Summary: Executives who spot signs of big market shifts face a quandary: They need good data to convince stakeholders that their companies have to change. But by the time data about disruptive trends is public, opportunities have shrunk or disappeared, and their firms may be on burning platforms.
How can leaders build the conviction to act before evidence is abundantly clear? First, they can gather “private data” (from their employees, customers, and proprietary systems) that illuminates the risks firms face. Second, they can map their firms’ position on the information-action paradox model and use it and other disruption frameworks to inform discussions that lower the threshold of proof.
There’s a paradox facing leaders seeking to transform their organizations as they see their markets begin to change. On one hand, they need convincing data to make the case that transformation is necessary—to show that their companies are about to find themselves on “burning platforms.” On the other hand, by the time public data about disruptive trends and market shifts is convincing, the window of opportunity has shrunk, if not disappeared. And when companies actually are on burning platforms, their leaders confront a harsh reality: Burning platforms inhibit change by increasing rigidity at the very moment when flexibility is crucial. The lesson: Avoid ever ending up on a burning platform. But that requires leaders to act before compelling data is widely available.
Berkeley Cox, Michelle Mahoney, and the rest of the leadership team at the Australian arm of King & Wood Mallesons (KWM), a global law firm, faced this exact problem several years ago. They were starting to pick up signals that their law practice needed to change dramatically, but convincing data was still scarce. The three of us worked with KWM Australia to generate and interpret what we call “private data,” or unique insights that clarified the change brewing beneath the industry’s surface. This article describes the approach we took and details specific methods other leaders can use to similarly motivate their organizations to address shifts before the evidence of them is abundantly clear.
The Nature of the Challenge
Business leaders face a problem that’s familiar to investors and political leaders: In periods of uncertainty the availability of information and the freedom to act are inversely correlated—or, in simpler terms, as data increases, your ability to act decreases.
Let’s say your company is deciding whether to commit a large amount of its resources to entering a new market such as driverless cars. As competitors’ moves and degree of success provide information about the market (its size, profitability, and growth rate), they simultaneously constrict your freedom to seize opportunities in it; with each move your rivals are building difficult-to-replicate capabilities and establishing strong positions in the most attractive market segments.
We have created a simple conceptual model to help companies map out where they stand when it comes to their knowledge and their ability to act. We call it the information-action paradox. A thought experiment contrasting Entrepreneurial Ellen and Corporatized Chris illustrates how it works. Entrepreneurial Ellen has a low threshold of proof, meaning she is willing to act with a low amount of data. Why…
