Great Strategic Leaders Always Think Twice

Most people let old ideas influence current decisions. But true strategic thinkers interpret situations from many angles and come up with better solutions. Every time.

Uncertainty can be scary – but what is even scarier is how insidious the human mind can be in the face of uncertainty.  To make sense of the continuous stream of data being pelted at us from every direction, our mind creates filters so that we can survive and function.
These filters are so effective that only about five percent of the stimuli trickle through. Your mind has become your worst enemy– it only lets through information that conforms to your current beliefs and expectations.  When faced with new data and important decisions, that can be really bad, deadly even.

Misinterpretation can lead to disaster.

Consider a classic example of misinterpretation at Pearl Harbor in 1941.  The captain of the destroyer USS Ward had just dropped depth charges on an unidentified submarine moving into Pearl Harbor, suspected of spying.  En route to port shortly thereafter, this captain heard muffled explosions and remarked to his commander, “I guess they are blasting the new road from Pearl Harbor to Honolulu.”  Operating from a peacetime frame of mind, the captain mistook the muffled explosions of the first Japanese air raids for road construction.  He failed to link his encounter with a suspect submarine that morning with the explosions he just heard.  His mind was insufficiently prepared to interpret the signals for what they really were all about, the start of the Second World War for the U.S.
Such misinterpretation, due to looking at new data through old lenses, is quite common in business as well. Instead of challenging our assumptions, we search for information that proves our old ideas right. Unfortunately, this confirmation bias further delays us coming to terms with a new reality. Instead, we should constantly test our assumptions and actively look for disconfirming information that would prove our old ideas wrong when they are in fact wrong.

Be a better interpreter.

Vigilant leaders must always be on guard for their evil twin who wants to interpret the world in terms of past realities rather than new ones.  For example, your competitor drops its prices – how do you view this and what would you do about it?  Your first interpretation might be that this is a desperate act to hold market share, a futile race to the bottom that will hurt all. But have you interpreted this situation correctly?  Perhaps you are basing this knee-jerk reaction on old knowledge. Here’s how you can tell:
1. Make a list of all the important things that have to be true for your interpretation to be correct. Arrange the list from assumptions that are easiest to verify information to hardest.  For example:

• Your competitor’s market share has been dropping.
• Lowering price can buy market share in this business. 
• The competitor cannot make money at this new price.

2. Look for disconfirming evidence starting from the top down. Finding market share data is relatively easy, but be sure to check trends within different customer segments and also consider lags or biases in the data.  Next, can you find examples where price drops did not result in higher market share?  Why did it not work?  Finally, challenge the assumption that your rival could not make money. Did it innovate its offering in a way that reduced cost?  Could it be using a lower price to generate volume for higher value parts of it business?
If you can prove any part of your interpretation wrong, you should rethink your view and response to the situation. A statue in Helsinki, honoring former Finland president J. K. Paasikivi (1870-1956), is engraved with his motto that “all wisdom starts by recognizing the facts.”

Three is the magic number.

When looking for evidence pro and con, try to find at least three sources for data about any new issue. Leonardo Da Vince believed that he would never understand a complex subject without looking at it from at least three angles (what we now call triangulation).
The Internet makes this rather easy, but don’t overlook traditional sources of information such as customers, competitors, suppliers, regulators, partners etc.  If there are differences in what you find, spend some time thinking about why those discrepancies exist and if they matter.  What other patterns can you see in the data?
Some organizations use scenario planning as a way to make sense of uncertainty and conflicting data.  The aim of this methodology is to generate competing views about the future and use a wide lens to capture new signals from the periphery.  Insights gained from this type of exploration and interpretation will not just help you avoid devastating pitfalls, but also highlight opportunities before your competitors see them as explained in our book Peripheral Vision or at our company's website.

Seven Tips for Coping with Customer Questions

Do you sometimes think your customers are clueless based on the questions they ask? If so, you are not alone.

A new survey from IT-employment agency Robert Half Technology reveals chief information officers get asked some pretty bizarre questions – and many of them clearly fall outside the realm of an IT staff's job description. Among the IT help-desk requests the surveyed CIOs got:

• Can I turn on the coffeepot with my computer?
• How do I start the Internet?
• Can you come over and plug in this cord for me?
• How do I pirate software?
• Can you recommend a good dry cleaner?

Funny – and yet not. But the range of crazy questions demonstrates how important it is to train customer-service employees to be ready for anything.
Here are seven tips for excellent customer service that any business can use:
Listen. Sometimes, customers just need to know someone at the company is interested in their problem, notes John Tschohl, co-author of Achieving Excellence Through Customer Service.
Apologize. Don't engage in fault-finding or laying blame, but do let the customer know you are sorry they had a problem, says Tschohl.
Take them seriously. Customers' questions may seem ridiculous, but they're important to that customer. Try not to laugh.
Stay calm. Customers may be irate, frustrated, or just irritating. But don't get down on their level, ever. Just staying calm can make customers feel you care and have the ability to help them.
Suggest solutions. Help-desk workers should have the power to resolve more than 95 percent of customer issues without having to pass the customer on to another person. Allow line workers to give out free coupons, accept returns, give refunds, and take other needed remedies without having to consult anyone. Then they can offer customers a range of options for resolving their problem, and get the job done, Tschohl says.
Be available. These days, smart customer service means setting up a help desk on Facebook, Twitter, or wherever else your customers hang out online.
Acknowledge your limits. If you're asked a crazy question like the one above, simply say that you're sorry their request isn't within the scope of what your company provides. You can't be everything to everyone.

Being Flexible During These Changing Times

You must remain as flexible as possible if you plan on selling your company or making an acquisition while these weak credit conditions are occurring.

If a good opportunity comes along you will need to act quickly. Quickly does not mean skipping any of the due diligence steps required. Using experienced advisors can assist you in evaluating a potential deal and help you include escape clauses in your purchase agreements to provide an exit.

Recession Proof Businesses? Do they really exist?

Yes, they do. People still need to buy things. The trick is finding the businesses that offer products and services that are always in demand or are necessary. These businesses can be solid investments during tough times. To make the chances of success even better, the business needs to offer a structured marketing and business model to help the new business owner get to a running start more quickly. Franchises offer the edge that other opportunities do not.

All the gloom and doom that we are reading about out there makes the idea of starting or getting into business for yourself sound a bit crazy. Still businesses have thrived during past recessions and many will flourish this year. Both Microsoft and Google either started in, or accelerated through downturns early in their lives.

A few ideas for recession proof franchises offered are:

Education is probably not going to change a lot even during a recession. Tutoring is still going strong because parents want the best for their children no matter what is happening in the economy.

Temporary Staffing Agencies- Historically a recession actually can help in the growth of temporary staffing. While companies are laying off hundreds of workers, they still need the jobs done, so this can be the stop gap measure to save money and still be productive.

Health and Beauty- This is a business that cannot be outsourced or done oversees for you. It is a needed service, and if a family can have it done economically, the business will thrive. Fitness centers are also still doing well. We know that staying healthy and exercise is the key to a long healthy life, so we don’t cut corners when it comes to that.

Home Improvement Companies- Most people are staying put and not moving to larger homes, so they fix up their existing homes. Home improvement companies continue to thrive no matter what the economy is doing.

Health Care Businesses- Health care companies generally do well because in a recession, people get sick just as much and sometimes more than boom times. Since there are more and more baby boomers having the responsibility of taking care of their parents, home health care and health care products have a very good chance of doing quite well.