Seeing around corners

Seeing Around Corners is the most recent book from the management academic Rita McGrath. It is an interesting book, if an odd one. One of the world’s leading management thinkers steps into futures territory, and mixes it up with some greatest hits from her previous work. The arenas concept from The End of Competitive Advantage gets a run out here, and some of the thinking in Discovery-Driven Growth (co-written with Ian McMillan) gets referenced as well.

Why is it odd? Well, although she clearly has access to researchers, the only futures work referenced here is the sort of stuff you’d more or less pick up by accident while reading American management consulting newsletters. At one level, a futurist should be grateful that she’s stumbling into the futures field, since it makes it easier for the rest of us to persuade managers of its merits. But you wonder if she couldn’t have done it better.

In this post, I’m going to have a walk through the book in what is intended as a spirit of constructive engagement.

Inflection points

Seeing around corners. It’s a story about how trends emerge and create inflection points, how you notice them, how you should respond if you are a business. Given that we’re in the middle of a big surprise right now, her timing is good. (The book was published at the end of 2019).

So the first observation is that because she hasn’t really gone into the literature here properly, there are some bits here that don’t feel right. Relying on the essentially lightweight piece of marketing that is the Gartner ‘hype’ cycle for a discussion of the ‘four stages of an inflection point’ seems to lack robustness, when there is a sea of STS literature—notably around the social construction of technology—that already addresses this in much more depth (p.8-9) The stages of inflection points really aren’t ‘hype, dismissive, emergent, maturity’, and even if you make a case for these four, they don’t go in this order.

Closer to the edge

The chapter on ‘Snow melts from the edges’ is probably most useful for futurists. It’s a contraction of a quote from Intel’s Andy Grove, who said, “When spring comes, snow melts first from the periphery, because that is where it is most exposed.” (p.14). Her case study here is about a completely different kind of inflection point; the surge in privacy concerns about Facebook and the other software giants (but mostly Facebook). This is late S-curve inflection point, not an early one.

She then introduces eight practices that help managment get closer to the edges (p.27) These include: making connections between the “corner office” and the street corners”; leverage diversity of thought; getting the balaance between big, irrevesible ‘Type 1’ decisions and smaller reversible ‘Type 2’ — drawing on Jeff Bezos; make small bets; get out of the building (which sounds like the corner office/street corner piece); create incentives that reveal awkward information; avoid denial; and “talk to the future that’s unfolding now” (shades of William Gibson, inevitably quoted here.)

There’s a wider point here that gets overlooked. There is research that suggests that different types of innovation and strategy also come from the edges, not the centre. This makes sense, since those in the head office are already acculturated to the way the organisation thinks. This isn’t just about information.

Leading indicators

The following chapter is about Early Warnings, and has a useful schematic on what you need to do to look ahead, not backwards. Here she notes Microsoft’s persistent failure to see inflection points, something finally addressed by the current CEO Satya Nadella, who gets some love later in the book.

The trick is not to focus on “lagging indicators’, such as profits, revenues, returns on investment, or EBITDA, which all represent consequences of earlier decisions. Or even on ‘current indicators’, such as production costs or free cash flow. ‘Leading indicators’, in contrast “represent things that are facts not yet in your business” (p.46). Leading indicators include, for example, employee engagement, management effectiveness, and ‘customer love.’ This last is one of Nadella’s preferred indicators.

Degrees of freedom

The same chapter has a useful chart that adds a layer to an S-curve. (Not that she mentions S-curves anywhere, as far as I can tell, either from reading the book or from the index.) The S-curve represents ‘increasing strength of signal over time’. There’s an inverse curve, characterised in the book as ‘degrees of freedom over time’. For clarity I’ve relabelled this below as degrees of ‘strategic choice’. And there’s a moment, where they cross, when you have to jump. The point is that to make the most of an inflection point, we have to act when signal strength is weak, whereas strategists like to make decisions based on “specific and clear information.”

By then the market will have locked in to a new model, and the opportunity has gone (p.50). She recommends short run scenarios, and indicators of change ahead of the inflection points, to help make the decision.

“Generally, we ask the question, What would have to be true at six months, twelve months or eighteen months before this scenario could occur?” (p.54)

There’s probably also a fast follower strategy here, but it doesn’t get discussed.

Long time coming

There are also risks, which get mentioned in a case study on higher education. Pending inflection points can take a long time to arrive; observers anticipate change but under-estimate the complexity of building the overall eco-system; and moving too early is as much of a problem as going too late.

The case studies that follow in the subsequent chapters are kind of familiar. Dollar Shave Club? Check. Netflix vs Blockbuster? Check. Uber/Lyft? Check. Some of the analytical tools and questions here are useful.

Learning quickly

Since the purpose of looking at the future is to disturb the present, the book picks up again when she turns to how businesses need to plan to learn quickly.

“The techniques here are not about making predictions and being right. They are about generating possibilities and opening your mind to what might happen, so that as evidence gets stronger, you are ready to take action.” (p.101)

The tension for the decision maker is that they need to make a decision while uncertainty is still high and there are still a lot of assumptions in play. McGrath’s skill here, in terms of managing her audience, is to be reassuring about process. This is different from the normal risk-averse corporate decision processes. So her model is about “little bets” leading to “checkpoints,” at which you assess whether you’re still (in essence) getting a return on learning that is higher than it opportunity cost. The obverse of this is that you need to learn to “fail cheaply.” (p.104)

And it seems that successful entrepreneurs exhibit these behaviours. They typically have methods that let them “gather lots of information, detect patterns, test assumptions, and bring together resources.” (p.116) They fall in love with a problem, not a solution, and pivot as things don’t work.

Swarming antibodies

Of course, organisations are dynamically conservative, as Donald Schon observed in the 1970s. McGrath doesn’t reference Schon, but she does describe the kinds of internal responses that organisations bring to bear to damp down change. She describes the reinvention of the German metals service business Kloeckner, which is a novel case study. As she puts it, “Even though reinvention was the only positive path forward… the organisational antibodies swarmed.”

She builds on this with an eight stage maturity model, which looks like the sort of thing that will help readers think about the scale of cultural change they need.

Dancing around

I think Seeing Around Corners is a less coherent book that either of her last two books, The End of Competitive Advantage and Discovery-Driven Growth. This may be because she’s dancing around material where there’s already quite a lot of theory and practice that she appears to be, at best, only lightly aware of.

Or it maybe because she’s moved to a more mainstream publisher that has different ambitions for a book like this and is trying to reach a wider audience. Certainly, the final chapter on ‘seeing around corners in your own life,’ which sticks out a mile, looks like it might have been a publisher’s brainchild.

Some takeaways

All of that said, this is a straightforward read. You will learn things from the case studies, and there are some useful frameworks and sets of questions.

And if there are three ideas to take away from the book, they are these:

• The role of the leader in this is to help people manage uncertainty by keeping a clear sight of the ‘why’ of vision and purpose.Change comes from the edge—emerging issues matter, as a futurist would say;
• Taking advantage of change means living with uncertainty and being willing to make decisions on the basis of more assumption-driven analysis than corporations are usually comfortable with;
• The role of the leader in this is to help people manage uncertainty by keeping a clear sight of the ‘why’ of vision and purpose.

If you want to watch Rita McGrath’s video summary of the story she tells in the book, it’s here.