Managing Volatility

Reading current popular articles about executive decision-making, observers tend to end up in two distinct camps. One is that a leader has to be willing to say no to new projects or anything else that will be a distraction from the current planned trajectory of the business — i.e., Jim Collins’ “hedgehog concept.” The other encourages openness to change and a nimble ability to integrate new initiatives and ideas — i.e., Larry Page on taking the reins at Google.

Of course, an effective leader must be able to do both. So the question is not whether to respond to new ideas or integrate disruptive thinking; it is how to recognize the better choice for your organization.

Whether saying no or yes to a new idea, astute leaders are reflective about what is served by the decision. Is the choice a knee-jerk, default position based on personal preference or current focus of attention? Do I understand why I feel so strongly about one direction or the other? Or is this a case of simple inertia — the mass of an organization moving in one direction, or not, that is so potent that other ideas never get to take root?

In my Vistage Peer Advisory groups, we have speakers in eight of 12 months of the year. These are people with deep domain experience in just about any management, governance, business, leadership or executive presence topic you can imagine (and likely some you would not guess).

My members get a three-hour CEO level download with an expectation they will get actionable and important content. So one month it is cybersecurity; the next, CEO dashboards, performance management, asset protection, HR law, culture, talent management and so on. It is a lot to absorb.

While all of it is important, timely and solid counsel, members have to ask which topics they can and should pursue now and which ones can wait or be shelved. One of my members, a health care CEO, has what he calls the three-month rule: “Anything that is not already on our queue, I look at three months later to see if I still feel it is critical or if it can wait.”

Saying no to every new idea to stay exactly on the current course invites getting blindsided by changes in the marketplace. And the need to pursue every new idea that has merit can create a frenetic and scattered culture that often cannot see projects through.

So how does a leader find middle ground? What questions help plot the appropriate path and level of embrace for new ideas? Here are a few thoughts to get you started on your own list:

► How does this idea impact our current commitments to ourselves, our customers, our employees and our investors?

► What projects or ideas would we be willing to let go of or cancel in order to take this new one on?

► What opportunities do we sacrifice by saying no? Where would we be truly vulnerable?

► How will the organization be better for taking this project on? What new skills will we acquire?

► How likely are we to be able to deliver on this new idea or project? (Half of an idea is generally only an expense line.) This is a tough one since we are so often naive about our ability to bring in change projects. Remember, 75% of them still fail to even get over the line!

I have recently added a new and more subtle question to this process. In February, several of my members and I attended the annual Vistage Executive Summit meeting in Dallas. Among the provocative presentations to a room of more than 800 business leaders was an annual update of economic conditions from ITR Economics. Getting both analysis of the external environment as well as a forecast for economic conditions provided the capacity to add this question to those to be asked when starting a new initiative — or not:

► What is the impact on investment and value derived in the coming economic climate?

When all else fails, one strategy for properly vetting new ideas and opportunities is for a leader to foster a culture of open debate at leadership team meetings. Free and enthusiastic debate of ideas, especially the more provocative ones, generates what are often fierce arguments for both sides of a decision. Even if it is not a group call, but solely rests with the boss, at least the boss will have heard the full debate and hopefully be able to decide thoughtfully, based on the merits and the risks.

Originally published in Arkansas Business, Barry Goldberg On Leadership, April 22, 2019.