To Succeed, Boards and C-Suites Should Focus On Failure

The decision the board and management are making may be right—but you will feel far more confident if you first come up with all the ways it might be wrong.

Today’s business leaders face an explosion of information and a climate of persistent uncertainty – both of which demand rigorous critical thinking. How can leaders and boards overcome their own biases to tackle the biggest and most important decisions of the day? Engaging a devil’s advocate may enable a more flexible and open-minded approach to problem-solving. And instead of thinking about success, something we all do naturally, boards and C-suites should focus on failure.

Years ago, I was invited to address the top management team of United Technologies, a Dow-30 component that, at the time, included such iconic brands and businesses as Otis Elevators, Carrier, a global air conditioning and climate control business, and Pratt & Whitney, one of the world’s leading aircraft engine manufacturing companies. To prepare for my talk, I read everything I could find about the businesses as well as chairman and CEO Greg Hayes’s annual letters to shareholders. I noticed most of the company’s materials discussed megatrends that drove their strategy—urbanization and the emergence of a global middle class.

At a cocktail party the evening before my talk, I pulled Greg aside and asked him if he had ever considered entering the agriculture business. He looked suspiciously at me and asked why I would think a technology-intensive manufacturing company would want to do that. I discussed how urbanization and a rising global middle class would drive demand for protein. He indicated that no one had ever suggested that they enter agriculture, and that they probably wouldn’t do so, but thanked me for the idea before walking away to mingle with others.

Over the next year or so, Greg and I would discuss global dynamics and how they might affect United Technologies. Then he asked me to help with a very interesting decision that he and the board of the company were about to make. They were going to propose a breakup of United Technologies. Greg explained that he and the board wanted an honest broker to independently think through why they shouldn’t pursue the breakup, given that most of the company’s formal advisors had incentives to encourage the spin-offs. I was honored to be asked to play the role of devil’s advocate and developed an argument against the breakup.

Ultimately, Greg and the board decided to break up the business into three companies, but I like to believe they did so with greater conviction having had at least one person tasked with telling them why not to do it. In fact, Greg later asked me to help him think through why he shouldn’t pursue a merger with Raytheon. Again, despite my best efforts to convince him and the board not to do it, they went forward with the transaction. And again, I believe they did so with confidence that a serious effort had been made to consider alternative actions.

One of the reasons that Greg and the United Technologies board have been successful in very volatile environments over long periods of time, I believe, is that they are not just open-minded, they actually go out to seek disagreement. The essence of this approach is captured in an oft-cited quote from Alfred Sloan, the legendary chairman of General Motors. At the conclusion of a senior executive meeting, Sloan summarized the discussion:

“Gentleman, I take it we are all in complete agreement on the decision here.”  He then observed everyone’s head nodding affirmatively before continuing: “Then I propose we postpone further discussion on this matter to give ourselves time to develop disagreement, and perhaps gain some understanding of what the decision is all about.”

But it’s not just disagreement that’s needed to navigate the radical uncertainty. One needs to also think about failure and what it might look like. One tool I used in my analyses for Greg was a prospective hindsight exercise, more colloquially described as a “premortem analysis.” A premortem analysis considers how decisions made today might end up being seen as foolish in the future. The idea is to imagine future failure and then think through what might have caused it. The exercise is one that can complement the engagement of a devil’s advocate and, as eloquently summarized by Gary Klein in a 2007 Harvard Business Review piece, “in the end, a premortem may be the best way to circumvent the need for a painful postmortem.”

The very act of imagining failure may help prevent it. And because it’s prospective failure that is being considered, there isn’t the emotional or political baggage that often accompanies post-mortem attribution of blame, so leaders can discuss potential problems before they emerge.

Every perspective is biased and incomplete. So why settle for adopting your natural default perspective as the only one you utilize to make decisions? Rather, it would make sense to seek out, appreciate and develop multiple perspectives to help you shed light on the topic of interest. Develop disagreement and imagine failure, it may very well be the best way to succeed.

Adapted with permission from THINK FOR YOURSELF: Restoring Common Sense in an Age of Experts and Artificial Intelligence (HBR Press, June 2020) by Vikram Mansharamani, PhD. To learn more, visit his website www.mansharamani.com or follow him on twitter @mansharamani.