Vigilant Organizations: Lessons from the BBC

By George S. Day, Ph.D., Professor at Wharton, Univ. of Pennsylvania and
     Paul J.H. Schoemaker, Ph.D., Chairman & CEO, DSI ¹

"In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment."

- Charles Darwin (1809-1882)

Over the past few years, the BBC, Britain's publicly funded broadcasting service, has faced a number of complex challenges, including those associated with balancing the need to cut costs and a desire to maintain core creative, democratic, social, and cultural values while joining the digital revolution, in a world where audience members have more control over how, when, and where they access broadcast content. With viewers and listeners capable of receiving thousands of international stations via digital television, the Internet, and mobile devices, BBC leaders have had to find ways to detect, interpret, and act upon critically important but often weak and ambiguous signals about fresh threats and opportunities on the far reaches of their business environment. Without a process to sense and act upon these often confusing signals in a rapidly changing world, the BBC's new Director-General, Mark Thompson, also understood that the organization would find it difficult to avoid the blind-siding that makes so many businesses vulnerable to the rivals and external forces that endanger long-term survival and success. As a result, when he took the helm in 2004, Thompson announced that "Our task is going to be to change the BBC more rapidly and radically over the next three to five years than at any previous point in its history." ²

To focus organizational attention on changes taking place in the larger world, Mark Thompson helped the BBC to develop a superior "peripheral vision" capability -- one focused upon "seeing around corners" and looking more carefully for clues of change. By creating a framework to monitor other industries, remote markets, theoretical research, exotic business models, and arcane demographic and other data that initially seemed to have little relevance to core offerings, Thompson also transformed the BBC into an organization capable of reducing risks through a managed process that encourages all participants to watch for, evaluate, and respond to subtle and ambiguous signals from the periphery.

Mobilizing his team to become more inquisitive, and stimulating the development of a more open organization that places audiences at the center of everything the BBC does, Mark Thompson also exemplifies the "vigilant leaders" we have encountered in our peripheral vision studies and consulting work. Leading a vigilant organization, executives like Thompson encourage a broad focus on the periphery. They nurture a flexible and curious culture, one both respectful of ideas outside the mainstream concerns of the enterprise as well as capable of rewarding those exploring the fringes, including the mavericks who speak up about emerging issues. They have an inquisitive approach to strategy, revealed in a process that unearths probing questions to focus the organization on specific challenges rather than diffusing energy into irrelevant concerns. They stimulate the development of active networks and knowledge systems that help organizational members to detect and to track interesting trends, as well as to share weak signals deemed significant. And they create an organizational configuration that assigns clear accountability and provides incentives for those who seek answers to important questions and share meaningful information surfaced during the strategy process.

Our study of more than 160 senior executives reveals that leadership attitude stands as the most significant component in developing superior peripheral vision capabilities as well as vigilant organizations.³ Indeed, our findings confirm that leaders define what organizational members see and how they make sense of what they see. They determine who receives a hearing, and who gets ignored. They decide whether or not the organization will open itself up to exploring the weak signals that appear from inside the firm as well as beyond it. The best among them also both "mind" and "mine" the periphery.

Minding and Mining the Periphery -- Six Guiding Principles ⁴

Vigilant organizations both "mind" and "mine" the periphery. In a complex global environment, successful leaders and planners know that they must "mind" a broad periphery, paying careful attention to and taking various actions across many and divergent areas. These include the divergence (and diverging interests) associated with local and international economies and politics, scientific and technological advance, environmental conditions, cultural perceptions, social behavior, and the industry itself (along with its customers and competitors). In addition, they know they must "mine" well-defined edges of the periphery -- where, for example, pending regulations and specific challenges associated with specific technologies usually emerge. To meet threats and opportunities posed by such challenges, these leaders encourage organizational members to "mine" for knowledge in specific areas. Thus, where "minding" requires a strong, divergent focus on the swirl of interests and change, "mining" necessitates a thorough-going convergent focus on specific parts of the environment while rapidly developing the capacity to respond.

By encouraging organizational members to monitor, mind, and mine the periphery of the business environment while simultaneously avoiding the pitfalls of overloading, distraction, and confusion, successful leaders we identified have guided more vigilant organizations by employing the following six principles:

Guiding Principle 1: Peripheral vision requires alertness and the ability to anticipate more than a desire to predict. ⁵

Although vision blurs more on the periphery than on the focal point, and weak signals remain fainter than strong ones, peripheral vision skills help us to understand that we can never predict the future; we can only anticipate it by remaining alert to challenges on the horizon, by making preparations in the face of uncertainty, and by acting before anyone else has time to do so. Thus, vigilant leaders ready their management teams for routine peripheral vision "eye exams," so that organizational members better understand the implications of weak signals and the realities of effectively and successfully anticipating the future. Indeed, many of the vigilant organizations we have examined (including Shell, P&G, and the BBC) invest considerable resources to improve their anticipation capabilities, through trend analysis, scenario planning, war gaming, role playing, and the design of monitoring systems. These investments ultimately lead organizations away from fruitless speculation and toward better questions. For example, rather than trying to predict sales revenues in particular market segments three years hence, vigilant leaders and team members have learned to ask questions about the multiple, and often unpredictable factors that drive sales, and whether or not the organization has the capacity to spot deviations from the norm (and when).

 

Guiding Principle 2: Problems flow not from insufficient data, but from a lack of good questions.

Too often, managers take false comfort in gathering more information, but fail to expand their field of vision to include potentially significant changes already occurring in far-flung foreign markets, in other industries, or along the continuum of cultural, environmental, political, regulatory, scientific, social, and technological change. To sidestep such failure, vigilant leaders broaden their scope, filtering out meaningless noise and asking the questions that can re-direct the attention of an entire organization away from mundane places and toward terrains that matter. Only then can organizational members begin to see the subtle signs of emerging threats and opportunities beyond the immediate horizon of daily activity. As illustrated in the best-selling Blink, for example, people with excellent intuition have learned how to focus their gaze on relevant pieces of a puzzle while ignoring red-herring details. Systematically testing competing hypotheses about what matters and what does not, they zoom in on fewer rather than a greater number of data points, always asking sharp questions, ignoring extraneous information, and seeking better information. They also develop a keener eye for seeing the missing pieces, which then allows them to anticipate how best to live in, rather than to predict, the future. ⁶

 

Guiding Principle 3: Scan actively, but with an open mind, because the periphery will not always reveal itself.

While passive scanning has an important role to play, organizations also need to explore the periphery actively, testing hypotheses directly and taking undirected journeys into uncharted waters. Leaders of vigilant organizations use various tools to focus attention on specific parts of the business environment, including shifts in customer preferences or emerging technologies. Moreover, vigilant leaders do not employ active scanning as a one-time or even an annual event. Instead, they employ it as part of an ongoing process that draws upon a broad repertoire of techniques and approaches.

 

Guiding Principle 4: Use multiple perspectives to understand the periphery more fully.

When events and trends on the periphery of a business environment confuse industry players, vigilant leaders bring to the process a set of different people, with diverse backgrounds, so that they can employ multiple methods and techniques to ask questions and to collect information. Conflicting viewpoints, differences of opinion, and multiple perspectives and hypotheses can help to illuminate different parts of the picture and divergent pathways toward the future.

 

Guiding Principle 5: If you see a glimmer of hope from a weak signal on the periphery, probe further before moving forward.

Do not always trust what you see out of the corner of your eye, and avoid jumping to conclusions when you detect a weak signal on the periphery. Vigilant leaders take time to learn more, by amplifying the weak signals with directed, probing questions, and by taking measured actions through a portfolio of real options and experiments to maintain flexibility until a more "tolerable" uncertainty emerges. While entertaining a variety of hypotheses, they look for both confirming as well as disconfirming evidence. This helps strategists to guard against the confirmation bias; that is, settling on a familiar, comfortable interpretation, and then selecting evidence to support that interpretation. ⁷

 

Guiding Principle 6: The challenge of balancing peripheral with focal vision requires vigilant leadership.

Devoting resources and attention to the periphery often involves moving investments from an organization's focal area and into peripheral vision work. Vigilant leaders know this, and seek to strike the right balance between the periphery and core in ways that meet the needs of the organization and its environment. Some realize that they need a tightly focused organization while others find ways to develop one that can manage small, incremental moves while also moving toward revolutionary change.

Peripheral Vision, Vigilant Leadership, and the BBC

Few organizations have needed to employ these guiding principles more than the BBC, given the broad and ambiguous periphery Thompson and others perceived, and the potential dangers they have faced in terms of potentially scattering organizational attention and resources too thinly while changing course to meet the challenges of a different future. Embarking upon an effort to learn more deeply about the larger world, in a relatively quick way, Thompson thus made the critical decision to focus on "minding" the periphery. By mobilizing the organization for inquisitiveness, directing attention to specific challenges, broadly tracking various trends and tastes, and assigning clear accountability, Thompson created a winning formula, one on which the BBC has continued to expand. Although the BBC's new General-Director has encouraged other "minding" strategies as well, these four provide instructive lessons about leading a vigilant organization.

Mobilizing the BBC for an inquisitive future

When the BBC appointed Mark Thompson as the organization's new General-Director during June 2004, he unveiled a bold vision, complete with "a future where the public has access to a [BBC] treasure house of digital content; a store of value which spans media and platforms, which develops and grows over time, and which the public own and can freely use in perpetuity." ⁸ This vision flowed from a visit Thompson had made to a small electronics store, where he found a TiVo-like digital recorder offered at a very low price. Perceiving a trend which the BBC needed to understand more fully, Thompson announced a restructuring of the executive committee and set in motion a review that challenged business operations. While the organization needed to cut costs, he made it clear that the executive team also needed to focus on bigger questions. Launching an initiative called "Future Focus," Thompson challenged each one of the BBC's 28,000 staff members to pay more attention to the changes that would define the future.

Getting everyone in the organization to look at the periphery -- to engage in active scanning, information sharing, and discussions about how new technologies, channels, and consumer behavior might change their own part of the business -- represented a significant culture change for the BBC, but it also allowed a diverse collection of insights and actions to emerge in different parts of the organization. For example, in seeking to understand younger audiences, BBC marketers discovered that while teenagers loved certain BBC programs, they did not associate those programs with the BBC brand. This realization led to corporate image-building campaigns, on teen turf, using teen language, in venues where the BBC could hope to reach younger audiences and to inform them about the BBC's contribution to their own viewing and listening preferences.

Directing attention to specific challenges ⁹

To avoid diffused attention while minding the broadest possible periphery, Thompson also created specific initiatives that directed attention to smaller, significant areas, including where digital technology had altered the landscape under which the BBC operated. Releasing a nine-point manifesto as part of the BBC vision, Thompson and BBC Chairman, Michael Grade, argued that the BBC could and would play a central role in building a digital Britain by employing the latest technologies to create a world where every person in the United Kingdom could expect to have equal access to on-demand, portable, and personalized digital services. Paying attention to the implications of new technologies and consumer preferences, the manifesto also promised to transform long-dominant, one-way traffic from broadcaster to passive consumer into a creative dialogue between active and inspired participants representing both buyers and sellers. This meant involving the BBC in a pioneering role to provide open access to the massive entertainment, learning, and civic possibilities of broadband. The manifesto also articulated a vision for lifting creative ambition so that the BBC could make an impact beyond broadcasting by launching programs and services to build public value, to release the creative energies of an active and informed citizenry, to raise the bar in British culture and creativity, and to stimulate a learning revolution to support and elevate Britain's global role and voice in the world.

To effect both technological and cultural change, BBC's executives also worked with outside consultants, including a local firm -- "What If" -- to explore changes taking place in the outside world. This forced members of the BBC team to realize that they had fallen behind their audience, many of whom already employed digital video recorders, wikis, cell phone text messaging, and other new technologies. As a result, the BBC also conducted a variety of real-world tests and probes of the periphery, including experiments that responded to profoundly different audience behaviors toward content, whether downloading, manipulating, co-creating, or interacting with it. For example, following development of a radio player to allow extended web access to on-air content, the BBC turned its attention to the creation of an Interactive Media Player that now offers web-based access to all television material broadcast over the past seven days.

Broadly tracking trends and tastes

To enhance the organization's abilities to respond to changing environments, Thompson also encouraged the BBC to tap into the power of "cool hunters" (those individuals who spot new trends). With these people helping to scan and search the periphery, all the while feeding their observations into to the creative production process, members of the BBC then looked at what they could learn from "precursors" (those companies, markets, and segments doing things well ahead of the pack). For example, by regularly visiting South Korea and other parts of Asia where entrepreneurs have avidly adopted digital solutions, the BBC's Chief Technology Officer quickly employed different frames of reference to ask probing questions about how new technologies influence the ways in which consumers gather news, entertainment, and information, whether via a cell phone, computer, or television. Such questions then led to other ones, including those focused on which types of content worked best through which distribution channels, and how Asian experiences might resonate or collide with expected results in the United Kingdom.

Beyond technological concerns, BBC executives also looked at changes in British home life, which ultimately forced them to confront important trends influencing viewer behavior, including the fact that increasing numbers of people now live alone; and that multiple-person households also contain multiple televisions and other viewing devices, not only allowing each individual to live inside her/his own "information cocoon" but also decreasing shared household experiences. This realization amplified the desire to market programs that could draw family members together. After exploring various options, the BBC ultimately decided to respond to this "new" opportunity by re-launching a classic series that had appealed to entire families in the past. The successful re-release of Dr. Who then poised the BBC for further creative dialogues with audiences both near and far.

Assigning clear accountability

Thompson also implemented a widespread process that charged specific groups with the responsibility for scanning the fringes and making sense of signals. Employing some of the best practices we identified in Peripheral Vision, vigilant organizations such as the BBC have pursued a number of options, including assigning responsibility to existing functional groups (with accountability and incentives based upon scanning broadly and then sharing lessons learned with other organizational members); mobilizing ad-hoc issue groups to identify key uncertainties the organization needs to explore further; creating high-level "look-outs" charged with scanning specific zones of the periphery and sharing insights with top managers; launching "game-changing" initiatives to encourage managers to envision and test hypotheses about new opportunities and threats beyond the organization's core business; investing in start-up ventures to test emerging technologies and markets; and outsourcing the responsibility for peripheral vision to external consultants who can help to unearth those factors that might transform the existing organization. While outside partners can provide fresh perspectives, vigilant leaders also need to ensure that "private eyes" focus on the right areas, and that information gathered makes its way to the farthest reaches of the entire organization.

Survival of the Most Adaptable

Somewhere in every organization, someone knows about weak but potentially important signals of change on the periphery, but the ability to profit from that someone's insights requires an investment of time and resources. How well prepared is your organization? Have you designed a process that allows you to capture and to share the insights gleaned by a superior peripheral vision capability? If not, you might find yourself out-maneuvered by rivals of vigilant organizations who have adapted themselves best to the realities of change.