Much to our surprise, recently we have had a return to board conversations about the dangers of developing tunnel vision on an organisation’s competitive situation – the sort of situation where a board doesn’t know what it doesn’t know and gets caught out.
Our surprise about how often this is cropping up is partly because it is hardly late-breaking news that a board must be in command of its strategic and competitive position. This is a given, whether you favour Michael Porter’s original competitive strategy work, or any other of the many approaches (eg the PESTLE model) that have grown up in the last four decades since Porter’s breakthrough writing on these things.
So being well enough aware of the surrounding competitive circumstances should be par for the course for a board. And, we hasten to add, this is equally relevant to for-profit and not-for-profit enterprise – again, whether you favour using Porter’s five forces model (translated as necessary for a not-for-profit enterprise) or any of the others since developed to address similar matters.
An annual round of reviewing and probing these issues, when done properly – with due care and attention, rather than complacently in a pro forma sort of way – will prevent most of the nasty surprises. Hence our raised eyebrows when this has come back into the board chat, and why a few more lines on such things here seems worthwhile.
Recapping the basics, the question of competitive position in a commercial enterprise concerns commercial competition specifically among alternative or substitute products/services, or more generally from overarching organisational competition (the broader rivalry between firms operating in an identifiable market, such as airlines or supermarket chains who serve a particular geography).
Equally, however, in a wide variety of not-for-profit enterprise, this is still about alternatives or substitutes. In effect, it is about the necessity of competing against other organisations for the resources on which an organisation relies for its future, and which must be drawn in from some audience of supporters. Any such supporters are, naturally, at liberty to choose other organisations to interact with in relevant not-for-profit dimensions – for example, to enrol with for education, or become a member of in a professional association or a community service endeavour, or more generically to support by donations/grants/subscriptions/etc. This makes those other organisations part of the not-for-profit competitive environment.
Then, less than fantastic results have many, many causes, of course, very often – even if not necessarily always, or entirely – related to your position in comparison to competitor organisations. But how to tell if the problem is the tunnel vision thing, or just the usual vagaries of organisational life? What can we take hold of, and what do we write off to experience and work out how to recover from?
In COVID-times, for example, a company in Melbourne that is beset with lockdowns, facing its main competitor in Perth, for a long time hardly touched by such restrictions, might feel that any loss of competitive standing was largely bad luck and/or beyond their control. That logic could hold some water, and it might be tempting to just tick and move on.
However, we would urge greater reflection, because it is still a fair and enduring summary to say that causes of poor(er) results much more typically relate to an inadequate response to:
- products/services becoming out of date without new ones coming down the pipeline, which will be a great deal worse if competitors are moving ahead with more purpose and direction;
- a significant drop off in member service or customer service that is not arrested and redressed, which will be a great deal worse if alternative providers are more on the ball; or
- blurriness enveloping brand values and taking the organisation into places it perhaps doesn’t belong, or would not wish to be, which will be a great deal worse if other organisations are in sharp focus with relevant audiences (or get to that more promptly).
So having noted that general stuff, back to “tunnel vision” – what we mean by tunnel vision here is that the board has become so focussed on problems that they know about, they don’t keep enough of an eye out for others lurking around out in the darkness of the unknown.
In other words – in the press of working on what they know, or finding out more about those things they know they don’t know so realise they should get to know, board members omit giving attention to testing the environment for possibilities around what they don’t know that they don’t know.
For a typical example, think back to industries with two major competitors, particularly where that situation has become the norm. Those two can be so locked in a duopoly battle with each other, and trying to guess what the other guy will do next, that they don’t see a new competitor coming – at least, not until that third player has stolen a chunk of their lunch, enough to provide capacity to keep competing and growing into a serious threat.
Perhaps surprisingly, it is just as easy to slip up in boom times – when growth numbers are looking terrific, why worry? But what if (you don’t know that you don’t know) the overall market is booming even more, and your organisation’s growth shouldn’t just be terrific, but fully into nose-bleed territory? Before long the organisation can easily go way backwards on share (ie. growth in your slice of the pie might have been great, but was still less than proportionate to growth in the total pie now available).
And before you put that idea to one side as just about commercial sales, we hasten to point out that this dynamic has equally been observed to hit organisations such as:
- universities, that were experiencing nice growth in enrolments but failed to see coming the exponential increase in demand for a some particular course or specialism; and
- membership organisations, that were comfortable with continued growth in membership from traditional audiences but failed to address booming demand from a segment not previously included or even considered.
In short, undue focus on the known competition, and adjacent developments that are not yet known but at least are being worked on, can obscure emergence of a novel threat (eg a new competitor), but also good news can obscure a crucial, but undetected, opportunity for there to have been even better news (not just growth but stellar growth).
Revelations like this lead to “OMG, we didn’t see that coming!” responses, typically followed by lots of weeping and moaning and gnashing of teeth, wondering where it all went wrong, and then someone loses their seat.
That may not or may not be an appropriate response, but much more is needed anyhow – particularly, duly considering why this particular opportunity or threat was not on the fuzzy “we’ll get to that later” part of the board’s to-do list, or perhaps not even a very faint blip on their radar.
Yes, of course, there may be some things that are just not able to be anticipated or detected. But experience strongly suggests these are genuinely rare, and that the most common issue is some degree of tunnel vision by the board has led to the overlooked opportunity or threat.
Put another way, the cause for concern arises when the board gets comfortable with what they know, and takes steps to manage the risk of what they are aware that they don’t know, but doesn’t go the extra (and more genuinely strategic) mile of allowing for or seeking out possibilities and opportunities associated with what they don’t know that they don’t know.
In the supermarkets example – think back about a decade, to the two-horse race where the competitors knew each other was the main threat, and they might have known that they didn’t know enough about how soon online shopping would be a thing but they could see it coming. But did they then look hard enough, and soon enough, to worry about other threats – say like a third competitor creeping in?
The upshot is that when this tunnel vision is getting in the way, insiders will be surprised to see someone lose their job in these “unexpected” circumstances, but from the outside looking in these developments will often look pretty yawn-worthy – such observers will be looking at the overall environment from a different perspective and will see the problem coming.
So how do we get to know the scope or nature of what we don’t know that we don’t know, and thus give ourselves a much better chance of not overlooking important threats and/or opportunities?
Yep, good question, especially when it is inevitable (no matter what sort of an organisation it is) that there is never enough time, effort, energy, or other resources to go around all the things we would like to do.
Best bet is to not “go through the motions” on annual planning and strategy exercises, where it is yet another round of familiar reports, anodyne assertions of brand values, and comfortable words around measuring things that are easily measured. In particular, become allergic to receiving lots of data that is not shown as causally-linked to the strategic outcomes that the board is considering.
Instead, take the time firstly to really engage with freshening up your understanding of the organisation’s strategic and competitive position, then call for data that is specific and pertinent evidence about where you stand presently on that – updating that next year you will allow you to measure the extent to which your board has delivered.
Then do the serious thinking to probe hard past the question of what you know that you don’t know, out into the darkness where unanticipated opportunities may arise and where genuinely novel threats might be lurking.
Based on those observations, go round again to make sure you are planning to measure not what is easily measured, but those things that will actually contribute to your strategic objectives and that you can reasonably expect your team to impact upon – especially when they require commitment to measure (eg via investing in more sophisticated data-gathering, and developing team capabilities to use those data outputs more thoughtfully).
And don’t dismiss too readily or too lightly the team member who is brave enough to make what could be a “hare-brained” suggestion about something new that needs to be done or a situation that seems to call for being examined … Instead, buy them a coffee and see if the idea could stand a little more thoughtful investigation.