What’s the most common problem I found with how CEOs and executives think and how to avoid it.
It feels like The Matrix — déjà vu — at the beginning of every engagement, which starts with interviews. I cannot help but notice the similarities by which most executives and CEOs respond to my questions. In management studies, we call this kind of behavior “patterned activities;” you can make a living off of predicting the behavior of both individuals and the corporations made up of individuals. I am one to know. I have been fortunate enough in my professional life as a management consultant to be exposed to over 500 projects across 400+ different companies and organizations. As a co-founder of a general boutique strategy and consulting firm, I benefited early on in my career by not solely focusing on a particular industry. This level of broad exposure has granted me the experience to illustrate what I have learned from 12k CEOs.
While employed as a Generalist Strategy Consultant, whose focus was diverse in industry and scale, I met face-to-face with dozens of organizational leaders and executives, which is behavior that is atypical of all strategic engagement at the beginning of a project. Therefore, I made it into a habit to add the following question to every interview questionnaire and utilized it in every instance I met with a new executive or CEO:
“What’s the biggest challenge you face today that’s keeping you up at night?”
And the answers I receive every time I asked this question will surprise you.
I thought the answer to this question would be vastly different most of the time. But, it turns out that the answer was the same three out of four times.
And — in fact — what is even more stunning is that the root cause of these same challenges and issues can be avoided by adopting a simple strategy. We will get to this strategy shortly.
Responses Breakdown
Before I get to the core of this article’s findings, I would like to add that this is not a simple theoretical claim I am making; instead, it is a testable hypothesis confirmed in an experiment. In particular, we analyzed a large enough sample and diverse enough to ascertain this finding with a respectable confidence level. First, we analyzed answers from companies of all sizes: small, midsize, and large enterprises, including around 350 companies in each category; a total of approximately 12,500 responses were collected from 1,000 projects over a decade. Then, we grouped the responses according to problem area-root causes and determined three categories roughly as follows:
75% of issues/challenges had a common category of root causes.
15% of varied hidden causes that are not readily obvious.
10% of varied obvious external causes, such as lawsuits, black swan events, and other random events.
Impressively, the exact breakdown above applies to both the 12,500 responses and the 1,000+ projects.
Perceived vs. Actual Challenge
An idea of a perceived or stated challenge first comes to mind in our analysis. In most interviews, the answers are widely different and are the result of what tends to come to a person’s mind first, and these are usually symptoms. For example, people react to a question by identifying and stating their pain points first — like actual pain, which is what keeps you up at night. This response is expected to the question: “What’s your biggest challenge that you are currently facing?” For instance, when you pay a visit to your doctor, you tell the doctor your symptoms first. Similarly, to determine the real cause of the issue, you always have to dig deeper and ask for other signs of trouble that could be the root cause.
Interestingly, though, in the cases of the common root causes, the response to what CEOs and executives felt should be their top priority to address these challenges was wrong most of the time.
So, What Causes this Phenomenon?
The answer to this question is in the “nonlinearity of organizations,” which are made up of people. Humans still run all companies, and until one day, when robots are capable of running an organization autonomously, the human factor is here to stay.
The idea that someone can identify the real root cause of a problem without doing some deep digging and potentially being led on a wild goose chase is misguided. Most people can tell what is going on in an organization, but that understanding only goes two or three levels deep. Beyond that, it is impossible to know the truth due to the complexity and increased potentiality of possible root causes. This is almost like a chess game when trying to guess why your opponent decided to make her last move by tracing the root cause of the past moves.
However, our research has been able to group two-thirds of the root causes into a single category that I refer to as synergies.
What Are Synergies?
To grasp the concept of synergies, we need to understand the term. The word synergia has its roots in the Greek language, meaning “working together.”
We define synergy here as the relationship between at least two parts or elements in a system. The interaction resulting from this relationship generates either more or less than the raw sum of its parts. There are positive and negative synergies:
- Negative synergies happen if the interaction between elements — in our case, employees in an organization — is less than the sum of its parts. I will refer to negative synergies as “Interference.”
- Positive synergies arise from what is referred to as positive feedback loops between elements and when such interactions lead to more than the sum of their parts.
Examples of positive synergies in nature include how bees interact with flowers to pollinate them and produce honey or how members of a diverse team interact to create or introduce new winning products to the market.
Think of synergies like clockwork and interference like cancer cells. Cancer cells start small and are super hard to detect at first. But once they spread, they become more challenging to treat. So, the trick is to identify cancer cells early and root them out before they spread. Cancer cells’ interactions are events that cause interference due to negative synergies and the destructive nature of human cells. Now, compare early vs. late detection or diagnosis of cancer in humans. Most of the early detected cancers are curable and simple to treat. But the problem is that you need to detect cancer early and not later when symptoms start to appear because, by that time, it is often too late. This is very similar to organizations. In most organizations, the challenges and issues — or our priorities that we face and tackle on a daily basis — are rarely at the root cause level and are almost always down the chain from the main event that causes them. These causes are usually detected later in the process. Similar to cancer in humans, late detection is a likely occurrence. That is because — without the right tools — interferences at the root cause level are difficult to detect and diagnose at an early stage, albeit this is improving with advancement in cancer research.
Examples of Synergies and Interference
In business — similarly to the internal and external causes of cancer — interference can be directed by either internal or external factors. For example, internally, simple incongruence in the organization can lead to interference. Let us compare this to an example of a startup that reaches an inflection point and is on the brink of doubling its workforce in a very short period of time. Such a change can cause major interference in areas across the entire organization. Unfortunately, many companies fail because they do not succeed in pivoting and crossing that inflection point successfully.
On the other hand, external interference causes can come from threats or disruptions in the market or the industry (such as what e-commerce did to brick-and-mortar retail or what the web did to local newspapers). This is becoming a very common and increasingly frequent occurrence that threatens large-established incumbents across industries. In addition, threats can come from new technologies, new business model startups, or even world events (e.g., future of work, chip shortages, supply chain disruptions, wars, natural disasters, etc.).
But in all cases, whatever the interference, it can be minimized by taking internal measures to address it.
What Should You Do?
By putting the right tools in place, more than 80% of interferences are simple to identify at an “early stage” (i.e., before they spread) and thus can be prevented from metastasizing throughout the organization like cancer. And — when identified and treated early — you can have the highest impact and leverage in terms of maintaining and/or maximizing synergies throughout the organization because, in fact, you would be minimizing interference that works against synergies.
Conclusion
Imagine you had the tools in place that are designed to identify and detect interferences in your organizations at all times, and you were alerted every time this identification occurred. How would this impact your business (i.e., provided that these checks are contextual and targeted enough to be helpful and produced no less than quarterly)? Can you achieve such a regular reporting function in an organization?
There are simple and complex tools to detect interference. They range from big data analytics to business intelligence. These are costly, and given the amount of data we generate these days, most of the data is garbage — so, garbage in, garbage out.
However, there are also simple solutions that can work just as effectively. For example, we have developed a simple, customizable tool that measures congruence, market fit, company culture, and additional factors that can detect the most interference in organizations by running an 18-point questionnaire every quarter. The cost of doing a simple survey is minimal compared to the more complex solutions in the market today that claim to be based on complex data. While the accuracy may not be 100%, it does provide clear directions to get you to 100%. You do not need complicated solutions to complex systems, but — in this case — simple heuristics can be far more effective and more accurate than complicated ones.
If you enjoyed this article and are interested in learning more about integrating innovative solutions into your organization, check out this article:
How to Apply Systems Thinking in Running and Managing a Business.
References
Cancer Research UK. (2015, April 2). Why is early diagnosis important? Cancer Research UK; CRUK. https://www.cancerresearchuk.org/about-cancer/cancer-symptoms/why-is-early-diagnosis-important
Definition of SYNERGY. (2019). Merriam Webster. https://www.merriam-webster.com/dictionary/synergy
Innovation, S. (2016, September 13). Synergy Types. Systems Innovation. https://www.systemsinnovation.io/post/synergy-types