The Hindu Business Line : Trust your gut, but digest plenty of data

WHAT can western managers learn from trailblazing Chinese entrepreneurs? That's the question Donald N. Sull answers in Made in China, from Harvard Business School Press (www.HBSPress.org), by profiling eight `formidable' ventures. Unpredictable regulation and industrial policy, uncertainty from integration into global markets, doubtful access to and cost of capital, macroeconomic jolts, and unclear and shifting property rights are some of the factors that Sull mentions as contributing to volatility in `multiple dimensions'. Each of these variables is individually uncertain, and their interactions make the future nearly impossible to predict with any degree of confidence, he writes.

A `fortress view of time' can be comfortable but the author would lead you away from it, by flashing a light through `the fog of the future', and graphically depicting `golden opportunity' and `sudden-death threat' across time. The vertical axis pointing upward measures the magnitude of opportunity for new value creation enabled by an external event, and the downward-pointing axis represents the magnitude of threat, he explains. "Like a seismograph, these lines register the past rather than forecast the future."

Managers cannot conjure up golden opportunities; nor can they wish away threats just because their companies are not prepared to face problems. Learn the art of `active waiting', exhorts Sull. This consists of "anticipating, preparing for, and quickly seizing opportunities and dealing with threats", building a `war chest of financial and human resources' for deploying during contingencies, and adopting the appropriate leadership style.

Conduct reconnaissance into the future, advises another chapter. Do you know that the US Marines spend much of their time conducting reconnaissance or recon, "by groping their way through unfamiliar terrain and assessing circumstances that shift constantly with changes in weather, enemy movements, and the deployment of their own forces?" Their rule is `recon pull, not headquarters push', meaning that they rely on "their understanding of the emerging situation based on local knowledge in real time rather than to blindly execute a preconceived plan from HQ". A quality that can be valuable in your managers too!

Keep the map fluid, counsels Sull, and offers a few tips. First, "a dashboard of financial and operating metrics is critical" and that must be real time and provide multiple perspectives of the company so that you can "spot early tremors and make connections". The data should be fine-grained, specifies the author, because "highly aggregated data can hide threats and opportunities". Interrogate anomalies and don't simply walk through life shrugging off unexpected events, orders Sull. "Small anomalies often serve as leading indicators", so when you are surprised, ask: "Is this a potential opportunity? Is this a potential threat? What can I do to find out more?" Also, take field trips to the future, and avoid the obvious. "Trust your gut, but digest plenty of data".

Elsewhere in the book, is the SAPE cycle, short for sense-anticipate-prioritise-execute process, as an alternative to the formal strategic planning model. SAPE is related to John Boyd's OODA, or observe-orient-decide-act, used in the military, one learns. "The faster company makes an operational improvement, seizes an opportunity, or responds to a threat, and the slower rival emulates this move, but only after a lag. By the time the laggard catches up with the leader, the faster firm has already moved on to the next thing," points out Sull.

He cautions, however, against `priority creep', that is, the number of priorities expanding over time. This happens "when managers add new items to their list without crossing off less important objectives, activities, or initiatives." Priorities are more effective than mission, vision, purpose, strategy, or just about any other management tool in translating situational awareness into action, argues Sull. "A small set of clear priorities can focus and align the entire organisation around the critical few things versus the mindless many."

A book that should be on your priority list, unless you would like to be actively waiting for wisdom to dawn on its own!

ManageMentor@TheHindu.co.in

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