For Verizon, this is just the beginning. The $2 billion was only a portion of the investment that will ultimately be required to build out its network with fiber optics. Undoubtedly, there will be speed bumps along the way. One of them occurred in November 2005 when SBC Communications, Verizon’s fiercest North American competitor, purchased AT&T and adopted the acquired company’s name along with a renewed emphasis on broadband. Meanwhile, Mr. Seidenberg will keep his eyes on the horizon to see how the big picture is changing. He knows that the new moneymaking approach involves risks, but the risk of not making a change is greater than the risk of making one.
Learning to See
Working through these six questions helps executives assess the validity of the company’s moneymaking approach. This is an iterative process that tests the leaders’ mental abilities to qualitatively see how the world is changing — almost always including the perspectives of others. It requires transcending the old rules of thumb that are etched deep in the psyches of many executives, and it means giving up the habitual reliance on precedent that worked for many companies during times of more linear change.
But the ability to perceive trends quickly, or even to make sense of them, will not automatically guarantee success. Rather, success depends on the rigor and discipline applied to the entire process of envisioning the changes, deducing specific actions, and implementing the plan.
Some leaders do this by deliberately seeking out diverse perspectives and listening to a wide variety of sources. They meet regularly with other top CEOs to bounce ideas off one another; they regularly read not just magazines and newspapers, but also Weblogs; they attend confabs like the annual World Economic Forum at Davos. Their social networks are filled with sharp observers who share their intense curiosity but come from diverse backgrounds. Leaders with business acumen are accustomed to informal chats with others, during which they feed their hunger for other viewpoints. They seek out younger leaders who understand how new technologies are being used or who are less bound by past ways of doing business.
Of course, there is a good deal of noise out there, too. Not every conversation will add clarity to the big picture. Davos, for example, has hundreds of formal sessions, sometimes hosting speakers with oppositional perspectives; not all of these voices will reveal the external landscape.
But great leaders can stay on point. They build their big-picture view, listen to and sift out extraneous threads, bounce their opinions off others, retest their qualitative hypotheses, and reformulate their big-picture view. This unseen iterative process provides the vital foundation for developing business acumen. Such leaders know that they are responsible for the organization’s ability not just to adapt, but to choose its course; the long-term survival of the enterprise depends on their ability to learn to see more effectively.
Cultivating Acumen at BP
Given the speed and unpredictability with which the world is changing, a company cannot rely exclusively on its most senior people to make sense of the business environment. Someone who is 20 might make sense of signals very differently from the way a senior executive would. Moreover, people who are not necessarily senior in the hierarchy can become sophisticated about what it takes to get a deal signed in Russia, to grow a trading business in a new arena, or to evaluate a package of offers in the area of sustainable development.
At BP, we have found that business acumen can be cultivated. Several practices are critical. The first is setting an expectation that our people will make connections outside the company, not just for transactions and deals, but to explore broader issues outside the normal business relationships. As an example, BP has conducted an intensive weeklong executive development program at Cambridge University, where senior executives talk with people from a variety of backgrounds — astronomers, anthropologists, political historians, economists, and actors.
Businesses also need to open up conversations within the company. In my organization, we’ve held in-depth dialogues where people talk about the business they want to do, the context in which they want to do business, and what they’re looking for from a company like BP. Then, it’s important to give people the space to experiment: to construct and implement their own theories, let them get on with it, and be there to support them if they fail.
Another practice, which we ourselves sometimes miss, is sitting back and reflecting: “I tried something. It felt like a risk. What are the broader lessons?” We just launched a company called BP Alternative Energy, and we are scheduling time to talk about what we’ve learned.
These kinds of conversations can easily go off the rails unless the individuals involved are grounded, self-aware, and confident enough to admit mistakes or ask for help. Therefore, we deliberately invest in people’s personal growth — not in a self-indulgent manner, but in a business context. People with higher levels of self-awareness are less likely to be limited by their own preconceptions when they look at the world around them. In our alternative energy business, for example, we gradually discovered that governments have a much more complex and subtle set of needs and objectives than we had originally expected. Meeting these needs requires a more nuanced and multidimensional approach to the business.
We want to help our people develop the kind of self-confidence that will allow them to wait long enough to make sense of external subtleties, instead of immediately jumping to an answer or theory. This is often the real test of whether our people are cultivating a more advanced understanding of the external world: Are they willing to wait, to tune out the daily “noise” of press announcements, to stay focused on the long-term fundamentals of the environment, and to act accordingly?
As people at all levels become more sophisticated and strategic in their outlook, strategy can move from an individual capability to an institutional capability. And with that transition, the quality and speed of our business improves as it increasingly reflects knowledge and insights from across the hierarchy.
Vivienne Cox (email@example.com) is the chief executive for Gas, Power & Renewables and Integrated Supply & Trading at BP.