The aim of the Beyond Default Roundtable discussions is to give practitioners in strategy and change an opportunity to share their experiences, challenge conventional wisdom, brainstorm ideas and network with peers who share the same interests and challenges.
As the Roundtable followed Chatham House Rules, the summary below only attributes information that is in the public domain.
Moderator: Welcome everyone. Our topic today is Confronting Your Default Future and it’s one I suggested to David. I first met David just before the first lockdown and was at a point when I was starting to reflect on what my own future might be. I’d recently moved away from being a transformation director working in large commercial organisations and was thinking about how to get my consultancy business up and running. It was at this point that I came across Beyond Default. The existential threat of the pandemic, together with other things, really made me stop and ask: “What is my default future?”, “Where will I end up if I don’t do anything about what I’m currently worrying about?” Talking with David helped me figure out what I was going to do, and the rest, as they say, is history. So, David, what do you think it is about our psyche that stops us confronting our default future as often and as vigorously as we should?
David: I remember our conversations well and am delighted that you found a new trajectory. Thinking about our future is something we all do most of the time; it’s a characteristic of human nature that we think about what the future might be, either for ourselves or others, particularly our children. And we think about what we might be able to do to improve that future. The only differences when we’re discussing it at a corporate level is the influence we have and the level of responsibility we hold for the people we lead. But sometimes confronting the default future can be so daunting that we convince ourselves that it’s acceptable and continue on the default trajectory.
When people think about their default future, they often hope that it won’t happen or a different future will emerge, somehow by magic. This is the default response of most people. One of the things that truly distinguishes strategic leaders from the rest is their ability to confront the default future and, if they consider it unacceptable, take action to change it.
But what does confronting your default future really mean? Firstly, it’s about understanding WHAT it might be, and secondly WHY. Only by understanding why you’re on the trajectory you’re on and where it will take you, can you make informed choices on what actions you need to take to change the trajectory. Hoping that something will happen, and the trajectory changes, is not good leadership – or an effective strategy.
Those familiar with Beyond Default thinking will know that the trajectory you’re travelling on is a result of two types of forces. The first are exogenous forces that originate from outside the organisation. You cannot control or change these forces, you can only respond to them. The other are endogenous forces that originate from within the organisation and are the result of past management decisions and actions. These forces can be controlled to varying degrees. Once you understand the influence of these forces, you’re in a much better position to decide what action needs to be taken to put your organisation on a different trajectory – one that leads to an improved future.
Moderator: One of my reflections as I went on my journey was feeling vulnerable, both as a leader and individual. I didn’t know what the future would be, yet I’m supposed to know that aren’t I, that’s my job. As a chief executive and leader of a business you’re supposed to know what to do next. At the time I felt quite vulnerable. In your experiences is that what happens?
David: It’s not only about feeling vulnerable, there’s also a level of discomfort. You don’t want to be in the position you’re in, so you feel uncomfortable. There’s also confusion as you don’t know what’s going on, or why. And there’s frustration because you want these feeling to go away. I think this is perfectly normal. What we’re talking about here is what people experience when they’re taking strategy seriously, whether it’s their own personal strategy or one for the organisation they lead. When you experience these feelings it’s important that you don’t fall into the trap of wanting instant solutions as it takes time.
Moderator: Has anyone had any experience of confronting their default future? Or, quoting Private Frazier from Dad’s Army, experienced the “we’re all doomed” mindset?
Discussion: David will recognise this because it happened when he was helping us develop our strategy. After we’d edged towards recognising that our default was not acceptable, and we’d started to explore what the alternative futures might be, there was an initiative announced by another organisation that operated in our space. The announcement made us think that what we thought were viable alternative futures were no longer relevant. We had a moment of despondency. We got through this by simply carrying on and ended up articulating a future that was distinct from the other organisation, with whom we now enjoy a very good relationship. I do think it’s possible to feel that you’re doomed and everything’s possible at the same time.
Moderator: I find the ‘keeping on process element’ interesting. Knowing there’s a process, and there was something else I needed to do, certainly helped me.
Discussion: I worked with an organisation who convinced themselves their default future was fine, at least a good proportion of the Board convinced themselves it was. To help them think otherwise we did quite a lot of storytelling to convince them that things were not as fine as they thought they were. Using David’s boiled frog analogy was quite powerful. Saying to them that if you stay on the current trajectory, over time it might not be such a good place to be.
Moderator: David, I’m going to ask you to tell us about some of the tools you can use. As a behavioural psychologist I try and stay with the feelings, I like to see how their heartrate is going and all that kind of stuff. I know that you’ll have other tools. Could you share some of them with us?
David: Before I answer your question, I’d like to comment on what the previous speaker said about an organisation announcing an initiative that made them think their already unacceptable default future just got worse. I distinctly remember the conversations at the time. What we did, and I do think it’s a form of tool, is to spend time understanding what this ‘competitor’ was actually planning and the impact it might have. It’s all too easy, when you see a competitor announce something, to think it’s a missile that’s going to destroy you. But as you understand it more you realise that the impact probably won’t be as great as originally thought. So, one of the tools is to really understand the true influence of the exogenous forces and the implications they will have on your default future. All too often we don’t do this and jump to conclusions based on false assumptions.
Another powerful tool is to mentally model what you think the default future might be. I’m reminded of an Australian client who was having difficulty developing their strategy. The executive team knew that their competitive landscape was changing but were not aligned on the potential impact or what they should do about it. In an attempt to unblock the situation I organised a two-day offsite outside Melbourne. On the first day we focused on the logical reasons why action was needed, including the financials, what their competitors were doing, that sort of thing. But I could see that they still weren’t getting it. So, after dinner – during which a good quantity of alcoholic beverage had been consumed – we returned to the meeting room. I then asked them to image that it was 10 years in the future and they were sitting with their grandchildren telling them what had happened to the company they’d led over the past 10 years. I invited them to share their story with the rest of the room. I said, and did, nothing more throughout the rest of the session. Without exception, they all volunteered to share their story. Some of them were quite emotional. We then went to the bar and enjoyed the rest of the evening. The following morning it was like a different meeting. The focus had shifted to what they needed to do to save the company. What they did during that evening was not only mentally model the default future, but also mentally model what they needed to do to put their company on a trajectory to a better future.
Moderator: That’s interesting how you managed to get everybody to confront the default future in real time, and at the same time. I very often see change and transformation happening bit by bit, person by person, piecemeal by piecemeal, which results in a lack of a shared understanding because they didn’t arrive at it all together. The result can be divisive as it’s not one trajectory they’re pursuing but multiple different trajectories. In your experience what’s the best way to tackle this? Is it to think about the exogenous forces first and then the endogenous forces – those that are anchor organisations to their existing trajectory? Is there a place where you typically start?
David: I usually start, without any prior analysis or assessment, by asking each member of the leadership team ‘what they think the default future might be?’. The aim is to capture what’s on their minds and see how aligned their thinking is. I start here because I believe most leaders do think about their organisation’s default future. They may not call it a default future, but they do think about the future. What I then do is to help them put flesh and structure to their thinking and help them articulate it in a way that others can understand. The next step is to explore what they think is driving their organisation to that default future. What you’re doing is enriching the picture based upon what they’re already feeling. So yes, I always start with the exogenous forces because those are the ones that define the context within which an organisation operates.
It’s also important to recognise that context can change very quickly. Since our last Roundtable three months ago the context has changed for all of us as a result of Vladimir Putin invading Ukraine. His actions have changed all our trajectories to an extent that we probably don’t yet fully appreciate.
Once we understand how the context is changing, and its impact on the default future, I then turn to the endogenous forces. These are the forces that can either anchor an organisation to its current trajectory or pull it onto a different trajectory – ideally one that leads to a better future.
Moderator: David, is the situation in Ukraine an example of an exogenous force where organisations find themselves saying, ‘it’s so big, there’s nothing we can do about it’, so they ignore it in the hope it will go away? Does that make sense, as they just can’t get their head round a war in Europe, so they plough on regardless?
David: I think that’s a very important point and if you read what commentators have been saying since the start of Putin’s ‘Special Military Operation’, it’s evident that since he annexed Crimea in 2014 his strategic intent was to bring the whole of Ukraine under his control. What many countries did, with a few exceptions, was to ignore what he was doing in the hope that it wouldn’t happen. Others assumed that by pandering to Putin he would not pursue such a course. We’re now seeing the resultant default trajectory unfold. The question is can this trajectory be changed and, if so, how? So yes, it can be such an existential threat that it’s just too big for us to get our head around. But it’s a characteristic of true leaders that they don’t shy away from confronting the default future – however uncomfortable that might be. It’s one of the distinctions between a manager and a leader. A manager ensures that an organisation continues efficiently and effectively on its current trajectory. A leader continually challenges whether they’re on the correct trajectory, and that starts by confronting the default future it will bring.
Moderator: As we think more deeply about confronting the default future, are there things that you see people do better, or worse, than they should? Is it that some are more likely to justify their existing strategy and just tweak it because they don’t want to get it wrong, while others are happy to tear it up and throw it out the window and start again? What is it you see once people confront their default future?
David: What I often see are organisations wanting a different future that’s based upon what their leaders think is best, or what they did in their last organisation. It’s rarely based upon an understanding of what the organisation’s default future might be and the insight that brings. I’ll bet a good bottle of wine that everybody on this call has experienced this. I’ve also seen leaders who know that the future is not acceptable, but are not prepared to take the personal risk of doing anything about it. It’s important to remember that if you’re a leader of an organisation and confront its default future, you’re also confronting your own personal default future because the two are intertwined.
Moderator: That’s interesting because the future of the organisation may or may not involve you, depending on what you do.
David: I’ve known some leaders who’ve said that the risk was too great for them personally and chose not to be part of putting the organisation on a different trajectory. I learnt this a long time ago when I was advising a company on a transformation programme and suggested that a particular person should join the team. When she was approached, she said no. The reason she gave was that she was on a defined salary pension scheme and if the transformation programme went badly, it could adversely impact her pension.
Moderator: That’s a pretty big force anchoring her to her current trajectory?
David: Absolutely, and in the Beyond Default Afterword we explore further the entanglement that exists between your own personal default future and the default future of the organisation you lead. When you confront the default future of the organisation you lead it’s not without personal risk.
Moderator: That’s kind of where I started. Has anybody else got any personal insights or experiences?
Discussion: I would like to bring an example that illustrates quite nicely what David was saying. I was working with the organisation where the whole industry model was changing. It was a case for transformation that couldn’t be avoided. But for the Board to confront this reality would have meant massively changing their existing business model and making massive investments. For at least the next five years it would have meant big pain, big changes and no profits. Coming back to what David said, it wasn’t the fear of losing their pension that they were afraid of but the reaction of the shareholders. They had the choice of either embarking on a risky transformation journey or milking the existing business model. It’s easier to focus on the old business model rather than sell a disruption story, especially when the money is still flowing. What’s interesting is that the leaders didn’t do nothing. They knew they needed to do something, there needed to be some some form of action plan, some kind of strategy, something needed to happen because everybody could see that the bad weather was coming. So, they embark on a transformation programme – not as big as that needed – but something. What typically happens is that such programmes include the introduction of a new software system, a new bonus scheme to help leaders be more aligned, a new whatever. You do something, but in reality it never delivers what’s needed.
Moderator: And they convince themselves that it’s a response to the situation, a more acceptable response that they can cope with.
Discussion: Yes, building on what the previous speaker said. I was at IBM when they made the bold move from licences for their software to cloud-based ‘pay-per-click’ software as a service platform model. This was a big big change that had direct impact on all the senior management team because it directly impacted their profitability. They did this in a measured way and, while I have a lot of horror stories from my time at IBM, they did it in a good way. It was a gradual change overtime, migrating to the cloud, embracing the software as a service model, while gradually moving away from corporation-wide licences. So, it is possible, but it needs real courage.
Moderator: Interesting. Does anyone else have anything they’d like to share?
Discussion: I’ve been reflecting on what’s been said and putting it into the context of projects, which is where I do a lot of my work. You often see this problem when people initiate a project thinking it’s going to take them to a desired future, but it’s not because it’s set on a trajectory that’s going to miss the desired future. Last year I was bought in to a financial services organisation to look at a project that a consultancy was running. It took me about three hours to conclude that it had no chance of hitting where they thought it was going. It was already way over on every single indicator. One of the problems when you say this is that people don’t want to hear it, because they then have to confront the fact that the project’s on the wrong trajectory. What this then often induces is complete denial. They start messing around at the fringes of the problem, doing a tweak here and a tweak there. I advised the organisation that they needed to stop the project as it was never going to get them to where they hoped. They said they couldn’t do that because they’d already spent a lot of money. In the end they didn’t do anything. I later discovered that they’d brought in another consulting company who told them they could fix it. A month later they said it was going to take a lot longer than they thought. The project is still running on the wrong trajectory, and it will forever. All too often people just don’t want to know what the default future of their project is. They want it to be someone else’s problem and find a way of getting out before it affects their own personal trajectory. I’ve seen that on so many projects.
Moderator: That’s a great example. David, you have a comment.
David: The last speaker makes an excellent point and thank you for bringing it up. It’s important to recognise that all projects and programmes are on a trajectory that takes them to their default future. While their purpose was to change the trajectory of the organisation to some degree, they were set up in a way that had no chance of delivering what was intended. The last speaker and I first met many years ago at a client that was attempting a significant digital transformation.
Discussion: Yes, I remember. I’d been brought in as an associate of a project assurance organisation to look at the programme for the Board and concluded that one of the things stopping it from being successful was that the sponsorship was in the wrong place. It would be very difficult for that sponsor, who was a committed individual, to deliver what the organisation thought it was going to get. The organisation I was associated with didn’t want to tell the client this because the sponsor was their client. They chose not to tell him and kept going for another two years, taking a lot of money out of the client. David, you know what happened to the programme and how it crashed and burned in the end.
David: Yes, I do, and it wasn’t only the programme that crashed and burned, the organisation also came out of it badly.
Moderator: What’s coming through is the entanglement of personal risk and personal humility, or lack of it. To be able to face your failures as an individual leader and be brave enough to confront the default future.
David: I think there are two aspects here. The first is the assessment, which is about understanding what the default future might be and why. The second is then deciding what to do about it. In the previous example the people designing the digital transformation programme simply didn’t have the capabilities and experience needed. It was a very large and highly complex piece of work aimed at significantly changing the organisation’s trajectory. The problem was that they didn’t have the capabilities needed nor did the digital platform vendor or the major consultancy brought in to assist.
What I do believe is that the better the default future is articulated the more likely you are to get people engaged in finding a way of changing it.
Moderator: Coming back to the mental modelling point made earlier it’s where I’ve had to do the most work as a behavioural psychologist – helping people to develop the cognitive skill of being able to mentally model the future. It’s not something everybody can do straight out of the box. It’s not easy and without practise is impossible. It’s a skill that’s lacking in lots of leaders.
David: Another important skill, that we’ve talked about in the past, is the ability to have very difficult conversations. And to have them in a way that’s non-threatening to the person you’re talking with. It’s a skill key to helping people understand what their default future might be and why – something they’d prefer to ignore.
Moderator: A further point on having the cognitive skill to mentally model, I’m reminded of a recent TED interview with Elon Musk where he’s imagining the future of the world being powered by renewable electricity. He’s even calculated what he thinks would be needed and how much he could generate. That’s an incredible mental capability to engage with the problem at such a macro level. He was saying that what made him different to most people was his ability to imagine the future.
We have a few minutes before we need to bring the call to a close. Does anyone have anything they’d like to share or ask?
Discussion: I have a question. Assuming you can imagine what the default future might be, how can you articulate it in a way that other people can understand? I think that’s incredibly difficult. When David and I asked shareholders of a family business to explain their default future, one of them came up with this diagram and instantly everyone knew what he meant. I’ve asked other leaders the same question and they often come up with lots of strategic waffle, but nothing that really articulates the default future.
David: I remember the impact it had. If I remember correctly the diagram was accompanied with a powerful story. As I’ve previously mentioned one of the most powerful ways of doing this is imagining you’re in the future and looking back. I did this with a beer company whose finance director had conclude that the company’s default future was not acceptable and wanted to do something about it. The problem was convincing his colleagues. I advised him to write an article imagining that it was 10 years in the future and describe what had happened over that time – basically describing how the default future unfolded. To make it more credible we made it look like an edition of The Economist, with a suitably eye-catching cover. He then convinced his CEO to hold an offsite to discuss it. When the Board arrived at the hotel the evening before they found a copy of the article in their bedrooms. This was the main topic of conversation over dinner. The focus of discussion the following day was not if they should act, but what action they should take. The article changed the context of their thinking and the focus of the Board.
Discussion: It’s a thought triggered by Elon Musk articulating how much electricity he could generate. When we talk about the future people are very nervous about putting numbers against it, even if they’re just fingers-in-the-wind estimates. But once you add numbers it becomes very real. I’m reminded of when I was in a software company many years ago. The sales manager was talking about sales projections and he said if we assume that we close 50% of prospects it means that we need to be talking to X many people. At the time I thought that’s the first time I’ve ever heard anyone explain it so clearly. It’s just incredibly rare that things are explained so clearly.
Moderator: That for me is the manifestation of mental modelling and I think Elon Musk is probably better at it than most people. He openly says that his numbers could be completely wrong, but he’ll put them out there because it will activate people’s thoughts around decisions they have to make.
Discussion: I’ve worked with some really strategic thinking financial directors and found their ability to construct – almost in real time – future financial positions is really great. I think that’s what separates them from the number crunchers.
Moderator: David, we have a couple of minutes left, would you like to wrap up for us.
David: Just to reiterate what we’ve been discussing. The most critical aspect of developing strategy in today’s world is confronting the default future, as without this understanding you won’t have a solid foundation on which to build the strategy. Clearly articulating what that default future might be and, equally importantly why, gives people the opportunity to engage and challenge – which leads to more robust thinking. You then have a solid foundation on which to explore alternative trajectories.
Moderator: I think we could probably run on with this topic, but we must bring things to a close. During our next Roundtable on 11 August we’ll be discussing overcoming the barriers to transformational change. Hopefully we’ll get a few people joining us who are not directly involved in strategy. If you know of anybody who might be interested in joining us, please invite them.
Thanks for joining us and we’ll see you all again soon.
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