01 June 2013

Responding to Surprise

Milo Jones and Philippe Silberzahn
Guest Contributors
Despite tremendous developments in business strategy over the last fifty years, businesses and governments keep being disrupted by events that they might have seen coming, but didn’t. In other words, they get surprised… and not in a happy, surprise party kind of way. Think of 9/11, the Arab spring, Fukushima, or the launch of the iPhone for Nokia.
Such events often have consequences far beyond their immediate environment that make many firms suffer, and require a response that isn’t in anyone’s existing playbook.  The late Steve Jobs – no slouch when dealing with disruption in the marketplace – once replied that his strategy was to “wait for the next big thing.”
Should you be doing the same?
When confronted by a surprise – however freakish it may be – there is a tendency to rush to action. It’s natural to ask: “What should we do?!”
US President Jimmy Carter, for example, was recalled from vacation in the summer of 1979 by the urgent and disturbing news that an elite Soviet commando unit had been spotted in Cuba. What were the Soviets up to? Did this mean a new Cuban Missile-style crisis?
US armed forces were put on alert, and Defense Department experts assembled in a War room… until someone reminded the participants that the Soviet commando brigade had pretty much always been there. Indeed, their presence in Cuba had been agreed to by JFK in 1962. In short, a problem did not exist, and the rush to “do something” by someone learning a fact for the first time manufactured a crisis out of thin air.
A puzzled Russian ambassador asked his US counterpart: “How am I supposed to explain this to my government?”
Nobody wants to be like the (still-unnamed) guy in the White House who acts before thinking, but how specifically should you act in the face of a surprising fact or shocking event? We suggest three simple questions to be your guide.
#1 What’s going on?
There will always be voices saying “Act, do something, respond”, but nine out of ten times, it pays to explicitly ask the question What’s going on?” and even perform some rapid analysis before doing anything else. In other words, when surprises happen, take a moment to untangle what you actually know from what people are assuming and from what is still unknown.
Better still, poll a few other executives for their take on what is going on. Are their assumptions the same as yours? Do they agree on what is still unknown? Do they know someone who could help fill in the gaps?
If there really is a crisis, and you’re not facing a Carter-like moment, getting such basic agreed facts written up on a whiteboard in a ’war room’ is the beginning of effective crisis management. If the surprise involves a natural disaster or other crisis covered by TV, we recommend that you keep the TV on, but turn the sound off: news channels will have whoever is to hand (or good-looking and was free to get on a plane) blathering on about this or that rumor, or doing endless recaps of the obvious (preferably with an emotional, ”human-interest” spin).
If you’re after information about what’s really going on however, just watch the scene and make logical deductions when the cameras pan out. Is smoke rising from the ruins? Can you see panicked crowds, or do the police look like they’re maintaining control? In other words, interrogate the images to help figure out the first key question “What’s going on?”
#2 What does it mean?
Once you have some clarity about what you know (and what you don’t know), you can ask the next question: “What does it mean?” Specifically, you can ask “What does it mean for us?” In other words, as the outlines of a surprising event come into focus, you can begin to think through the implications of the event for your firm.
Typically, people employ two mental tools to answer this question.  Whether they know it or not, the first tool that people instinctively use is an event cascade. An event cascade is simply a chain of cause and effect, or “If this, then that” reasoning. If there has been a volcanic eruption in Iceland, then the ash may disrupt air travel; if air travel is disrupted, airline profits will suffer, logistics chains may break or slow down, etc.
Typically – and again, whether they know it or not – the second tool people use to understand the meaning of a new situation is analogies. Say your industry is crippled by a disruption caused by the Internet. People will often mention a similar industry having undergone a comparable disruption, and then point out the similarities and draw lessons.
Here, we recommend that you be careful – analogies can be seductive. You should ask not only what is similar about your situation, but also what is different. Looking for similarities and differences across several analogous situations should tell you a lot about what the present situation means for you.
#3 What should we do?
Then, and only then, should you ask our third key question following a surprise: “What should we do?” Here, we recommend a couple of techniques to make better decisions. First, like a good chess player, “Think several moves ahead”. Draw on event cascades again and think move/counter move.
Second, look at your firm from the outside, and with perspective. Keep in mind President Kennedy’s benchmark during the Cuba missile crisis of 1962: “How will the world judge our decisions when it’s over?” Finally, if you are struggling to reach a consensus about what to do (and no one has the authority or will to impose a decision), try agreeing on the mirror image of this question “What should we not do?”
Active discussion about what not to do frequently airs new opinions and prompts further thought about what you should do.
Iteration and patience
Finally, in thinking about what to do, remember that you always have the option to wait, the option to do nothing. There are situations where, simply put, it is better to do nothing, either because action would be counter-productive, or simply because there isn’t much to do anyway. In that case, you keep working on the first two questions; “What is going on?” and
“What does it mean?”
If that sounds like a cop out to you we refer back to the late Steve Jobs, who when asked by Professor Richard Rumelt about his strategy in 1998, simply replied: “I’ll wait for the next big thing”. When Jobs then saw it, Apple pounced and came up with the iPod.
But in the meantime, in the face of a lot of disruptive change and surprises in the IT industry, Jobs was thinking “What’s going on?” and “What does it mean for us?” It’s no easy task, but when faced with a surprise, real courage is sometimes best displayed not by answering the question most people are asking, “What should we do?”, but by working harder to figure out the other two questions. 
Reposted with permission.

The article is also on Forbes.com.

© Bredholt & Co.