future planning

Managers are practical men and women. They win their spurs and their rewards by successful action, and their personal futures are endangered, not by bad ideas, but by bad results. Yet this is a false dichotomy. Thinking Managers is specifically addressed to the 'Thinking Manager' for excellent and surely obvious reasons: bad thinking, like complete lack of thought, leads to poor performance; good thinking, and the habit of thought, are what underlies managerial excellence.

Yet it isn't so simple. As Edward de Bono has often stressed, all good creativity is logical in hindsight. The problem is how to be logical in foresight - for example, how to achieve an apparently sensible strategy that will make total sense in restrospect as it pays off. But the foresighted critic of a strategy or plan can never be absolutely sure that it will fail. Thinking Managers severely criticised Jac Nasser, the president of Ford Motor, a few months back. But his ousting by the board was by no means a foregone conclusion - after all, Nasser's fellow directors had gone along with some plainly dangerous policies:

FIVE FORD FAILINGS
(1) Ignoring worsening performance in production and quality and (not surprisingly) market share.
(2) Alienating staff at all levels, and badly affecting their morale, by forcing through burdensome change programmes with which they did not agree.
(3) Pursuing an irrelevant personal ambition to become the next Jack Welch - the widely admired and copied General Electric powerhouse.
(4) Picking up one of Welch's worst ideas - automatic dumping of people with low appraisal scores.
(5) Betting Ford's billions on a highly debatable view of a future in which car purchasers would expect far more than cars from the supplier.

Observe that the first four of these five failings are always wrong in any context. You may get away with such errors, gross though they are. Welch got away with his automatic sackings. But any harmful results from this unthinking policy were offset, like other defects which General Electric inevitably displayed, by one Great Idea about the future. Welch saw that banks and other traditional financial institutions used their customers' cash flow - including GE's - to finance money-spinning operations. Why shouldn't GE use its own resources for many more monetary purposes than financing sales of its own products?

The success of GE Capital is the overwhelming cause of GE's massive increase in market value. It now accounts for half of GE's profits. But Welch was much wiser than Nasser in making his bet on the future. First, Welch wasn't betting on unpredictable changes in customer behaviour. Second, he wasn't moving into strange territory: GE, as noted, was already financing installment purchases, etc. Third, the expansion of GE Capital in no way hindered the development of the main-line businesses; it actually added helpful in-company services.

In contrast, Nasser's one-stop auto-shopping strategy was unproven, and added nothing to the basic selling proposition for Ford's cars and trucks. Operations like the Kwikfit tyre centres in Britain were far from management's experience. Anyway, the concept flew in the face of today's observable trend - that far from favouring one-stop shopping, fickle customers are looking for the best buy, wherever it can be found: hence, the modern segmented markets and marketing.

KALEIDOSCOPIC PATTERN
The kaleidoscopic, shifting, almost chaotic pattern of human behaviour as the 21st century develops was the overriding (and underlying) theme of Futurescene, a gathering held recently in St.Paul de Vence. I chaired this first seminar of the Global Future Forum, which brings together futurists and business managers to develop ideas about the next three to five years - and maybe beyond. The focus was on the sector which has seen the greatest effort to promote one-stopping: financial services.

The customers, by and large, have steadfastly resisted this proposition. Just why was shown by the results of responses by GFF's expert panel of futurists and industry insiders. On issue after issue, the respondents (led in most cases by the Americans) came down on the side of dynamic change. Service would move from standardised to personalised, organised round customer segments rather than traditional lines-of-business, with self-service and intelligent automation coming to the fore as the financial servers demonstrated their effective mastery of the new technology.

This gleaming modern image, unfortunately, conflicted harshly with a survey of websites. conducted by Unisys (the sponsor of the GFF) among 400 of the world's leading banks. A quarter had no website, or none which could be found (which comes to the same thing). A further 41% had sites: but since these contained no e-mail or contact information, they might as well have not existed. Then, 16% had no mechanism enabling Web customers to buy any products from the site.

A further 5% had unacceptable responses (e.g., you were referred to a link which sent you back to the link you had just left). That left just 58 sites that could handle a customer enquiry in a satisfactory manner - 15%, or even worse than the typical Pareto distribution of 20-80. The conclusion from these dismal facts must be disheartening: that the great majority of the surveyed organizations had strategic views that failed to match their actual behaviour.

A strategy or an overview which is not implemented - or, still worse, contradicted - is effectively (or ineffectively) the same as having no strategy at all. One of the great Swiss banks, for bad example, has started four e-initiatives, all based on acquisitions, and closed them all, citing their continuing losses. The longest life of these doomed projects was six quarters. No entrepreneur would cut a new venture's throat so rapidly - assuming that funding was still available.

The bank's behaviour supports other pieces of evidence which suggest that financial services companies are ill-equipped to participate in dynamic change. They have the resources in money and manpower, but lack the vigorous leadership needed to invest the resources in the right place at the right time in the right way. The deficiency is not surprising, perhaps. As customers, people want banks and others to be safe havens for their money. Conservatism as custodians makes a poor fit with progressive dynamism as entrepreneurs.

THE FOREMOST FIFTH
What's true of banks also applies, even if in lesser degree, to other businesses. The men (leavened with a few women) at the top are not often of the age or the inclination to lead modernisation. Maybe there really is a Pareto distribution here. Maybe a fifth of the firms in any given industry or marketplace will account for 80% of the successful initiatives in new technology, new management, new products, new services and new, future-oriented customer strategies. The 80% majority of firms will always lag behind the leaders.

The problem is partly intellectual. Failing to think about the future is as severe a defect as failing to plan. The same time-honoured maxim applies in both cases. If you don't know where you are going, you won't get there - except by accident. But the ideas, however excellent, are only useful if they lead to action. The job of the manager is 'making it happen'. The future, after all, is affected by manager's actions and inactions. If their visions are not realised, that could be because (see Ford's Nasser) the forward view was flawed. But the fault could equally well lie in flawed execution (see Nasser again) or failure to execute (the banking websites).

There has never been a more impressive display of predictive vision by a senior manager than a speech made in 1970 by Peter McColough, then chief executive of Xerox. A decade and more before the advent of the World Wide Web, McColough coined the phrase 'the architecture of information' and correctly identified the technologies (all of them available to Xerox) which would combine to turn that architecture into reality. He also fathered the mechanism to provide the combination - a free-ranging group of scientists and engineers that would set its own agenda and work to its own deadlines.

The Palo Alto Research Corporation, brilliantly staffed and imaginatively led, performed spectacular feats. Most of the now-familiar inventions that created the personal computer were born at PARC. The leaders of the computer industry thought as one man that nobody would ever want a computer on their desks. The people at PARC (like a very young man named Bill Gates, living in Seattle) thought differently. Their thinking perfectly meets the de Bono definition: it was absolutely logical in hindsight. But why wasn't the idea of a computer on every desk logical in foresight to the leaders of the industry?

WISHFUL THINKING
As so often, wishful thinking interfered with rational judgment. IBM's leaders were so attached to the high prices and huge gross margins on big computers that they could not accept the end of the mainframe era - even when the runaway triumph of their own PC proved that a new age had dawned. Xerox should have been readier to accept the new dawn, given that it had no computer interests. But PARC was divorced by geography and organisation from the operational management, whose minds were fixated on selling copiers, to the exclusion of anything else.Xerox let its innovations make fortunes for others - like Gates and Steve Jobs of Apple. That gave an emphatic answer to a question posed in 1963 by none other than the visionary Peter McColough: 'Is it inevtable that such organisations as Xerox should have their periods of emergence, full flower of growth and prestige and then later stagnation and death?' McColough even identified the causes of the fate awaiting his company: the move from an enterprise 'loose on procedure, unclear on organisational lines, variable in policies' to an institution which is governed by rules written and unwritten and the 'heavy hand of custom'.

This painfully clear account of what happened to Xerox (and IBM, and the now bankrupt Polaroid) leads to a most important conclusion. 'Intellectual Capital', or IC, the sum total of a company's acquired knowledge and systems for applying that knowledge, depends heavily on IC2 and IC3 - Intellectual Curiosity and Institutional Change. Without IC2, the future remains a closed book. Without IC3, even if the book opens, nothing or too little will be done.

McColough's forebodings can be reversed to create a manifesto for companies and managers that want to join (or stay in) the top fifth - the makers and shapers who will make the best use of the opportunities that are always abundant in times of volatility and variety:

(1) Ensure that everybody in the organisation is 'in the know' and feels that way
(2) Link rewards and promotions to 'trying new things' and risking failure
(3) Tolerate mistakes made in the cause of progress
(4) Encourage 'self-renewal' by training, development and stimulating new assignments
(5) Downgrade stability as a corporate objective and elevate change (McColough: 'the only stability possible today is stability in motion').

Remember that the Xerox boss was writing nearly four decades ago. The needs and the circumstances are far more compelling in the Age of the Internet. But how did Xerox become so deeply infected with the very disease that its greatest leader had identified? How, for that matter, was the amazingly successful research and development which the same man had set in motion allowed to wither on Xerox's vine? Just imagine the stupendous outcome if its thunderous sales power had been placed behind the working PC created at PARC.

DETERMINED RESISTANCE
What happens in such sad cases is that 'possessions, stature and reputation' (in McColough's words) begin to distance the top echelon from the field of play. Below them, the middle managers follow suit by clustering in self-protection round 'what is'. Neither group concentrates on 'what will be'. Even when an aggressive boss like Intel's Andy Grove takes the lead, determined resistance may have to be overcome (which took two years of anguished debate, losses and departures before Intel completely dropped memory chips for a super-golden future in micro-processors).

The only cure is IC3. Turn the senior group into a non-operational change leadership, overseeing generation and exploitation of new ideas, avidly exploring (IC2) future and current new developments, and removing roadblocks - human or structural - from the path of enterprise. There is no alternative: except to stay stuck in the ranks of the also-ran 80 per cent.