The CEO of an autonomous region for a multinational called with a problem. “We’re too successful,” he said. “We’re number one in the country, not only within my company but across the entire industry. Take your pick of the metric — profit, market share and customer satisfaction — we win.”
So what was the problem? Their current success was due to innovations and strategies put into place three years ago. Since then, everything had just purred along. Given that they were constantly lauded as examples of best practice, he was finding it difficult to motivate the senior managers to innovate for tomorrow’s success. In his words: “It is difficult to drive change when everybody is patting you on the back.”
Complacency like this is hard-won, but damaging and difficult to tackle. We began by talking with the CEO to identify the foundations upon which the company’s success was built – and discussing why these could ultimately lead to its demise. The CEO then agreed to leverage a classic tool – a disruptive scenario, but with a twist.
The CEO gathered twenty of his top managers at a secluded retreat, where he described how he’d received advance notice of a super-competitor’s imminent arrival. The tension grew as he described a competitive threat that targeted the heart of their business model.
Tension heightened as leaked advertisements and price plans were circulated. After a few moments of genuine panic, the CEO said: ”You are my top management team. We have a month. Tell me what to do.”
After the initial shock dispersed, (one participant actually said “this feels like a bad dream”), the managers formed cross-functional teams. Slowly solutions started to emerge. By the end of the day, there were many ideas, and some guarded optimism that the threat could be controlled.
As night fell, the CEO took the floor. I have two things to say. “First, the threat I told you about today is pure fiction. I made it up to provoke our thinking.” Confusion quickly gave way to relief. “Second, you’ve generated some highly innovative ideas. Which should we put into practice anyway?” Numerous initiatives emerged over the next twenty four hours. The shock of the “bad dream” had been central to helping the company extend its leadership for many years to come.
The CEO had taken a risk by not telling his team that the scenario he presented was fabricated — and in fact that it had been solely created to challenge his team’s implicit assumptions. And yet we have seen this approach work at multiple companies in different settings.
This “bad dream” approach works the best under these conditions:
First, the bad dream usually needs both outside input and senior management support. It is very difficult for an outside consultant to make the dream realsitic enough if the story is not championed by a high profile, embedded insider.
Moreover, the bad dream must be colorful. It must be embellished with personalities, quotations, documents, and other snippets of reality so that the participant feels that it is real. It must provoke an emotional reaction. Fear, excitement, shock, and desparation are vital to breaking sucessful managers out of complacency.
An effective bad dream is typically fairly complex, involving by multiple variables — consumer trends, emerging technologies, competitive threats, and regulations. After all, if the challenge is too straightforward, it doesn’t feel very challenging (or very realistic).
Typically, a bad dream is best placed in the medium term; one-to-two years horizon is best. This is near enough for the threat to feel real and disturbing, and yet not so near, that the actions are too tactical or knee-jerk.
Finally, this exercise works better when sprung upon managers with an element of surprise. This reduces the time they have to question the story. Instead they focus all available resources to innovate their way past the threat.
History suggests that the seeds of failure are often sown in times of great success. Little warning signs just off the main radar are too easily dismissed. This happens for many reasons; but a fundamental one is this: We are very good at lying to ourselves when it comes to our own success. We assume that if something good happened, we must have caused it — but dismiss setbacks as bad luck, a phenomenon that has been studied since at least the 1970s. We therefore miss the signals that we need to change. The bad dream is one of many tools that can help address this imbalance.
Simone Ahuja is founder of Blood Orange, a marketing and strategy consultancy focused on emerging markets and innovation. She is co-author of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth.