Surprising yourself can kill you

Obviously, you can't avoid surprises. No one can anticipate the future. But it is the responsibility of leaders to avoid surprising themselves and being unprepared for the consequences.

The latest surprise is the current "sub-prime" situation. Highly reputed companies, like Citicorp, Merrill and all major banks have forced to take unprecedented write-offs and fire their leaders, because their leaders were unaware of the magnitude of their involvement in new untested instruments.They were just as surprised as others that they had a major problem.

Why?

It is clear that the disciplines of strategic thinking, analysis and decision making have been neglected. Current managements have become so involved in the "numerics" that they failed to understand why the numbers were so good.

Just look at the CNBC programs... all everyone talks about are the economic and financial numbers and not the underpinnings of these numbers. When the numbers are good, it is assumed they will remain good, when they are poor there is a strong tendency to explain them away and point out that things could be worse and will get better.

One of the major reasons that GE, in the 1970's, embarked on installing a highly disciplined strategic thinking process was that they were surprised that five of their eight major ventures failed. They installed a disciplined system to challenge the key assumptions and make sure that they were as sound as possible. In addition, a contingency alert system was established to reduce the impact and hasten the response if the key assumptions were wrong. I explain this in my book, The Secret to GE's Success, and played a major part in this review system.

Jack and Suzy Welch in their November 19, 2007 Business Week column, the Welchway, explain that it is critical that leaders don't become isolated and surround themselves with "yes people", and emphasize that it is critical to have an open system and get inputs from a variety of sources.

I know that Jack personally has a number of people in lower parts of the organization to give him inputs. He was willing to cut across and down into organizations to find out what was really happen and enable him to ask good questions in his review sessions. But Jack was human like all of us, he had is own biases and favorites and it was difficult for others to get him to change his mind.

The key to avoiding surprises is to have system that continually challenges the key assumptions, determines their foundation and is willing to change direction.

In my book , I use the word, adaptability as one of the reasons the GE was successful. However, this only comes if you have a strong and disciplined strategic thinking and decision making system and welcome comments from all and not just a few. It is not easy to take an unpopular stand and get promoted in any organization. This means that you need people who are willing to risk their careers if they believed that the company is moving in the wrong direction.

In future blogs, I would like to discuss some of the key ways to avoid surprise and what to do about it.

Your comments and experiences are welcome.