Strategic Thinking, Decision Making, and Innovation-1

MANAGING YOURSELF

Zoom In, Zoom Out

The lens through which leaders view the world can help or hinder their ability to make good strategic decisions, espe- cially during crises. Zoom in, and get a close look at select details—perhaps too close to make sense of them. Zoom out, and see the big picture—but perhaps miss some subtleties and nuances.

Zoom buttons on digital devices let us examine images from many viewpoints. They also provide an apt metaphor for modes of strategic thinking. Some people prefer to see things up close, others from afar. Both perspectives—worm’s-eye and bird’s-eye—have virtues and pathologies. But they should be vantage points, not fixed positions. Leaders need multiple perspectives to get a complete picture. Effective leaders zoom in and zoom out.

I’ve come to this conclusion after more than 25 years of observing how leaders set strategic direction, interact with constitu- encies, and respond to unexpected events. I’ve worked with thousands of executives and conducted systematic studies of in- novation, alliances, change, and transfor- mation in hundreds of organizations. I’ve seen how organizational structures, pro- cesses, and cultures can direct the gaze of leaders close in or far out, and how levels of analysis can become default positions that limit effectiveness.

The zoom framework offers a dynamic model that can help current and aspiring leaders increase their own range of vision and establish conditions that enable oth- ers’ success. In this article, I will identify the behavior and decision modes associ- ated with zooming in and contrast them

A fter an explosion on a BP oil plat-form in the Gulf of Mexico in April 2010 killed 11 people and caused the biggest oil spill in U.S. history, the company’s CEO at the time, Tony Hay- ward, zoomed in on the implications for his career. He appeared preoccupied with the incident’s impact on BP’s management and, particularly, on himself. About a week after the explosion, Hayward was quoted as saying to executives in his London of- fice, “What the hell did we do to deserve this?” Despite PR coaching, a month later he told reporters, “I’d like my life back.”

Hayward, who was forced to resign in July, had numerous opportunities to acknowledge the bigger picture: the human devastation and public consterna- tion in the Gulf region. But even though BP deployed thousands of engineers to contain the spill, he could not, in public, rise above a 10-foot view; it was as though the crisis were his own personal devil. Hayward repeatedly focused on the small picture—trying, for example, to shift the blame to supplier Transocean, which had run the rig that exploded. His zoom button seemed to be stuck on the closest setting.

The best leaders know when to focus in and when to pull back. by Rosabeth Moss Kanter

cRUcIBLE 118 Lessons learned from a hospital bed

cASE STUDY 121 The good and the evil of an angel investor

SYNTHESIS 126 Three ways to explore globalization

LIFE’S WORK 132 Norman Foster on effective office architecture

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with those for zooming out. I’ll consider the structures and cultures that trap people in dysfunctional default positions, and I’ll conclude with ideas on developing capabilities for zooming to all levels.

Zooming In Zooming in brings the details into sharp focus. Any opportunities look large and compelling, though they may lack some context.

A CEO I will call “John Jones”—who owns a midsize retail chain started by his father—works primarily in close-in mode. A classic entrepreneur who combines hustle with retail-is-detail know-how, Jones expanded the chain successfully from two to 30 locations by continually seeking the next prime site, merchandise item, or website tip. His discoveries came mostly through his personal connections rather than analysis. Jones disdained strategic plans and management theories. He removed a well-regarded banker from his advisory board, for instance, because the banker would ask for plans— orderly goals, with timelines—when Jones simply wanted to concentrate on specific operational ideas that were easy to implement.

Thanks to his industry knowledge, wide personal network, and intuition, zooming in served Jones well for a decade. But when the economy soured, his good instincts felt insufficient. Family members and key employees began to question his decisions. Jones had no succession plan—nobody had been groomed for the future. He made acquisitions on the basis of his own taste or just because an owner wanted to sell, and gave little thought to cost, whether the acquisition was a good fit, or what else was on the horizon. He had no broad theory about which op- portunities to pursue and no industry map. Zooming in was limiting his company’s growth prospects.

Close-in managers look for immediate benefits and make ad hoc decisions. They often favor one-on-one conversations over group meetings. They want to address

details by doing whatever occurs to them. Faced with a problem, they look for quick fixes rather than stand back to seek un- derlying causes, alternatives, or long-term solutions. They prefer to contact some- one they know rather than search more widely for expertise. These tendencies are exacerbated in organizations that restrict information flow, reward quick hits, and confine people to their roles.

A close-in perspective is often found in relationship-intensive settings, where hu- man talent is the primary asset. Consider another executive, whom I’ll call “Sam Lee.” He ran a well-regarded professional services firm during a decade of incre- mental growth. Known as a benign leader, Lee could talk about strategies with external constituents, but he operated best when zooming in. He liked to confer in a clublike huddle in his office rather than discuss issues in open meetings. He was unfailingly helpful with individual requests (including one-off favors). In other words, he liked to make excep- tions instead of policies. As a result, his organization had an abundance of private deals with individual staff members (such as off-calendar budget allocations, vaca- tion privileges, sabbaticals, and extended family leaves).

In a time of prosperity with few ex- ternal threats, a personal approach may be acceptable. Toward the end of Lee’s tenure, however, the firm found itself in an increasingly competitive environment with greater regulatory pressure. It was becoming untenable to treat each situation as unique. Even as policy exceptions accu- mulated, the logic behind these decisions remained unaddressed. Junior profession- als were left to wonder and worry about the rules and fairness. Whispered concerns about favoritism ran through the corridors. The organization was running on a patron- age system of personal credits and debits, with a market for favors substituting for principle-based decision making. Morale and productivity declined, jeopardizing the company’s reputation and making it harder to attract the best talent. When Lee

TellTale sIgns

QuesTIons ThaT wIll help you Zoom ouT

You get over- whelmed by count- less details

What is the con- text? What matters most?

You take things per- sonally, finding the

“me” angle first

What larger purpose is being served? What is at stake for others?

You trade favors, hoping others will

“do it for me”

Why is the task or mission worthy of support?

You make excep- tions or special deals based on particular circumstances

Will the circum- stances recur? What policies or decision frame- works could be used?

You jump on any good-looking offer that pops up

Does this fit the goal or destina- tion? What else might be on the horizon?

You treat every situation as unique

Are there other similar situations? What categories or groupings make sense?

Too Close In?

Are You Stuck in A Perspective That’s

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retired, his successor immediately zoomed out, stating a few broad strategic priorities. He created clear formal policies to replace informal exceptions and began discussing them all openly in large meetings.

One of the traps of zooming in is that policies and systems are based on internal politics. Close-in people tend to talk about their personal lives, as though self-disclosure will beget the same from others, turning organizational actions into an exchange of favors based on special relationships. They often resist change because it disrupts the social equilibrium. Sometimes their personal approach is valuable, because people respond faster to individuals they know than to abstract appeals. But “do it for me” is a weak basis for corporate decisions. It also means that employees cannot easily stand in for one another, because relationships are

“owned” by specific people. And it can put ego above institution.

Relying heavily on personal instinct and interpersonal deals without a wider perspective or a long-term rationale can prove perilous. An overly personal ap- proach can also make managers quick to perceive slights, whether or not they’re real. The CEO of one technology company, though known as a great strategist, still let zooming in drive some decisions. He was personally offended by how a prominent magazine had portrayed him, so the com- pany stopped advertising there. Employ- ees took this as a warning to tread carefully when providing him with unfavorable information. In another case, a corporate middle manager pored over e-mails to see whether he was being treated appropri- ately, and complained immediately if he perceived any suggestion of offense. His focus on status over substance cost him a higher-paying position; the plum promo- tion went instead to a manager with a grasp of the bigger picture.

Zooming in can obscure the big picture, leading managers to overlook important issues. Decisions become based on who you are and whom you know, not on broader goals.

Zooming in can also lead to turf protection. When managers use territo- rial language, it reveals that they have fallen into this trap. One division CFO, for instance, always used the first person when referring to budget numbers, as in “I have x dollars,” even though it was the organization’s money, and ignored repeated requests from other members of the executive group to stop this manner of speaking.

Personalizing is not the same thing as self-reflection—indeed, it might be the opposite. Self-reflection is a learning process that requires a distant perspective on one’s own behavior, in context. An ob- session with self is reinforced by zooming in, but self-awareness stems from zoom- ing out.

Zooming Out Zooming out is essential to big-picture decision making. When people are far out, they can map the whole territory before taking action. They see events as ex- amples of general patterns rather than as idiosyncratic or personal incidents. They put things in context and stress principles.

The former CEO of Garanti Bank, Akin Ongor, led it from a middle-of-the-road bank in Turkey to global prominence by setting up processes that replaced poor performers and upgraded talent. When his announcement of layoffs provoked union protests and even death threats, Ongor refused to take the attacks per- sonally or get drawn into ad hominem battles. Instead, he went to the media and elevated the discussion to the principles behind the bank’s actions. By zooming out, he helped his employees, the public, and government officials see the layoffs in the context of a transition in the economy and as a move that would save an important institution so that it could create more jobs in the future. The protests ended, and Ongor continued to lead successful change at the bank.

Zooming out helps people see the map and stay focused on larger principles. Consider Procter & Gamble CEO Robert

McDonald, who rose through the ranks to head a global public company with a long-established culture. Even while seeking current profits, he constantly asks questions about what will support the sustainability of the company and keep its values intact. He can generalize about geographies and lines of business while appreciating cultural differences. He is personable but doesn’t personalize issues, repeating often that he is a stew- ard of an institution that must endure beyond him.

Zooming out is appropriate for top leaders. But it also has traps. For one thing, key stakeholders might want to see im- mediate results and know that the details are right before they support long-term big-picture thinking. That’s why broad visions need to be matched by small wins that demonstrate feasibility. For another, leaders who like to be far out may operate so high above the fray that they don’t see emerging threats and opportunities (which, ironically, is a danger for close- in leaders too) or recognize competing theories that are better able to explain new developments. Having zoomed out to examine all possible routes, they can neglect to notice the moment for action on one promising path. When zooming out makes established highways look too good, leaders may fail to jump onto a side road to get around the traffic.

When the focus is on grand theory, novel situations are dismissed as too in- significant to merit attention. Leaders lose the sense that the big picture might be contingent on a set of circumstances that may well evolve. But sometimes a novelty is a signal, heralding embryonic change. The film The Social Network presents a fictionalized version of an iconic moment

Zooming out helps people see the map and stay focused on larger principles. But it also has traps.

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further erosion. But critics said that he failed to convince average Americans that he was addressing their problems. His sup- porters argued that his actions, Keynesian in nature, would show their merits in the longer run; yet as John Maynard Keynes himself pointed out, in the long run we’re all dead. One of the problems with staying at the most distant end of the zoom is that the picture looks static and few routes are visible. It may appear, for instance, as though all economic highways go through the Federal Reserve and big banks. Zoom- ing in, and monitoring the situation as it appeared to communities and families, might have helped Obama communicate that he was seeking alternatives that would reach more people directly—such as increasing small-business lending at local banks. Instead, despite his many ac- complishments, Obama’s approval ratings plummeted, and his party lost badly in the 2010 elections.

Getting Stuck A failure to zoom can spell doom. As we have seen, problems arise when people get stuck at one end of the scale and are unable to move to the other for a different perspective.

One question is whether it’s possible to create teams that balance close-in and far-out modes. Perhaps. But if people can’t shift from the worm’s-eye or bird’s-eye level, they often talk past one another. Those zooming in want to come back to the particulars and haggle over details, frustrating those who want patterns and a strategy. Those zooming out might seem theoretical and impractical, or find that their general frameworks and principles are not understood by those who zoom in. Hardened preferences can get in the way of good decisions.

A narrow focus in either direction can lead to trained incapacity, a concept attributed to social theorist Thorstein Veblen. Regardless of their innate poten- tial, if people spend too much time on tasks that draw on only part of their rep- ertoire, it can make the other part atrophy.

in which the Winklevoss brothers, feel- ing aggrieved that fellow student Mark Zuckerberg had created Facebook when he was supposedly working on their web venture, meet with the university presi- dent, a disguised version of then–Harvard president Lawrence Summers. In the movie, the president dismisses Facebook as just another undergraduate venture and tells the brothers to forget it and start another business rather than waste his time on something so trivial. Whether the incident was merely movie fiction or not, in real life that president was overly fo- cused on important long-term plans and goals and on keeping a wide perspective on the institution. His lack of attention to interpersonal interactions eventually cost him support and his job.

Sometimes leaders need a nudge to look at details that might shake their theories. Take a chief executive I’ll call

“Herman Fry,” who ran a science-based company that was starting to use genetic engineering in a growing product line. Fry had previously led a division to global prominence through breakthrough in- novations and was known as a brilliant strategist and big-picture thinker. But when he heard rumblings against geneti- cally modified ingredients in Europe, he initially dismissed them as local issues that didn’t require scrutiny or a response. When he heard that a UK customer was being pressured about the same issue, his attention was caught—but not enough; he still said the concern was a minor blip and did not bother to look more deeply. By the time he was persuaded to gather more details, a global backlash had begun, and the company had lost the chance to reas- sure customers and tell its story ahead of the protests.

A preference for zooming out can make leaders appear remote and aloof. After a campaign that involved both inspiring rhetoric and street-level organizing, Presi- dent Barack Obama faced severe national crises. He zoomed out to address big systemic issues, such as the financial crisis, with policies that advisers said stopped

TellTale SiGnS

QueSTionS ThaT will help you zoom in

You dismiss devia- tions from plans or models as too minor to matter

Does the devia- tion challenge the model? How can the deviation be understood?

You veer away from dealing with specific problems in favor of focusing on general theory

What actions does your theory suggest for this particular problem?

You must have a full analysis or a big study be- fore determining actions

Is there sufficient information to proceed in this instance? What are the costs of delay?

You always stay on major established paths

Are there side roads or shortcuts?

You pursue the mission regardless of human costs

How is this affect- ing the people who must carry out the mission?

You fit everything into a few general categories

What are the details that make things different? Which details matter?

Too Far out?

Are You Stuck in A Perspective That’s

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while gaining a broad view across coun- tries and cultures.

The language of zooming offers an objective way to discuss differences in perspective and encourage people to move to a different level: “Let’s zoom in on that problem.” “Let’s zoom out to put it in perspective.” Zoom-based checklists can help people stop themselves from overpersonalizing, reminding them to go up a few levels to the principles involved, or from overgeneralizing, encouraging them to get more grounded in situ- ational realities. Everyone can apply the principles of zooming to his or her own job by asking the right questions, such as whether a given action fits the overall goal or whether there is sufficient infor- mation to move forward on a particular theory. (See the sidebars “Are You Stuck in a Perspective That’s Too Close In?” and “Are You Stuck in a Perspective That’s Too Far Out?”)

The zooming idea suggests that we don’t have to divide the world into extremes—idiosyncratic or structural, situational or strategic, emotional or con- textual. The point is not to choose one over the other but to learn to move across a continuum of perspectives. President Bill Clinton’s political genius was that he could “feel your pain” while putting events into historical and international context, zooming in and out quickly in a single conversation or speech. That dynamic capability is the essence of great strategic thinking.

Zooming can help leaders respond to events before they become crises. It can help them embrace new opportunities while continuing to operate with princi- ples that build sustainable institutions for the long run. Leaders should make room to zoom.

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He stressed personal values as well as global trends. Indra Nooyi, PepsiCo’s CEO, blends a big-picture view of principles guiding the company, such as the need for transformation in food and beverage companies to promote improved health, with an ability to zoom in on the details of budget allocations for current business lines. Nooyi has defined new roles (such as a chief science officer) and new struc- tures (for instance, the Global Nutrition Group, linked to central R&D) that help the previously decentralized organization both zoom out to a global perspective and zoom in on local differences.

Effective leaders encourage others to expand their zooming range. For ex- ample, P&G, like most companies in the consumer packaged goods industry, is a heavy user of large-sample survey market research, which maps territories through statistical abstractions, a form of zooming out. Though P&G’s leaders don’t disregard these data, they also send employees into the field to live with families, zooming in on their needs and experiences. The closely observed details of individual household behaviors ultimately influ ence P&G’s investment decisions.

The zoom function is more than a metaphor; it can be a way for people to stretch their mental capabilities by, for example, manipulating maps, comparing photos, exploring issues from various vantage points, and creating action plans that reflect learning from multiple perspectives. IBM’s Corporate Service Corps integrates both the big and the small pictures into its global leadership development programs. It sends cultur- ally diverse teams on monthlong field assignments in unfamiliar territory. The team members get direct experience solving specific problems on the ground

The fact that it’s difficult to balance zoom- ing in and zooming out may explain one perceived difference between male and female managers uncovered by Insead professor Herminia Ibarra. She found that women score high on all aspects of “21st century” leadership performance (such as relationship building, collaboration, and teamwork) except vision setting. Relation- ships are nurtured by zooming in. Vision involves zooming out. This may derive from the pernicious stereotypical view that men should be entrusted with big- picture decisions, while women should be assigned to care taking tasks. The very

nature of caretaking requires zooming in to be attentive to details, one child or one executive at a time. Zooming in is also a necessity for those whose fate depends on being attuned to the characteristics and preferences of power holders. Traditional divisions of labor by gender encourage men to zoom out and women to zoom in, with fewer opportunities to take another perspective.

zooming Toward Both Perspectives The best leaders work the zoom button in both directions. Faced with a crisis, they can address the immediate situation while seeking structural solutions. They can zoom in to see problems while zoom- ing out to look for similar situations, root causes, and principles or policies that will help prevent the crisis from recurring.

Daniel Vasella, chairman and former CEO of pharmaceutical giant Novartis, was both a psychiatrist by training— which made him able to zoom in on the emotional state of the people around him—and a strategist with a theory of industry change that guided divestitures, acquisitions, and internal restructuring.

Rosabeth moss Kanter holds Harvard Business School’s Arbuckle Professorship

and specializes in strategy, innovation, and leadership. Her latest book is SuperCorp (Crown, 2009).

We don’t have to divide the world into extremes— idiosyncratic or structural, situational or strategic, emotional or contextual—and choose one.

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