If you tried to do something new, and everything turned out better than ever, you need to keep it going, don’t you? Many managers share this point of view. And, at first glance, you cannot but agree with such an approach. But in reality, everything is not so simple.
Let’s consider an example from the mobile industry. Motorola has rolled off turning from a leader into an outsider — despite having received a special award for quality from the US Department of Commerce.
The company’s phones were reliable, but management was completely wrong in assessing how important the global analog-to-digital transition was.
It is always very risky to optimize just one aspect of the business. It is difficult to achieve success at the expense of a single strong side of the product if consumers are interested in other aspects as well.
Experience is not always important
Even CEOs can get into the trap of overly linear thinking. Perhaps you think that executives with previous experience in mergers and acquisitions are more effective in conducting them than managers without such experience?
In fact, everything is somewhat more complicated. Strange as it may seem, experience is a double-edged sword, applicable to both mergers and acquisitions as well as to other situations.
Most companies make the second M&A worse than the first, and the third worse than the second. How can this be?
This is because experienced acquisition-experts are more likely to jump to conclusions. They believe that what worked the previous time will work this time. These managers draw the wrong conclusions from their experience and end up performing worse.
Past experience can hamper a CEO to learn and perceive new information in a variety of spheres.
To be successful in making tough leadership decisions, you need to look at the situation with a fresh eye every time – even when you think you know onions about such transactions.
Leaders need to get used to thinking non-linearly. It’s not easy, it goes against the simple and straightforward methods that lie at the heart of traditional managerial work – but a non-linear thinking is much closer to real life.