curious to know why that was the case.

    When a leader seems to have his or her mind made up, subordinates make a rational calculation with an eye toward future decisions. They want to have an opportunity to influence future choices; they do not want to lose a seat at the table. To preserve access, power, and influence, individuals determine when senior leaders no longer want to hear about additional information pertaining to the decision at hand. At that point, subordinates trade off a possible reduction in quality of the current choice for the maintenance of their role in future decision-making processes.

    Confirmation Bias Filtering sometimes takes place in a rather unconscious manner. Psychologists have shown that human beings tend to process information in a biased manner. We tend to seek out information that confirms our existing views and hypotheses, and we tend to avoid or even discount data that might disconfirm our current positions on particular issues.

    Psychologists describe this tendency as the confirmation bias. Moreover, we enact this bias in a variety of fashions— some more direct than others. Clearly, we may act in a biased manner in our own personal efforts to gather and analyze data. However, the confirmation bias may play out in more subtle ways too. For instance, we may call on people in a certain order in a meeting, such that momentum clearly builds for a particular option through the repeated presentation of data that bolster the preferred alternative. We may even arrange seating in a conference room such that people who are believed to hold disconfirming information do not have the opportunity to sit next to the key decision-maker s.

    The lack of physical proximity may send a strong signal about power relationships and thus discourage the bringing forth of information that does not confirm the existing view of the world within that room. Kissinger apparently recognized that confirmation bias affected the decision-making process in the Son Tay incident.

    Not everything that is plausible is true, for those who put forward plans for action have a psychological disposition to marshal the facts that support their position. Advocates for a particular position may provide information in a manner designed to bolster their recommendation and persuade others to support them. To his credit, Lieutenant General Bennett did not do this when offering his intelligence assessment to Blackburn, Moorer, and Laird in that final meeting before the Son Tay mission began.

    Instead, he offered a balanced view, with apparently equal amounts of data both in support of and against going ahead. However, Blackburn clearly seemed to tilt his presentations throughout the process in favor of moving forward with the mission. While he had informed Nixon of the evidence of reduced activity at the camp in prior meetings, he did not bring that data forward again when asking the president for final approval to proceed with the operation on November Of course, Laird also did not go back to the president with the human intelligence.

    Circumventing the Filters If leaders hope to uncover key problems in their organizations before they mushroom into large-scale failures, they must understand why subordinates may choose to filter out bad news. They must be wary of how their own behavior may cause their advisors to hold back dissonant information.

    Leaders clearly must create a climate in which people feel comfortable coming forward with new data, even data that might go against the dominant view in the organization. To become effective and proactive problem-finders, though, leaders must go one step further. From time to time, leaders must circumvent the filters by reaching out beyond their direct reports to look at raw data, speaking directly with key constituents, and learning from those with completely different perspectives than their closest advisors. They have to reach down and out, beyond the executive suite and even beyond the walls of the organization, to access new data directly.

    They have to find information that has not been massaged and packaged into a neat, slick Microsoft PowerPoint presentation. To do so, leaders must become adept at five techniques shown in Table 2. These activities may take some time amidst an already very busy schedule for senior executives, but the investment will pay off handsomely if it enables leaders to spot threats, as well as opportunities, at a very early stage. Hold executives accountable for responding to the concerns they hear. Seek different voices Rotate responsibilities for key reports and presentations. Ask to meet with different people from lower levels of the organization.

    Seek out the people who actually do the work or use the product. Connect with young people Seek out the youngest and the brightest inside and outside your organization. Use them to learn about new trends and gain access to a different worldview. Focus on the disconnects between what people are saying at the core versus the periphery of the business. Talk to the nons Make it a habit to speak with noncustomers, nonemployees, and nonsuppliers—those who choose not to interact with the organization for some reason.

    She became CEO at a time when the organization was in deep trouble. Losses had mounted, the sales force seemed dispirited, and the debt burden was overwhelming. A Securities and Exchange Commission SEC investigation ultimately led to a restatement of earnings going back to The specter of bankruptcy loomed. Over the past seven years, Mulcahy has engineered a remarkable transformation.

    She has chosen to listen directly to them, without a go-between who might alter or muddy the message. Her techniques involve more than simply going out on customer visits, although she does that as well. Interestingly, she has not assigned accounts only to executives in charge of functions such as sales, marketing, and operations. Each executive is responsible for communicating with at least one of our customers, understanding their concerns and requirements and making sure the appropriate Xerox resources are marshaled to fix problems, address issues and capture opportunities.

    Moreover, Mulcahy wants each member of the top team, including herself, to be personally accountable for addressing customer concerns. They are usually from customers who have had a bad experience. Believe me, it keeps us in touch with the real world. It grounds us. It permeates all our decision making. She does not simply rely on summaries of statistics about customer service. The conversations with customers become valuable raw data that may provide insights not available in reports compiled from reams of customer survey statistics.

    Mulcahy has learned that customer questionnaires can be deceiving. This should set off alarm bells. Take the automotive industry. Satisfaction scores average around 90 per cent. Guess how many people repurchase from the same manufacturer? Only 40 per cent. In the past, the company relied on mystery shoppers to evaluate service in each of its store locations. Are the products that customers want in stock? Are the stores neat, clean, and uncluttered?

    Are the store associates courteous, helpful, and professional, and are wait times minimized? The company measures the three Ss using a customer questionnaire.

    Know What You Don't Know: How Great Leaders Prevent Problems Before They Happen - PDF Free Download

    People who shop at CVS occasionally receive a receipt for their purchases that contains an invitation to call a toll-free number and respond to a set of survey questions. Customers who respond become eligible for a cash sweepstakes that takes place each month. Today, CVS receives more than one million responses per year from its customers. Executives do not only look at reports filled with analysis of the data. Helena Foulkes, Senior Vice President of Marketing, explains that the calls are recorded, and that executives can listen to actual comments for a particular store that appears to be struggling.

    Each day, the top ten executives at CVS receive an electronic audio file of one phone call received the prior day from a customer. That comment can be either positive or negative. A senior manager typically selects this call to distribute to the top team because it highlights something new or intriguing that they may not have considered or heard previously. Foulkes finds some of these comments to be incredibly thoughtprovoking.

    Finally, similar to Xerox, each senior team member takes calls from customers for one hour roughly twice per year. They shed insights in a way that quantitative data sometimes do not.

    4. You Won’t Discover Your True Voice

    Foulkes stresses that listening to the Customer Comment of the Day and taking phone calls personally enables executives to hear about problems firsthand, to spot patterns and trends quickly, and to avoid becoming isolated in the executive suite. He has learned, though, that the system can become stale if the same senior manager reports on a particular customer at each review meeting.

    They think that they can fix the problem. Therefore, they do not tell anyone until far too late. If a problem surfaces at a particular meeting, I will go back to the person that presented at the previous meeting. I ask them if they were aware of the issue at the time of their presentation.

    If so, then I probe as to why they did not surface the issue sooner. The key is for them to learn from the experience and not make this an exercise to assign blame. Of course, I do look for patterns of mistakes from people who present. If someone repeatedly holds back information, then I need to solve a different problem with that individual, because in the end, they need to know that they will be held accountable.

    How to stay calm when you know you'll be stressed - Daniel Levitin

    Hayward, a business unit general manager at Ametek Corporation, makes customer visits on a regular basis, as many executives do. However, Hayward makes it a point to speak not only with the people at the client location with whom he normally communicates by phone or email. He seeks out others in the purchasing department with whom he typically does not interact.

    Much more importantly, he does not restrict himself to the procurement unit. Hayward also does not restrict himself to senior managers. She applies this same logic to her investments in various companies. When Garber visits companies that are in her investment portfolio, she makes it a point to not restrict her conversations to the CEO and other board members. Garber seeks out information from a variety of managers within the portfolio company.

    She does so for three reasons. First, she wants to assess the talent within the firm. Second, these conversations help her test for organizational alignment.

    The Top Complaints from Employees About Their Leaders

    Does everyone understand the strategy? Has senior leadership achieved strong buy-in at all levels? Do people share a common set of values? Finally and perhaps more importantly, she hopes to discover if issues are festering beneath the surface, about which the CEO and board may be unaware, or have chosen not to disclose fully to the investors. In most cases, like Tacelli at LTX, she finds that executives do not mean any harm when they hold back bad news. They believe that they can solve the problem on their own, if only they had a bit more time. They tend to have great familiarity with the latest ideas and products in fields such as technology, fashion, healthy living, and the environment.

    The CEO should then meet with this cabinet periodically to see how their perspective on key strategic issues differs from what he or she is hearing from the members of the senior management team. Hamel believes that interacting with young people will help CEOs see opportunities and threats that senior leaders may not perceive.

    Moreover, Hamel recognizes that the perspectives of these young people often are filtered out if left to the normal machinations of the organizational hierarchy. One business unit president in London recognized that he did not understand the Internet as well as he should have. He wanted to get up to speed on the business. Therefore, he found the brightest young person under the age of thirty in the organization, and he asked that employee to serve as his mentor on e-commerce issues. The talented young person spent the next several months schooling the head of the business.

    When Jack Welch heard about this technique, he asked all the general managers at General Electric to find young mentors who could teach them the ins and outs of the web. We had the youngest and brightest teaching the oldest. A variety of innovations have provided a fast and economical way for senior executives to connect with young people on the front lines of their organizations.

    Many CEOs have blogs, and some have begun to spend time trying to understand, in a systematic manner, what their employees are writing on their own blogs. At Hewlett-Packard, researchers have created new technology that analyzes what is being written on the blogs of more than ten thousand employees. The name for the software came from the notion that it provides an ability to listen in, with permission, on the many virtual water cooler conversations that employees are having in cyberspace. He has over four hundred friends in a social group that he has created, many of whom are his employees.

    Some in the British press have criticized him for spending his time in such a manner. I think this is a lousy and disconnected way to lead. I believe that unless one interacts with and plays with the leading technology of the age, it is impossible to dream the big dreams, and difficult to create an environment in which creative individuals will feel at home In the ordinary course of business, I talk with the general manager, with the sales manager, with the manufacturing manager.

    I learn from them what goes on in the business. But they will give me a perspective from a position that is not terribly far from my own. When I absorb news and information coming from people who are geographically distant or who are several levels below me in the organization, I will triangulate on business issues with their view, which comes from a completely different perspective. This will bring insights that I would not likely get from my ordinary contacts. However, insiders may be too tightly wedded to a particular mental model of how to do business.

    That cognitive inflexibility might not serve the firm well if it experiences a major shift in the external environment. In so doing, they have developed fresh perspectives and perhaps even come to question some of the central tenets held by those who work at the core of the business. Bower describes these individuals as inside-outside leaders, and he argues that they bring a more objective perspective on the changes needed in the mainstream business when they become chief executive.

    In so doing, they combine the benefits of being an insider with the divergent perspective of an outsider. How many speak on occasion with their noncustomers, nonemployees, and nonsuppliers—those who are currently not engaged with their organization in some fashion? Connecting with these groups can provide incredible insight. Clayton Christensen argues, for instance, that spotting disruptive innovation opportunities tends to happen when one speaks with noncustomers as opposed to current users. The latter group often focuses on incremental improvement ideas for your current product line, rather than a truly breakthrough change.

    You may even go so far as to talk with university students who have attended an information session held by your firm, but then chose not to submit a job application. What did they hear or learn that caused them to look elsewhere for employment? Universities spend a great deal of time speaking with those who choose not to become their students, and they learn an immense amount from them. Without question, every college obsesses about its admissions yield—the percentage of accepted students who choose to matriculate at the school.

    Moreover, poor yield prediction can have pernicious consequences for a university. A lower-than-expected yield leads to empty dorms and the associated drop in revenue, while a higher-than-expected yield causes overcrowding and perhaps subsequent student dissatisfaction. Universities spend time trying to speak with accepted students who chose to enroll elsewhere. They ask many questions.

    What other schools did they select most often? Why did they choose those schools? What types of students are most likely to not enroll? Like these schools, business leaders can benefit by speaking with those who have rejected their organization. Senior leaders need to occasionally hear from these voices directly. They need to hear the unvarnished truth from those who have chosen not to engage with the organization for one reason or another. Can it really help leaders see the future, to spot problems before they mushroom into catastrophes?

    To close this chapter, consider for a moment the remarkable career of Winston Churchill. Many people marvel at how prescient he was at key moments in his lifetime. He seemed to see looming threats long before others did. Time after time, he tried to sound the alarm about threats to his beloved Britain, and he recommended preparatory measures. Churchill foretold the threat from rising German militarism in the years prior to World War I. Similarly, he tried to sound alarms about the threat from Hitler during the s, but sadly, his warnings fell on deaf ears for far too long.

    Finally, he predicted the threat from Soviet expansionism, culminating in his famous Iron Curtain speech in March How did Churchill cultivate this ability to spot the threats and problems that loomed ahead? One reason may be that he immersed himself in each job he held in the British government. He did not spend his time huddled in London with only his closest advisors. Churchill always wanted to be in the thick of the action. He traveled relentlessly to speak with people far and wide, from inside and outside government.

    He demonstrated a remarkable inquisitiveness and curiosity, and he loved speaking with the people on the front lines. Some characterized him as reckless at times; he even wanted to observe the D-day landings firsthand from a naval vessel in June Consider what happened when Churchill became First Lord of the Admiralty in He set out to understand the scope of German military superiority and to revolutionize the British Navy in preparation for war. During this time, he launched a massive construction campaign and switched the British fleet from coal to oil—momentous decisions that met with a healthy dose of skepticism at the time.

    He also equipped his ships with inch guns, an innovation that proved critical during the combat that soon unfolded. Churchill came to these decisions after engrossing himself in all facets of the British Navy. He appeared to be everywhere at once, inquiring, badgering, learning. He was interested in everything from gunnery to the morale of his soldiers. He was fascinated with airplanes and immediately understood their utility for warfare. He spent hundreds of hours learning how to fly. Rushing into analysis with a vague problem statement is a clear formula for long hours and frustrated customers. You need clarity around the decision-making criteria and constraints, the time frame required, and an indication of action that will occur when the problem is solved, or not solved. Asserting any solution without proper validation in this complex world is a recipe for disaster. No matter what your conviction or experience "I've seen this before" , the stakes are too high to try to force an answer. Only by first finding all the cleaving points that allow you to dissect the problem, will you likely find the most serious crux of the issue.

    Elizabeth Holmes never focused on how many false positive blood tests were sending people to the hospital, or she might not have minimized the problem. Groupthink amongst a team of managers with similar backgrounds and traditional hierarchy makes it hard for anyone to see the real alternatives clearly. Every leader needs to make sure and listen to people with a diversity of experiences, who are open-minded, and have no ulterior motives. Some issues can be resolved with "back of the envelope" calculations, while complex modern issues may demand more time and sophisticated new tools.

    For example, sometimes no amount of regression analysis is a substitute for a well-designed real world experiment with "big data" analysis. Analytically oriented teams often say, "We're done" when a solution is found, but don't follow-through with a plan to communicate complex concepts to diverse audiences, and sell their action plan to stakeholders. Effective solutions capture the total audience with compelling actions.