May 22, 2006

Excerpts: Head, Heart And Guts -- By David L. Dotlich, Peter C. Cairo, Stephen Rhinesmith

By: Dylan Schleicher @ 9:59 PM – Filed under: Management & Workplace Culture

Have you ever struggled to make a decision for which there is no right solution? Have you had to act quickly with little or no data? These scenarios are more and more common in a complex and ambiguous world. Head, Heart & Guts presents a new leadership paradigm focused on developing well-rounded or whole leaders equipped to address todays business challenges. The excerpt below explores individual and collective intuition as an element of guts leadership. -------- Individual and Collective Intuition We recognize that some people consider intuition to be largely irrelevant, as more companies increasingly adopt Six Sigma and fact-based decision methodologies, but perhaps we can remove the negative connotations of the word intuition through a few examples. First, we want you to understand that flying without instruments, that is, without any data or understanding of people issues, is guaranteed to result in a crash. In other words, relying only on guts and ignoring head and heart is perilous. President George W. Bush sometimes seems to fit this model. He is a highly intuitive leader who has used that intuition to achieve success. In some situations, however, he is so reliant on his instinct and so oblivious to facts or how issues affect people that he makes significant blunders. His critics suggest that the war in Iraq is one of those blunders. No doubt, President Bush is convinced that he is doing the right thing, and few would doubt that he has the courage of his convictions. At the same time, he might be a more effective president if he were to counterbalance his instinct with some strong analysis and some empathy. Therefore, were not recommending that leaders rely more on instinct than on data. Instead, were suggesting that instinct can be used situationally and with whatever facts exist to arrive at more effective decisions. Consider the way Johnson & Johnson uses what they refer to as collective intuition. Rather than analyze the data and make a unilateral decision, they encourage many voices to participate in the discussion. Because so many voices make themselves heard, the discussion can become a bit chaotic, but as Bill Weldon, chairman and CEO of Johnson & Johnson, has said, sometimes a leader must be able to endure chaos and appreciate it in order to discover the right thing to do. Collective intuition has helped Johnson & Johnson break away from the conventional wisdom about the pharmaceutical industry. In the past the company was criticized by some analysts for not divesting its lower-margin consumer and device businesses and focusing purely on the higher-margin pharmaceutical business. Rather than follow this conventional view, the leaders of Johnson & Johnson engaged in broad dialogue with a number of leaders across a very decentralized organization, coming to the conclusion that a broad portfolio offered the greatest opportunity for both growth and insurance against market shifts. Today, with the outlook for drug prices uncertain and pharmaceutical company stocks trading significantly lower than five years ago, that view has been vindicated, with Johnson & Johnson having higher value due to a broad portfolio of businesses, especially medical devices. Collective intuition emerges after sustained debate and discussion. When people feel free to share their points of view, to disagree with conventional wisdom, to listen to other ideas and reconceptualize their own, a shared idea or approach eventually emerges. It isnt as clean as a decision that flows directly from an analysis of facts, but the latter type of decision is increasingly rare. When facts are flowing at such a rapid rate and in such confusing ways, slow, careful analysis doesnt always work. Collective intuition is a synthesis of evolving opinions over time. It is a process that unfolds in a sometimes haphazard manner, and it is impossible to know when or how the collective intuition will emerge. What Johnson & Johnson and other companies have found, however, is that over time, through dialogue guided by values, a group of people will gain a sense of the right thing to do. As ideas emerge and are debated and discarded, one particular path or position will draw everyone toward it. Based on leaders values and visions, they will be drawn toward a specific decision that fits with their beliefs. We should caution you that waiting for collective intuition takes patience. For impatient leaders, this concept is especially challenging. People who have spent years making decisions based on logical analysis and data collection may view collective intuition skeptically. If they sit in on meetings that take place in companies such as Johnson & Johnson, they may hear all the discordant voices initially, wonder if alignment is ever possible, and long for a dictatorial leader. They arent willing to wait for the voices to blend and speak as one. They dont understand how they can make decisions and take risks without more hard facts. To these skeptics, we counsel patience. We would also suggest that other methods can be used, along with collective intuition, to make the risks acceptable. For instance, Meg Wheatley wrote a book called Leadership and the New Science in which she talked about chaos theory and fractal patterns. Essentially, her thesis was that you need to move to higher ground so that you can look down and see patterns that you would not ordinarily see when youre in the chaotic middle of things. This concept of changing perspective can help you see a trend or market movement that is not rooted in data. Seeing an old problem from a new angle stimulates fresh thinking. Sometimes, leaders travel to another country and view their industry through the eyes of foreigners. In this way, they gain a fresh perspective on their industrys problems and may see new opportunities or fresh problem-solving approaches that were previously invisible. They dont have the facts to support risk-taking moves in pursuit of these new opportunities, but their altered perspective convinces them to trust their intuition and capitalize on the emerging trend theyve observed. Many times, skeptics dont realize that they have relied on intuition to make risky decisions in the past because they havent labeled it as intuition. For instance, many leaders who have been involved in succession planning refer to the process of reviewing the job specs, the results of candidate interviews, the recommendations of committees, and the ranking of candidates in terms of how well each meets the specs. Ultimately, they choose someone for the job, even though all the procedures and information suggest he is not the best-qualified candidate. They select him, though, because their gut tells them that this person is ready and able to handle it, even though the data may suggest otherwise. More often than not, their gut is right. Another way of looking at this issue is to see whether leaders are willing to take risks on innovation. When people come up with an original, daring idea in response to a situation, this idea usually is rooted in the imagination rather than in the data. Leaders must decide whether to take a risk on a cutting-edge concept that cant be vetted through data analysis. This can be intimidating, and if a leader doesnt appreciate creativity or people who look at things differently, he wont take the risk. More than ever before, however, organizations need leaders with this capacity. Although they dont need leaders who take foolish risks on off-the-wall schemes, they require top management to know when to take risks and have the guts to back risky-but-breakthrough approaches. What companies need are leaders like Chris Albrecht, the CEO of HBO, who, following both his own instinct and the collective intuition of his colleagues, launched breakthrough original programming with shows like The Sopranosshows that violated many of the rules for television programming and entailed huge risks for the relatively young network. There was absolutely no way that data alone could have told him this risk was justified. Yet there was a collective feeling within the HBO brain trust that this was a risk worth taking. Sidney Harman, founder and executive chairman of Harman Industries, took a huge risk on innovation. Harman Industries, manufacturers of high-end stereo and audio equipment, made an extremely tough decision in 1996. For years, they had relied on analog systems, but they were aware of the potential for digital systems and wanted to capitalize on that potential. The enormous switching costs, however, seemed prohibitive. During a meeting with top executives, though, Harman floated the idea of committing all the companys resources to digital. There ensued a meeting that went on for hours, in which executives expressed anxiety and disappointment but also highly creative and cutting-edge concepts. In a Harvard Business Review article, Harman expresses what took place: [there was] concern that we would be betting the company if we went digital. I realized that to provoke the creative thinking we needed, I would have to let my guard down and be willing to embarrass myself by floating unformedand even uninformed ideas. What occurred during this meeting was exactly the type of collective intuition we described earlier. They decided to throw their resources into the digital arena, not because the data definitively pointed them in that direction but because the instinctive consensus of the group was to take this risk. This decision has helped Harmans company grow by leaps and bounds and reach almost $3 billion in sales last year. In the marketing arena, were seeing a shift toward instinctive risk taking. Increasingly, commercials are airing that have little basis in research. Consider Nikes commercials, which are often aired without extensive focus-group testing or market research. Many of them operate at a level below consciousness. They seem not to be delivering a product message but rather are abstract and mood-focused. Yet they work, branding Nike as hip and in tune with the mind-set of young athletes. Its no coincidence that Nike makes a concerted effort to develop head, heart, and guts leaders. They tend to promote individuals who possess a good mix of all these qualities, and they make an effort to loosen up fact-based leaders by having them interact with designers and other creative types. They seek leaders who can grasp the soul of the Nike brand and combine it with the analytical, fact-based decision making of business experts. Of course, there are many ways to develop the instinct and intuition that allows leaders to take necessary risks. -------- Excerpted with permission of the publisher John Wiley & Sons, Inc. from Head, Heart and Guts. Copyright (c) year by 2006.

About Dylan Schleicher

Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.