Measuring leadership potential
This fourth article on the Leadership Mindset is about resilience: 'The ability to respond effectively to unforeseen problems'.
In this series of articles, I am building a composite picture of the optimal leadership mindset. In the first three articles I described three essential elements:
- Having an uplifting vision of the future
- Producing a practical strategy to bring that vision closer to reality
- Engaging talented people in that strategy.
I constructed benchmarks for each of these, as well as a composite benchmark for all three. Benchmarks make it possible to calculate the general leadership potential of a given mindset, as well as the relative strengths of the four main aspects (vision, strategy, engagement and resilience). This can help leaders develop using MindSonar.
Clinton
Let’s look one more time at the Clinton definition. “Leadership”, Clinton says, “means bringing people together in pursuit of a common cause, developing a plan to achieve it and staying with it until the goal is achieved. Leadership also requires the ability to respond to unforeseen problems and opportunities when they arise.”
Resilience, flexibility and tenacity
Embracing the less-is-more principe - in the beginning I decided to focus on four main pillars: vision, strategy, engagement and resilience. That selection meant that there were three elements in the Clinton definition that I put aside for the time being:
- Tenacity
Staying with it until the goal is achieved. - Flexibility
Being able to deal with and appreciate a wide variety of perspectives. - Creativity
Making use of unforeseen opportunities.
Now that we are looking at resilience, however, we need to include tenacity, flexibility and creativity. Why? Resilience is fundamentally different, in the sense that it presupposes a special type of context. Envisioning, strategic thinking and engaging are useful in any situation. Even when the sailing is smooth, you still need and idea of where you want to go and to plan when to call at which port. But resilience presupposes crisis. When a gail is blowing, you might need a new strategy.
Psychologists define resilience as adapting well in the face of adversity, trauma, tragedy, threats, or significant sources of stress. It involves ‘bouncing back’ from these difficult circumstances (APA, 2012). In this crisis, being resilient, you maintain your commitment to a certain direction. That’s tenacity. Even though - as we will see further on - the level at which you define this direction may change, as well as the practical goals that arise from it.
Plus you are finding new ways to achieve these goals. Which requires letting go of outdated strategies. That is flexibility. Which is by no means automatic. Research shows that prior knowledge can interfere with the ability to appreciate what is happening when the situation changes. Wood and Lynch investigated whether consumers with greater pre-existing knowledge about products were less apt to pay attention to and learn about a new product. People primed to be knowledgeable about a product did substantially worse at learning about a new product. Many leaders pride themselves on their expertise. Which is precisely what may hamper their ability to be resilient.
Fortune 500 companies: 88% disappeared
’When you always do what you always did, you’ll always get what you always got'. That’s the saying. But that’s not true when the system changes. Under different circumstances, you will be doing what you always did, but you will not be getting your usual results. Mark J. Perry, professor of economics, has noted that only 12.2% of the Fortune 500 companies of 1955 were still on the list 60 years later in 2015. Mostly they were doing what they always did and they had become unrecognisable, forgotten companies (who has heard of Armstrong Rubber, Pacific Vegetable Oil or Riegel Textile?). And this turnover of companies is picking up speed. Corporations in the S&P 500 Index in 1958 stayed in the index for an average of 61 years. By 1980, the average tenure had fallen to about 25 years, and in 2012 it was just 18 years. An outdated strategy will exhaust your resources ever faster. That is why resilience is such an essential ingredient of the leadership mix.
Disappearing political parties
Not only companies disappear. Political parties do too. During the first two decades after the collapse of communism, 37 political parties won seats in the Czech, Slovak or Hungarian Parliaments. By 2012, 22 of these parties had failed (Bakke and Sitter). Political parties want to survive as organisations. Why did they fail? Most of them suffered from a spell as a junior partner in government. And all new parties are vulnerable to splits.
Kodak invents the digital camera
Companies and parties diminish when they stick to outdated strategies. Kodak is a good example. They actually invented a working digital camera as early as 1975. But then decided not to launch it. And not from ignorance either. The team that developed this camera understood full well that they had a game changing innovation. They invested millions of dollars to get their digital camera ready for mass production. A few years later, they were ready to offer it to the general public. However, higher leadership at Kodak decided against it. They did not want to hurt their physical film roll sales, an important source or revenue at the time. They did not want to endanger short term revenues, disappointing the shareholders.
Nokia focusses on voice
If you are from Europe, your first mobile phone was most probably a Nokia. A Finnish company, they were the first ever to operate a cellular network. There were theories on how the unique Finnish culture had produced such an outrageously successful company. For many people the word ‘Nokia’ was synonymous with ‘mobile phone’. With the emergence of the Internet, however, data became more important than voice only. And data meant mobile operating systems, apps and visual information. Nokia didn’t understand that. They kept developing better hardware to give their customers ever clearer and more stable voice communication. They believed that was what their customers expected. When finally they did decide to develop a smart phone, it was too late. They couldn’t get their phones competitive enough in time.
The TOTE model
I think the old TOTE-model from cybernetics (Test > Operate > Test > Exit) is relevant here. It shows the basic elements of goal directed behaviour.
- Test
The first requirement is knowing where you want to go. In leadership, that’s your vision. This is Clinton’s ‘pursuit of a common cause’. Then you need to know where you are. How far away are you from the goal? That’s the test.
- Operate
Then you operate. You do things to get closer to the goal. How you organise your actions is your strategy. Here we have Clinton’s ‘developing a plan to achieve the goal‘. - Test
You keep testing: Am I getting closer? As long as you are, you basically keep repeating that same operation. You maintain the strategy. You keep producing physical rolls of film. You keep producing better audio for phones. - Exit
But when you don’t get closer, that’s where resilience (tenacity with flexibility and creativity) comes in. You need to let go of your strategy and start doing something else. Something new. You exit from the present strategy. You start selling digital camera’s. You start developing smart phones.
Dramatically effective strategic change
We just looked at two examples (Kodak and Nokia) of non-resilience: not responding well to unforeseen changes. But there are plenty of positive examples as well. Harvard Business review describes how in 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, had a crisis when the price of natural gas went down by 90%. They hired a former LEGO executive, Henrik Poulsen, as their new CEO. Poulsen saw the moment as an opportunity for fundamental change. “We saw the need to build an entirely new company,” he said. He renamed the firm from ‘Danish Oil’ to ‘Ørsted’, after the Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation; we needed to build a new core business and find new areas of sustainable growth. We looked at the need to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”
Under Poulsen, Ørsted managed to cut the cost of wind energy by more than 60%. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company.
Similar stories can be told about Netflix (moving from just distributing content digitally to becoming a leading producer of original content that wins Emmys and Oscars), Philips (moving from producing household appliances and TV’s to medical equipment) or Ecolab (moving from selling industrial cleansers to supplying hardware, software, and chemistry for a more efficient use of water). They all moved beyond short term profits towards a strategy inspired by a greater mission, Which in turn was linked to goals not just for the company, but for society - or even the planet - as a whole.
Mindset
Leadership behaviors and strategies results from a leadership mindset. Mindset includes how someone feels, their mood, their attitudes and beliefs and their thinking processes. You obviously need a special mindset to endeavour the huge strategic changes - and take the financial, social and emotional risks - involved. How can we describe this mindset in terms of meta programs?
Change!
The most obvious meta program involved in resilience, is ‘change’ thinking (from the trio maintenance versus development versus change). Or could it be development? Development is doing the same thing, but doing it faster, more, better, et cetera. Change is doing it completely different. Development is evolution, change is revolution, a ‘turnaround’. In business, as in most areas in life, there is always an element of development in change. When reforming Danish Oil and Natural Gas, Poulsen stayed with energy. In that sense he started a development. He didn’t say: let’s forget about oil and gas and wind. Let’s focus on growing trees. He developed new ways to generate energy.
From mismatching to matching
Organisations take radical turns when circumstances force them. Like the price of your main product going down by 90%, or China producing household appliances with an acceptable quality for a quarter of your cost.
Seeing a positive future in a crisis
Resilient leaders do two main things in a crisis. First of all, they see the crisis as an opportunity for fundamental change. In a crisis other stakeholders are more open to new directions. It is obvious that something needs to change. Maintaining the old strategy will lead to bankruptcy or at least to major problems. Hence the opportunity for a radical change that probably hadn’t be acceptable without a crisis. Dominic Cummings, the (in)famous British political strategist has said: “Things are possible, and they are especially possible when there is a crisis.”
Seeing this opportunity is an expression of the meta program ’matching’. Focussing on what is good, right or correct. What is special about this matching, is that it is done in a context where most people are mismatching (focussing on what’s bad or wrong). People tend to focus on the negative when there is a major threat. The human brain has a tendency to give more weight to negative experiences than positive ones. “Our brains are wired to scout for the bad stuff and fixate on the threat” (Rick Hanson). The resilient leader manages to keep this negative focus in check and direct their attention to possibilities.
Focus on options. From ‘away from’ to ‘towards’
The second thing a resilient leader does in a crisis, is focus on possibilities. They see a future that not many people see. Under Poulsen, f.i., Ørsted embarked on what many experts thought of as an impossible mission. The company invested in offshore wind power, but it was too expensive, the energy produced was more than double the price of onshore wind. So the next strategic goal was to make offshore wind energy cheaper.
In this second aspect of resilience, we see an interplay of five different meta programs:
- Towards (goals you want achieve rather than disasters you want to avoid)
- Options (Focus on possibilities)
- Future (Seeing those possibilities happen in the future)
- Internal reference (Believing in your vision, even when others don’t - and even though they have a point).
- Internal locus of control (Believing that the new goals can be achieved).
The big picture
Leaders that have led great strategic changes emphasise that they derived their new direction from a bigger picture. They moved from: ‘What do we need?’ to ‘What does society need, or even what does the planet need?’ And what can we contribute to that? Philips for instance, understood that with an ageing population, they could contribute more by producing high quality medical equipment than by producing ever cheaper consumer goods in competition with low wage countries. In terms of meta programs this is ‘general’ thinking: having a helicopter view. In terms of abstraction they first moved up and then down again. From the present strategy to a higher level: why do we do what we do; what are the higher goals we strive for? And from there, down again to a new strategy.
The relationship between vision and resilience
Resilience is a special case of envisioning. Or rather: resilience is envisioning in a special type of context. We looked at vision in general terms before (part 1 of this series). Having a vision is having an image of an ideal world, related to a mission: how our organisation can contribute to that ideal world. So in our definition of vision, we incorporated the big picture.
In our envisioning benchmark we were looking for:
- Future thinking
- Towards thinking
- Matching thinking
- A lot of visual thinking
- Some kinesthetic thinking
- Internally referenced thinking
- Internal locus of control thinking
All these meta programs are the same for resilience. When Poulsen shifted Danish Oil and Natural Gas from fossil fuel to wind energy f.i., he was showing all these meta programs:
- Future thinking: What do we eventually want Danish Oil to be?
- Towards thinking: We are in trouble now, but where do we want to go?
- Matching thinking: Wat is good about our present situation? How is this an opportunity for Danish Oil?
- A lot of visual thinking: What will it look like when Danish Oil will be wind energy oriented? (Here we see why he had to change the name of the company too).
- Some kinesthetic thinking: Inspiration has a strong kinesthetic, physical element.
- Internally referenced thinking: I know this the right strategy, no matter what the experts say.
- Internal locus of control thinking: If we want to achieve this, we can. Even when others are sure it’s not possible
Adversity
Resilience is all the meta programs mentioned above, but in a context of adversity (danger, crisis, threat, uncertainty). It is not just ‘towards’ thinking and ‘matching’ thinking. It is towards and matching thinking in a context where most people are thinking in terms of ‘mismatching’ and ‘away from’. If you would simply do your usual envisioning in a crisis, rather than panicking, or going passive, you’re already taking good steps towards resilience.
Creativity
Resilience needs creativity (more intensive ‘options’ thinking). In a crisis this is unusual. Scientists who studied the contents of over 9,000 daily diary entries from individuals working on creative tasks, found that the stress of time pressure led to less creative results. “When creativity is under the gun,” they wrote, “it usually ends up getting killed.” (Harvard Business Review). Researchers also found that chronically stressed rats fell back into familiar routines and rote responses instead of using their normal curious learning behaviour (Dias-Ferreira, et al).
Faith
Resilience needs more faith (a greater extent of both ‘internal reference’ and ‘internal locus of control’ thinking) than just envisioning. This is essential in a context where people, many of them experts, do not believe that this is the road to take or that you can even do it. Barack Obama expressed this kind of thinking concisely in his slogan “Yes we can!”
Resilience Benchmark
So when we want to measure resilience, with MindSonar, first of all we are looking for the same benchmark I formulated for vision:
- Future thinking > 7 - 10 points
- Towards thinking > 7 - 10 points
- Matching thinking > 7 -10 points
- Visual thinking > At least 5 points
- Some kinesthetic thinking > At least 2 points
- Internally referenced thinking > 7 -10 points
- Internal locus of control thinking > 7 - 10 points
For resilience I will add to that:
- Change thinking
- Options thinking
- General thinking
Plus, I will set the desired scores for ‘internally referenced thinking’ and ‘internal locus of control’ thinking higher for resilience than for envisioning.
Plus I will up the score for kinesthetic thinking. Looking at the examples described above, emotional commitment to the new strategy seems very important. Here too, we have limited room to move, because we need to maintain a high visual score for the vision.
So the benchmark for resilience would be:
- Future thinking > 7 - 10 points
- Towards thinking > 7 - 10 points
- Matching thinking > 7 - 10 points
- Visual thinking > At least 5 points
- Some kinesthetic thinking > At least 3 points
- Internally referenced thinking > 8 -10 points
- Internal locus of control thinking > 8 - 10 points
- Options thinking > 6 - 8 points
- General thinking > 6 - 8 points
- Change thinking > 5 points, with Maintenance thinking <2
Leadership audit: Resilience
With this resilience benchmark we can do a fourth leadership audit. We can take a MindSonar profile for the context of ‘Leading X’ and compare it with this benchmark.
Let's have another look at the MindSonar profile we used before: Jonas’ profile for the context of ‘Being VeganMarket Director’. Please note that testing this profile for resilience is only relevant if Jonas and his company are confronted with adversity, uncertainty or threat. What could those be, in Jonas’ case? Maybe when mainstream shops start selling organic foods way below his prices, when newspaper articles are saying organic food is no healthier than agro-industrial food or when the city wants to close down their location.
When we check Jonas’ profile against our resilience benchmark, we see the following matches and mismatches:
- Future thinking > 7 - 10 points = mismatch
- Towards thinking > 7 - 10 points = match
- Matching thinking > 7 - 10 points = match
- Visual thinking > At least 5 points = almost a match
- Some kinesthetic thinking > At least 3 points = mismatch
- Internally referenced thinking > 8 - 10 points = mismatch
- Internal locus of control thinking > 8 - 10 points = mismatch
- Options thinking > 6 - 8 points = match
- General thinking > 6 - 8 points = match
- Change thinking > 5 points, with Maintenance thinking <2 = mismatch
From this audit we may conclude that Jonas could be a better leader when it comes to resilience. Although, again, we don’t know if that matters, because we don’t know if he’s being confronted with adversity.
Jonas could improve his resilience mindset by
- Focusing more on the future rather than the present and the past.
- Moving from development thinking a lot more to change thinking
- Being more aware of his feelings and his emotions.
- Valuing his own ideas and opinions quite a bit more..
- Believing that they can achieve what they want to achieve.
- Focusing more on change.
We could phrase this desired resilience profile as:
“I strongly feel that my vision for a very different future of VeganMarket is the right direction to take and I truly believe that we can get there.”
Coaching
Of course - just as with the other parts of the audit - knowing what meta programs to change and actually changing them are two different things. Especially when it comes to resilience, Jonas might need quite a bit of coaching. There are, however, several coaching techniques that a MindSonar Professional could help him with. In Jonas' case, we might even suggest to him that he call us ('us' being the MindSonar Professional) as soon as a major crisis arises.
Combined Leadership Benchmark
When we combine the resilience benchmark with the benchmarks we already have for vision and strategy, we arrive at this combination:
Vision
- Future thinking > 7 - 10 points
- Towards thinking > 7 - 10 points
- Matching thinking > 7 -10 points
- Visual thinking > 6 -10 points (corrected to at least 5)
- Some kinesthetic thinking > At least 2 points
- Internal referenced thinking > 7 -10 points
- Internal locus of control thinking > 7 - 10 points
Strategy
- General thinking > 7 - 10 points
- Some specific thinking > At least 2 points
- Towards thinking > 7 - 10 points
- Some mismatching thinking > At least 2 points
Engagement
- People thinking > at least 6 points
- Together thinking > at least 6 points
- Matching thinking > 7 - 10 points
- Kinesthetic thinking > at least 3 points
- Proactive thinking > 7 - 10 points
Resilience (in contexts of crisis)
- Future thinking > 7 - 10 points
- Towards thinking > 7 - 10 points
- Matching thinking > 7 - 10 points
- Visual thinking > At least 5 points
- Some kinesthetic thinking > At least 3 points
(We raised kinesthetic with 1 point relative to vision) - Internally referenced thinking > 8 -10 points
(We raised internally referenced with 1 point relative to vision) - Internal locus of control thinking > 8 - 10 points
(Raised internally internal LOC with 1 point relative to vision) - Options thinking > 6 - 8 points
- General thinking > 6 - 8 points
- Change thinking > 5 points, with Maintenance thinking
With this benchmark MindSonar Professionals can now deliver a composite assessment of the leadership mindset.
For a general picture we look at vision, strategy and engagement.
In a crisis we would add ‘change’ thinking, ‘options’ thinking plus ‘general’ thinking plus we would raise some of the overall benchmark scores (‘kinesthetic’, ‘internal locus of control’ and ‘internal reference’) for resilience.
This concludes my fourth article on the Leadership Mindset.
