A few years ago, I received an early morning call from a colleague, Beth, the COO of a large corporation, whose situation exemplified the complex issues companies are facing today. “Mike, this is what’s going on. We went through some difficult layoffs. We’re now facing competition from small businesses—some of which are halfway around the world. Our products are dated, and we are slow to adapt. The services we provide are in need of much improvement. We need to transform our company and our business. Let’s talk.”

Beth asked me to join her team for a meeting that evening in Washington, D.C., to discuss what it would take to transform her organization into the competitive and respected organization it was once known to be. This was going to be a conversation that went much deeper than executive leadership development. Fortunately, I had a suitcase already packed from a recent trip, so I jumped in the car and drove to the airport to catch the next flight.

Our team had worked with this company to build training simulation software in the past and knew all too well the headwinds that they were confronting. Merely suggesting they optimize their processes and tools, examine their competition, or explore new markets or acquisitions would be insulting. What Beth was asking for is far more important—and a bit less tangible. As I worked with Beth to create a new plan for the corporation, I shared many insights and lessons learned. For now, let’s take a quick look at the conventional approach that led them into trouble in the first place.

Beth’s organization is global, with operations throughout the Americas, Europe, and Asia. The corporation faced relentless competition domestically, as well as fluctuations in unstable European markets. Despite these facts, the initial team was highly optimistic about their continued growth in the Asian markets, specifically in China. They decided to expand in select global markets where they believed their products and services would be greatly used. The plan was to first get into the market by investing as little as possible from existing U.S.-based production lines. Products would be created, shipped, and sold locally in outlet stores throughout Beijing—a method of expansion similar to their European strategy just two years earlier. Beth had given her approval.

Six months into the plan, sales were up, margins were a bit below expectations, and demand looked promising. This wasn’t much of a surprise. The pre-market research indicated that a substantial share of the market was open for the grabbing.

Beth was soon caught up in both the hype and the stress of the situation. News reports from all over the world were talking about stalled or collapsing economies. A new breed of competitors was entering the market. Economies in the surrounding regions were slowing. World noise was overflowing. Still, at breathtaking speeds, her team generated reports that thoughtfully confirmed their actions. They released memos, analyzed charts, and cataloged endless information. Consistent meetings caught all team members up on details and checkpoints ensured everything was on time. Organizational noise greeted them at every corner. Before they knew it, they had buried themselves so deep in data and reports that finding any insightful patterns was next to impossible.

In Beth’s situation, visible issues started to surface about nine months into the initiative. In hindsight, she realized the issues were there much earlier, but she and her team had neglected to notice the larger issue and instead had busied themselves with fixing small problems.

As the market response slowed and margins continued to get thinner, the team decided that they needed more data. They reassembled the research team and gave them a clear charter: gather new data, analyze it, determine what was going on, and fix it—quickly. The process took about a month, a very long month to the team that was watching their initiative corrode. After various contentious meetings, the team determined that the best course of action was to reinvest in earlier campaigns that generated the best results. To mitigate some of the risk, they also decided to ramp up manufacturing by shifting 30 percent of the production to their European facilities.

Rather than taking the time to understand the underlying dynamics as we typically focus on in our leadership development training programs, Beth’s team reacted to issues as they surfaced, neglecting the fact that all the issues were somehow interconnected. We can laugh about it now, but when Beth was first describing her situation, it certainly was not funny. She said they were on a “crazy cycle.” If sales went down, they would react by pushing marketing. When sales went up, they would react by pushing manufacturing, and when clients called upset, they would just react. Because they were always reacting, they did not have time to think or understand the dynamics.

Unfortunately, this is not an uncommon lesson. At The Regis Company, we see firsthand how often teams are derailed because they simply were not equipped to deal with the complexity. Developing an ability to understand the dynamics of systems has become critical to navigating the rampant complexity that greets us daily, and has become a cornerstone of our executive leadership development programs. Obviously, we can’t control complexity. What we can control is our thinking—even in the face of some powerful factors that typically derail our thinking, such as biases, lack of attention, fear, too many choices, and a constant barrage of noise.

Michael Vaughan is the CEO of The Regis Company, a global provider of business simulations and experiential learning programs. Michael is the author of the books The Thinking Effect: Rethinking Thinking to Create Great Leaders and the New Value Worker and The End of Training: How Business Simulations Are Reshaping Business.

Mike Vaughan

Author Mike Vaughan

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