Developing the most difficult managerial skill

There is one critical skill that every manager truly needs, but only few have it at the required level. Any manager who leads people to achieve certain objectives, or focuses on business development and other strategic issues, or tries to radiate the unique value of the products, needs to understand the reality as seen by the other people.

We all have that skill to a certain degree. Most of us live with a spouse, family and neighbors where a certain level of understanding the viewpoint of another person is necessary. The difference is that we know these people personally.  This is not the case with managers who need to speculate the response of people they have never met, like most of their clients and suppliers.  And how many executives understand the perspective of the union leaders, with whom they meet, but don’t really know well?

Politicians have to have this skill sharpened to the degree of understanding mass of people.  They watch the crowd through the media and, even more importantly, through chats and blogs and by that develop a deep understanding of the inner fears and desires of the individuals within the crowd.

The term “understanding” means being able to reasonably predict the response to the actions we take.  In order to be able to predict there is a need to construct the key relevant cause-and-effect relationships as viewed by the other person.

An ironic point is that “understanding the other” usually expresses noble feelings, but it is also a pragmatic need for making good managerial decisions.

The mission of understanding the cause-and-effect as seen by people we don’t know is always difficult. A big obstacle appears when we try to understand the behavior of people from different cultures or socio-economic state.  The differences make it hard to identify the key cause-and-effects behind the actions of the other person, because of different values that lead to quite different causes than ours.

An emotional obstacle is raised when the other person is viewed as an enemy or a rival, because understanding means being empathetic to the other person.  Problem is, these are the cases where understanding the other side is most required. Throughout history the successful army generals were able to analyze the perspective of the enemy, but in order to do so they had to restrain the emotion of shying away from such understanding.

The problem of most top managers is that they are not aware that the other might see a very different picture. Managers have to understand what their customers and users truly want, which is quite different than what the managers want.  The analysis of the situation from the competitor perspective is also frequently required.  Yet, such an analysis of the cause-and-effect from the customer, competitor or supplier perspective is not common.

Is it possible to develop the skill to get into the shoes of somebody else and construct the relevant cause-and-effect from that perspective?

There are four categories of people that the managers should be able to understand their perception of reality:

1. The employees at every organizational level.
2. Individuals who have an official role within another organization that is, or could be, in direct business relationships with our organization.
3. Individual customers and users of the product/services of the organization.
4. Individuals and organizations that have other interests in the organization. These include regulators, media and people who live in the neighborhood.

TOC includes two categories of generic tools that support a view of an organization from the outside leading to quick, yet valid, observations of the key cause-and-effect entities that impact the performance of that organization. It is easier to predict the behavior of an organization, actually the individual decision-makers within the organization, than predicting the behavior of an individual operating on his/her own.  But, part of what works with an organization is useful for understanding a specific person.  The difference is caused by having to synchronize between many individuals and by that forcing the organization to simplify the goal, values and procedures.  Organizations also try to be rational, which is not necessarily true for most individuals.

The first category of tools to understand other people, or an organization, is the group of insights, notably the five focusing steps, that simplify the seemingly complex and uncertain environment and provide us with the effective FOCUS on what truly counts. This is true also when we look on another organization.  Being aware of the inherent uncertainty is part of the insights that allows us to focus just on the right elements, whose impact is stronger than the uncertainty (noise).

For instance, when employees are required to subordinate to a scheme that its rationale is unclear, we can imagine the resistance. The use of any specific performance measurement impacts behavior in a way that is easy to predict, when one asks the question: how should the employees react to the measurement?

The TOC Thinking Processes (TP) is another, but highly related, category of tools enabling us to predict the response of an organization, a group of potential customers, or an individual to a certain act.

Let’s examine the overwhelming negative response of many individuals who have witness how a passenger has been dragged by force out of a flight. Fact is that this harsh response came as a surprise to United Airlines management.  Was it too complicated to consider the possibility that other passengers might record the incident and make the video viral?  Was it too complex to predict the social networks and media responses? How long should have taken the local managers to understand the huge developing threat?  Eventually top management had to humbly apologize, pay hefty compensation to the passenger and suffer severe damage in the company reputation.

Here is a simple cause-and-effect branch outlining the situation:

The key question is: How come the local management did not predict the response of the passengers? The simple answer:  they are not used to think of the possible response of other people, because it seems too complex.

The TP are usually focused on OUR own cause-and-effect with one clear exception; a conflict between two parties, which is depicted on one cloud, so both needs are recognized and verbalized. However, the same cause-and-effect tools can support a careful buildup of small cause-and-effect trees that focus on the possible ramifications of a change from the perspective of other people.  What we lack in intuition can be gained by logical reasoning and a-priori focused search for meaningful information.

Let’s consider a case where a manufacturing company contemplates to stop producing a specific product family. The arguments are relatively low T per unit and, at the same time, high capacity consumption from a loaded critical resource that currently prevents the sales expansion of other products.

Should the company consider how the distributors, the immediate clients, react to such a decision?

Assuming there are good reasons not to ask the opinion of the distributors before taking the step – is there a way to predict how the distributors will behave?

Goldratt complained that too many executives don’t have a clue on the business of their clients and suppliers. This is quite similar to the lack of interest to understand the other perspective of reality.

What can someone who never worked in distribution know about the perspective of a distributor?

Let’s put some simple facts about distributors:

• They deal with very large number of SKUs.
• Most of the clients of a distributor buy many different items.
• Some of the SKUs offered by the distributor, but definitely not all SKUs, have replacements that are acceptable to most of their clients.
• Logistics is a big player in running the business.

When you look on the very short, pretty obvious list, you can easily deduce when a supplier pulling out a family of products creates a big problem to the distributors forcing them to react.

From the distributor perspective there is a difference whether he is already carrying replacements of that product family that his clients accept as good enough. When the answer is positive then the distributor should not grossly suffer from the supplier’s act.

However, when no acceptable replacements are available then some clients might look for such replacements elsewhere and shift their purchasing to another distributor. Forcing the distributor to look for acceptable replacements from another supplier raises the risk that many more items would be supplied by the new supplier.

Another cause to be concerned with is the emotional reaction of the managers of the distribution company against such an action that causes them considerable damage.

The need to predict the behavior of business partners should be obvious to everyone. However it is not.  It is critical not just to predict negative response, but also what would generate great positive response.

The skill to understand the perspective of another organization can be vastly improved by TOC. It requires being aware that this is possible, beneficial and truly required.  It is part of recognizing the inherent simplicity.