How Great Leaders Look into the Future

by Hubertus Hofkirchner -- Vienna, 08 Aug 2018

Small companies or startups are agile by nature and can react, adapt, or pivot fast, but the larger an organisation, the harder it is to change its course and the further out it needs to look into its future. They need the best possible predictions to questions like: What scientific break-thoughs and technological advances will impact us? Which global challenges, cultural trends or political developments will change how customers look at our offering? Which dissatisfactions with the status quo will open up an entry path for new competitors?

For an ostensibly easy solution, many executives of large corporations turn to external foresight consultancies, trend agencies, and other gurus to advise them on what the future may bring. Such an external view can certainly be refreshing and bring valuable, even unconventional thinking but may be short on direct and specific recommendations.

For a truly impactful futures exercise, great leaders tap the collective knowledge of their employees. For example, Apple’s late Steve Jobs prided himself of never doing market research – which arguably contributed to his fame for being great leader, enthusiastically adored and loved by millions of faithful fans. Few people know that in truth, Apple was doing market research all the time and more than anybody else. How? Apple’s employees were encouraged to use the company’s products and prototypes intensely and thus were far more knowledgeable about them than the vast majority of customers. What better way to gauge interest in new product ideas early and to learn about likely problems and issues in time?

Employees are already focused on an organisation’s specific market and cognisant of the trends which affect it. Most importantly, they are also the ones who need to understand and apply the future vision. There is a far more immersive possibility than just to hand them an external futures report to read: a participative in-house futures process based on modern prediction market technology which engages employees actively and intensely with company’s possible future and strategy.

First, a warning

When done right, in-house future process will foster self-organisation, boost motivation, and spark valuable initiatives. However, participative employee projects are never trivial and they can go wrong for certain reasons which need to be forestalled. For example, they can instill a false sense of entitlement, be abused for self-promotion, or spark internal activism. In such cases, the result may be frustration, conflict, and demotivation.

False entitlement is nearly always the result when any of the questions to the employees mistakenly ask for their personal preferences and for their wishes, or for what changes they want. These self-interested questions will get a plethora of answers but they will only express the employees’ interests. The project will suffer from an unhealthy disbalance to the detriment of other stakeholder groups, such as customers and shareholders. Such results, if they were implemented, work against the future success of the organisation as a whole.

When engaging employees in a futures process, all future questions should be asked in a projective way, from the total perspective of the organisation, considering all stakeholder groups. The right question is not: “What would be better?” implying: for you but rather: “What would be better for the company?” With this little twist, employees will naturally fall into a third person perspective which yields more balanced thinking. Instead of a myriad of little conflicting ideas and wishes, everybody’s opinion will converge and evolve into a clear joint vision of what is right for the organisation and what must be done, jointly.

Self-promoters are a frequent occurrence because successful engagement processes need a high degree of top executive commitment. Some employees will try to abuse this access to advance their own career. They will usurp more than their fair share of talk time and try to win arguments by all means, including exhausting other participants. Their focus is on winning against their fellow employees – which they see as their opponents – rather than what is right or wrong for the organisation.

To counter this behaviour, it needs more than just boilerplate communication rules and their enforcement by a trained moderator which is the current state-of-the art. When using a prediction market tool, the strongest method to curtail such behaviour is a first round of short-term future questions. These could ask participating employees, for example, for next month’s sales numbers or for raw material factor prices, anything which can be verified in a very short time. When actual results come in, the self-promoters will get humbled by performing badly in the exercise while the quiet superforecasters will stand out and get the heightened attention which they deserve.

Internal activists feed from a misunderstood sense of democracy. While it is beneficial and laudable that everybody shall have a say and everybody’s opinion shall count, an organisation can ultimately only pursue a limited number of parallel initiatives. Different to self-promoters, internal activists push not their own career but their pet issues and ideas at the expense of others which may be just as good, or better. Once management decides on which path to pursue, disappointed activists may still insist on their rejected ideas and turn to politicising. Lack of acceptance and rumours of favoritism or intransparency endanger the success of the exercise.

To prevent such shenanigans, leaders must fast forward into a more democratic future. Instead of just listening to employees and then deciding for them, they can allow even more participation, where employees don’t just have their say and go away but they also get to decide specific, well-defined matters as a group. This is no trifling task. Inadequate procedures for such decision making, such as badly selected groups, insufficient or unsupported information or simplistic voting procedures will aggregate individual ignorance instead of producing collective intelligence. Successful participation needs a carefully managed deliberative group decision process which will be described later.

Naturally, this democratic approach threatens the myth of the leader as the lone superhero, the strong man who decides it all from the top, then gives the orders, and gets it right against all odds while everybody else has it wrong, be it citizens, customers, employees, or investors. In today’s complex world such a person is mere fiction and a setup for failure. The new successful leader needs to act like a supercoach who gets a team of individual top players to a great joint performance in a big game.

The next installment of this mini-series will describe how to build a futures team of foresighted individuals, superforecasters, in any organisation. Stay tuned.

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