As Published in Business 2 Business, August 2008

Vigilant Leadership

A leadership skill in short supply

By Ira S Wolfe

“I’ve fallen and can’t get up” takes on a whole new meaning these days when it comes to business leadership.

For example, General Motors hit a 54 year low in its stock price in early July.  Just a few days later, IndyMac Bank became the largest bank failure in U.S. history.  And who can forget Bear Stearns being “rescued” by JP Morgan Chase for less than 1/15th of its value earlier this year?

Could more vigilance from these companies’ leaders have averted their organizations’ demises?  Could the worsening credit crisis been avoided if we had more vigilant leaders?  Could GM and Ford still be the automotive leaders in the world had they seen what Toyota saw?  Could the attacks of September 11 been avoided had leadership ignored what was being heard on the periphery? 

To be fair, hindsight is always 20/20 in analyzing the aftermath.  But why is it that some leader’s foresight is as good a failed leader’s hindsight.  Why are some leaders so much better at averting impending catastrophes on a routine basis while others seem to find crisis after crisis like a heat-seeking missile finds its targets?  

Profound new research seems to indicate the answer might lie in a leadership skill called vigilance: a skill oft-overlooked and a skill that is apparently in short supply given current events.

Vigilance ironically is a leadership skill valued most in its absence. When the going is good, leaders are praised for their brilliant operational excellence. But when the winds of fate shift, the lack of vigilance can be a career killer.

The words that no board or investor or business owner ever wants to hear are “we missed the boat.” In a 2005 study examining why CEOs were fired, 23 percent were terminated for “denying reality.” (Other reasons included 31% were seen as having mismanaged change. 28% ignored customers, and 27% tolerated low performers.)

Vigilance, described in a Spring 2008 MIT Sloan Management Review article, is a “heightened state of awareness, characterized by curiosity, alertness, and a willingness to act on inaccurate information.” In other words, vigilant leaders are highly competent in observation, listening, dealing with ambiguity, and dealing with paradox.  They have an innate sense of curiosity and imagination. What differentiates vigilant leaders is they can spot opportunities and threats before their rivals.  They can sense and act on early warning signs of trouble earlier and spot the faintest glimpse of opportunity before anyone else.  

In a world of increasing complexity and rapid change with new developments coming out of left field daily, vigilance is no longer a just nice-to-have skill. It’s a must-have. As Jack Welch, former CEO of General Electric, says, “leaders need to ask: what is around the corner?”   And yet it seems that very few leaders are even slightly curious what is lurking outside of plain view.

One reason for this lack of vigilance among leaders is the strong focus on operational execution.  Managers typically are promoted to leadership positions based on their ability to deliver results.  But as operationally focused leaders, they are often blindsided by rapid change.  In the same study about the competence of CEOs, only 23 percent were identified as curious and vigilant by their boards and managers. Like many people, they prefer the world of what they know more than exploring the uncomfortable world of what they can’t see. Unfortunately business leaders in today’s world who lack curiosity and the ability to make good decisions without every tid-bit of information is a catastrophe waiting to happen.

So what distinguishes the vigilant leaders from those striving for operational excellence.  A vigilant leader has these four primary leadership traits:

• Focuses externally and stays open to diverse perspectives.
• Probes deeply for second-order effects.
• Encourages others to explore widely by creating a culture of discovery.
• Longer time horizons

In contrast, operationally focused leaders concentrate on the task at hand, engage in traditional strategic planning and budgeting, and a tunnel-like focus on execution. Operational leaders run like thoroughbreds, wearing blinders to keep them focuses on the track and the finish line.

Vigilant leaders take an outside-in approach to strategic planning. Instead of starting with growth targets and other financial performance measurements, they start with what-ifs and what’s going on with the competition. Vigilant leaders have a habit of asking these questions -- 'What happened last month that is unusual, what surprised you?”  Vigilant leaders don’t wait for the once a year retreat to ask these questions but make them part of their weekly and monthly management meetings. 

Vigilant leaders also slay organizational silos, a killer of all things called change. If communication gaps exist between departments or between management and employees, “noise” detected on the periphery of the business will be deemed irrelevant. Even worse, the information may just die a quiet death as it falls into the cavernous black hole that live and thrive in organizations.  Analogous to the black holes in astrophysics, a lot of information often goes into these black hole departments and managers’ heads – but not much comes out.

Vigilant leaders seek out diversity and different perspectives; operational leaders discard outliers. Vigilant leaders embrace uncertainty; operational leaders avoid it or attempt to control it.   Vigilant leaders invite new ideas; operational leaders defend their positions. Vigilant leaders encourage questioning; operational leaders expect answers.  Vigilant leaders look to other industries to see what’s changing; they invite industry outsiders as consultants or to join their management team.  Operational leaders look inward; they don't typically bring in, or accept, outsiders.

How can an organization foster vigilance? 

First organizationally, leaders must recognize and reward employees for keeping their eyes and ears open also.  All too often employees are touted for following orders and keeping their mouths shut.  Instead of listening and then telling, the employees respond after the fact with “I saw it coming but no one asked.”  A culture must exist where any employee is comfortable speaking up and where failing is not a crime.

Second, hire vigilance…or promote managers who have it (although admittedly these managers are often identified as the “mavericks” and therefore passed over.)  But regardless of whether you are hiring externally or building a succession plan internally, a portion of the interview should be spent exploring how this candidate keeps up with market trends and competitive changes and how well he anticipates the unexpected without taking his eye off the ball. 

Vigilant leaders are those individuals who make a practice of being abundantly alert and deeply curious. They don’t ignore the guerrilla lurking the room that no one seems to notice. They anticipate its arrival.  They expect that every employee pays close attention to what’s happening and trust what he or she sees.   They also expect the managers to be receptive to hearing divergent input and taking it seriously. 

How vigilant are your leaders?  Are they peering around the corners asking “what if” or are they just going about their business asking “what just happened?”

For more information about workforce trends and hiring the right people, contact Ira S Wolfe at 717.291.4640 or iwolfe@super-solutions.com