Top CEOs trump stats with intuition
The CEO as a novelist – a novel thought, for sure. But modern CEOs must walk the walk, no longer just talk the talk when it comes to managing chaos. Making claims for operational expertise has to be more than empty statements.
The CEOs I meet are eager to acknowledge and respond to the VUCA (volatile, uncertain, chaotic, ambiguous) world they see all around them. But they often don’t have the skill set. Trained in quantitative disciplines, they focus on finding the single, right management or engineering process; they do not consciously improve the creative flexibility required to cope with the tremendous acceleration of challenges we see around us.
It’s an illusion to think that the massive improvement in living standards we have enjoyed have been accompanied by increased security. Au contraire. The stunning gains we have made materially are very precisely reflected in ever-greater increases in volatility (a polite word for “danger”).
You simply would not get such cheap cars, iPads, interior decorations, light industrial goods and food without a quantum leap in the complexity of the systems managing their production – and razor-thin margins of safety – every step of the way.
Again and again world history has shown that elites and leaders underestimate the complexity of the tasks they set themselves. Even as passengers are screaming that they can see the iceberg straight ahead, admirals and sailors appear to be frozen at the controls. The slow, ghastly descent of Europe into World War I, and the momentum of Japan into World War II, both show how worst-case scenarios can become reality shockingly fast. The situation now in Europe is equally surreal. Germany is going all-out to block government spending, the only form of stimulus that can compensate for plunging private-sector activity. The reason seems to be an overwhelming failure to grasp what is going on – and I believe it’s mainly a failure of imagination.
Too many leaders (technocrats in today’s parlance) get bogged down in data, instead of letting their minds roam. It’s no surprise that some of the most successful CEOs are able to imagine and execute seemingly impossible projects. It’s almost a cliché to mention Steve Jobs, but he is the archetype. Other examples are Amazon’s Jeff Bezos and IBM’s Sam Palmisano.
Here is where scenario building – as a novelist does – comes in. It’s important because existing metrics – from measuring risk using “normal distribution” to profits using “return on equity” – have become so controversial. We are truly living in a new and quite dangerous world.
So what can a CEO do? He needs to throw out his textbooks, slip into his velvet smoking jacket, snip the end off his favourite cigar, take a sip of brandy – and start letting his synapses spark. He needs to start thinking creatively and randomly. Like a novelist, he needs to imagine plots and storylines. He can luxuriate in details – like in an imaginary world, he can conjure up a mad dictator, a Tom Clancy-type military clash in the Sea of Japan, or even temperature changes overwhelming low-lying Japan. In fact, he will still likely underestimate the bizarre and phantasmagoric events unfolding everywhere. But at least his thinking will begin to match the complexity and excitement of the real world – as opposed to being trapped in a comfortingly linear, predictable but, ultimately, utterly unrealistic mindset.