Creating Great Choices

by Jennifer Riel

  Visualization might involve creating a storyboard to illustrate how that player would move through the different stages, from identification by the regional program directors to winning the junior singles title at Wimbledon. Physical models would be particularly useful in explaining what the national tennis center in Montreal would look like and how it would be experienced by the young players.

  Storytelling, visualization, and modeling are not mutually exclusive. Teams can use all three methods to help build and share their models. Each helps you clarify and communicate your thinking in its own way, so often the best course is to combine them, using all three approaches in different ways for different audiences. Deciding when and how to use each method is another challenge of your empathic skills: What do you, your team, or your audience need to hear, see, or touch in order to understand the possibility? The answer to that question should help guide your use of these tools.

  UNDERSTAND THE LOGIC

  Once you are clear about what each possibility is (and what it isn’t), you can shift to explicitly assessing them. You still don’t ask whether a possibility is a good idea or a bad one. That kind of evaluative question has unhelpful social dimensions (it tends to result in arguments, as people commit to one answer or another) and logical ones (you can’t know whether it is a good idea, for sure, until you’ve tried it). Instead, you want to understand under what conditions each possibility would be a great solution to your problem.

  To understand those conditions, we return to the most important players we identified in stage 1 of the integrative thinking process. Recall that the players are the stakeholders who matter most to the solution and who are most impacted by the problem. Now, for each of the possibilities, think about those players and ask, Under what conditions would this possibility be a winning solution to the problem for this player (see figure 8-4)?

  Figure 8-4. Under What Conditions?

  The conditions you identify are essentially a description of the world in which you would move ahead with each possibility. If these conditions hold, you all agree, that possibility would a great solution. At this stage, there is no discussion of whether these conditions are likely to hold, but rather only an understanding that if they did hold, this possibility would be a great choice.

  What does this look like more concretely? Think back to Jørgen Vig Knudstorp’s solution to creative control of The LEGO Movie. For his solution to be a winning one, it would have to be true, for instance, that the filmmakers would be open to truly listening to and learning from the company’s biggest fans, that the company’s owners would be willing to trust in the filmmaker’s judgment without demanding final script approval, and that the LEGO Group’s senior leadership team would be able to engage with the filmmakers without micromanaging them.

  The same approach can be applied to Tennis Canada’s new strategy. The logic of its integrative possibility would look something like figure 8-5.

  Try This

  For the iPod, what would have been the conditions under which it was a good idea? What would have had to be true about consumers, the music industry, and Apple for the iPod to be a successful new innovation—one that would let consumers access music digitally while letting artists and record labels be paid for their work?

  Once you have defined the possibilities and understood the conditions under which you would choose each one, you have determined the logic for each possibility. You have articulated what the possibility is, and you have explained the conditions under which it would be a winning solution. Even before you have implemented any part of any possibility, you have gone a long way in clarifying your own thinking, making the models more concrete for others, and setting the stage for you to assess the possibilities in practice. These tasks can be accomplished for any idea, even those for which there is not yet any data in the world. Even if you cannot currently prove that the logic holds, the logic itself can be articulated.

  Figure 8-5. Conditions for Tennis Canada

  Try This

  For the possibilities that you have been working on in this chapter, ask yourself, Under what conditions would each possibility be a great choice? Remember to consider this question through the lenses of the players you considered back in stage 1.

  Next, the challenge is to determine to what extent the conditions you’ve identified exist now or could be made to exist in the future. The more confident you are that a possibility’s conditions do or can be made to exist, the more comfortable you will be in placing a bet on that possibility. The way to gain that confidence is through testing.

  DESIGN AND CONDUCT TESTS

  The approach that underpins our use of tests is falsifiability. Philosopher Karl Popper argued that for any hypothesis (and your possibility is a hypothesis about a potential better future) to be credible, it must be falsifiable—that is, it must be possible to disprove it. The application of Popper’s construct here is that rather than try to prove that your possibility will work, your tests should focus on trying to make the possibility fail. You can do this by looking for places where your conditions don’t hold, thereby learning about the possibility and making it better.

  The practice of falsification takes getting used to, but it can be a powerful way to learn when you get the hang of it. Some companies, such as Pixar Animation Studios, even build their cultures around it. As Ed Catmull, Pixar president, says, “All the movies we now think of as brilliant were, at one time, terrible . . . Think about how off-putting a movie about rats preparing food could be, or how risky it must’ve been to start Wall-E with thirty-nine dialogue-free minutes. We dare to attempt these stories, but we don’t get them right on the first pass . . . We are true believers in the power of bracing, candid feedback and the iterative process—reworking, reworking, and reworking again, until a flawed story finds its through line or a hollow character finds its soul.” Inside Pixar, individuals understand that their job is to help new ideas go “from suck to not-suck.”8 The way they do it is through rapid, iterative testing.

  This final step of the integrative thinking process, then, is to design and conduct tests of the new possibilities. These tests can range from simple, no-frills prototypes to full-scale pilot projects. But regardless of investment, tests should be focused on falsifying—on looking for ways to prove that the conditions you’ve identified don’t exist, and pushing to avoid the confirmation bias trap.

  A Different Mindset

  Testing and experimentation of this kind require you to take on a different mindset than you have so far used in the integrative thinking process. When you were articulating models and generating new ideas, you were looking at the positives and imagining what might be possible. The testing mindset is different; it is a shift from thinking to doing, with an eye toward getting new data about the world.

  What does it look like in practice? At Tennis Canada, for example, learning by doing was the heart of the approach. The team had to balance testing the most critical conditions of its new model with some significant fiscal constraints.

  The Tennis Canada team couldn’t test everything at once, all at the beginning of the transformation. So it prioritized. At the outset, the key test was whether the narrative was compelling enough to convince players, parents, and coaches that the new model could work. So the team started to talk about the model with key influencers and, in particular, with the two elite coaches they most hoped would buy in: Louis Borfiga, then director of the junior French Federation national center, and professional coach Bob Brett. The coaches’ enthusiastic reactions boosted the confidence of the team that others would feel similarly positive.

  For the potentially risky international training dimension of the new model, key conditions were that the players would be willing to embrace the model and that the financial investment would pay off in terms of performance. These assumptions were hard to assess without actually building the model, so the team decided to start slowly, again with a testing mindset. Initially, Tennis Canada funded only two players in thi
s new way: Milos Raonic, who went to Barcelona, and Eugenie Bouchard, who trained in Florida. Both were excited to try the new approach and soon saw positive results in their performance.

  From there, much of the strategy was honed and refined along the way. Today’s remarkable success would have been almost unimaginable back in 2005. It definitely couldn’t have been proven in advance. But it could be modeled, its logic defined, and its outcomes tested.

  As with Tennis Canada—and Apple for that matter—it may turn out that the conditions don’t exist that would have to hold for a possibility you’re considering to be a winning solution, in part because your new possibility doesn’t yet exist. In this case, it is important to ask, Could you make those conditions exist? Perhaps you don’t have a big enough base of customers today to make the possibility viable. Could you imagine a way to help generate that customer base? This is a process of exploring how you might create the world you seek. The answer may not be obvious right away, and this step does require a leap of imagination. Moreover, it requires a mindset that is always open to possibility. That mindset—the stance that ultimately enables the whole integrative thinking process—is the subject of our final chapter.

  TEMPLATES

  To help you document your work in prototyping and testing, we’ve prepared a set of templates. Figure 8-6 guides you in defining the possibilities. Figure 8-7 helps you understand the underlying logic of your potential solutions. Figures 8-8 and 8-9 help you design and prioritize your tests, and you can use figure 8-10 to track the results.

  Figure 8-6. Template: Define the Possibility

  Figure 8-7. Template: Understand the Logic

  Figure 8-8. Template: Design Tests

  Figure 8-9. Template: Prioritize Tests

  Figure 8-10. Template: Track Your Tests

  Chapter 9

  A Way of Being in the World

  In 1887 Lever Brothers bought land in Cheshire, England, to build an expansion to its soap works. But CEO William Lever was interested in something more than a factory; he wanted to build a community. Over the next twenty years, he oversaw the construction of a custom-designed village featuring more than seven hundred homes spread across 120 acres, along with an art gallery, a hospital, schools, a concert hall, a swimming pool, and a church. Lever’s vision—dubbed Port Sunlight, after his top brand—was to create a model town for his workers, one where they could expand their minds through education, religion, and the arts.

  The idea, he wrote, was to “to socialise and Christianise business relations and get back to that close family brotherhood that existed in the good old days of hand labor.”1 It would be good for his workers, he said, and it would be good for his business. Lever felt that healthy, happy employees would be productive, especially if they saw that their environment was tied to their own hard work. So he funded the village with company profits.

  In 1903 some 10 percent of the company’s capital was invested in Port Sunlight. To Lever’s mind, it was the most effective form of profit sharing.

  If I were to follow the usual mode of profit sharing, I would send my workmen and work girls to the cash office at the end of the year and say to them “You are going to receive £8 each; you have earned this money; it belongs to you. Take it and make whatever use you would like of it. Spend it in the public house; have a good spree at Christmas; do as you like with your money.” Instead of that I told them: “£8 is an amount which is soon spent, and it will not do you much good if you send it down your throats in the form of bottles of whisky, bags of sweets or fat geese for Christmas. On the other hand, if you leave the money with me, I shall use it to provide for you everything that makes life pleasant, viz. nice houses, comfortable homes and healthy recreation.”2

  If this sounds a tad paternalistic to the modern ear, keep in mind that many of Lever’s contemporaries felt no such impulse to better the lives of their workers—or if they did, they failed to act on it. Most industrial workers at the turn of the twentieth century lived in congested tenements, with poor sanitation and increasingly strained infrastructure. Disease and poverty were rampant. Port Sunlight must have seemed, to those willing to forgo their whisky and sweets, something of a utopia. And so, Port Sunlight sustained; until as late as the 1980s, all its residents were employees of Unilever, the global multinational created in a merger of Lever Brothers and a Dutch margarine manufacturer.

  Lever’s legacy remains in the form of his model village but also in Unilever itself, now one of largest consumer goods companies in the world. The company has a stable of more than four hundred brands, including Dove, Becel, and Lipton, and earns revenues of €53 billion per year. CEO Paul Polman, a soft-spoken Dutchman who came to Unilever after a long career at P&G and a shorter stint at Nestlé, reflects fondly on Lever’s “own form of enlightened capitalism.”3

  Polman has thought a great deal about enlightened capitalism. He joined Unilever in 2009 as its first-ever outside CEO, just as the global economy was entering the darkest days of the financial crisis. In that disruption, he saw an opportunity. “I’ve always been a little bit concerned about that dominance of the financial industry,” Polman explains. “It was very clear, to me at least, that the system that we were operating under had run its course—had done well for many people, there’s no question about it—but it had run its course. We needed a different business model.” Polman set out to create that new model.

  He asked his team to think hard about what Lever had called “shared prosperity.” Before long, the company created the Unilever Sustainable Living Plan, a vision to decouple the company’s environmental footprint from its growth, meaning that the company would aim to grow its brands while simultaneously reducing its environmental impact. The goal was to move toward “a world in which everyone can live well and within the natural limits of the planet.”4 Importantly, under the plan, Unilever would assume responsibility for the whole of its supply chain “from farm to fork,” rather than outsource that responsibility.

  TAKING A LONGER-TERM VIEW

  At first blush, this might seem like a typical corporate social responsibility initiative. But Polman’s ambition extended far beyond traditional CSR, which he equates to “having a less negative footprint or doing some activities to make you feel good.” Instead, he says, “you really have to show that business activity has absolutely contributed to solving some of these issues.” The Sustainable Living Plan was only one of Unilever’s forays into solving, rather than paying lip service to, our toughest global challenges.

  Another component of Polman’s new business model is a very different approach to investors. He had long been worried about the negative effect of short-term investing on the long-term health of companies. It is hard to overstate how short-term the capital markets have become over the past decade. As of 2015, the annual turnover rate for US stocks was slightly more than 300 percent. That amounts to an average holding period of only seventeen weeks. Exchange-traded funds—baskets of securities that trade like common stocks on an exchange—go even faster, with an estimated holding period of only twenty-nine days.5 It wasn’t always thus. According to Polman, “the average holding of a Unilever share in 1960 was 12 years; 15 years ago, it was about five years.”6

  This shift to the short term means, by and large, that we aren’t so much investing as speculating. Jack Bogle has pointed out that this practice is bad for investors. Polman saw that it was also bad for business. Now, rather than grow the fundamentals of a business, CEOs are incentivized to boost the company’s stock price over the short run. This is a matter of increasing expectations rather than real returns, talking up the stock rather than improving the company.

  Polman was determined to change the short-term focus at Unilever: “One of the things I had to do was to move the business to a longer-term plan,” he says. “We had become victims of chasing our own tail, cutting our internal spending in capital, R&D, or IT to reach the market expectations. We were developing our brand spends on a quarterly basis and not doing
the right things, simply because the business was not performing. We were catering to the shorter-term shareholders. So I said, ‘We will stop quarterly reporting, and we will stop giving guidance.’”

  When Polman announced Unilever’s new policies in 2009, the company’s shares dropped 8 percent. Yet he remained steadfast in his message to shareholders. “I explained to them we were going to run the business for the longer term. We were going to invest in capital spending. We were going to invest in training and development. We were going to invest in new IT systems. And we were going to invest back in our brand spending.” These investments would take time to pay off, and they had the potential to skew quarterly numbers dramatically. So Polman asked his shareholders to take a longer-term view, too.

  Some shareholders were willing to take the leap with Polman; those who weren’t, sold their shares, an action that was fine with Polman. As he sees it, CEOs spend too much time trying to cater to current shareholders, a group almost impossible to fully satisfy. Because stocks are broadly held, shareholders tend to be a mixed lot, and, Polman muses, “they have totally different opinions. If you would run your business based on the input from all of your shareholders, you’d go berserk and you’d probably run your business into the ground.”