The concept fallacy

The concept fallacy

Depending on how much press we read, we can come across headlines that follow this pattern on a weakly basis:

XYZ has left his post after only x months due to differences of opinion on the strategy of the organization.

While we know that in most of the cases this is just a PC way of saying that people didn’t keep promises, didn’t get along, new interests emerged that the new guy was crossing etc., sometimes this is really the reason why the new CEO leaves….and when this happens, it raises the following question:

How did the board decide exactly by this CEO?

Truth is in most cases the board doesn’t have a solid case for selection. Considering experiences, track records and chemistry is not enough; even ideas about strategy are not enough: how can the board decide if these ideas are good? Based on what?

The board MUST have a CONCEPT based on which a strategy maybe built before they start talking to candidates. Ram Charan in his book “Boards that lead” referred to this concept as the Central Idea, Labovitz & Rosansky more than a decade earlier in their book the “Power of Alignment” called it simply “the Main Thing”.

This concept should be discussed with the candidate who -if he’s good- can credibly add to it, modify it, etc. If the board hires the candidate, he’d present a strategy that complies with the concept and the board can approve it, or -if it’s a well functioning board- credibly add to it, modify it, etc.

In lack of this the typical schema goes something like this:

“can you increase profitability by 20% in the next 3 years?” “yes!” “how?”

“I see chances of reducing operational costs by introducing the following best practices and to increase revenues by cross selling, better marketing, expanding into new markets, etc.”

The schema is basically kept on the level of cliches which means communications is meaningless, which in turn means nobody knows anything and key players pursue their own agenda.

In some industries it’s more difficult to come up with such a concept than in others. Being a 3rd tier supplier in automotive manufacturing SEEMINGLY leaves much less room for new/improved concepts that could serve as a base for strategy than in industries that cry out for new concepts, like media for example.

The common denominator across all industries is that only a handful of players have a concept, the rest operates on cliches….like the headlines they produce.

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Laszlo Kovari is a writer and the founder of Prakhsis, an organizational development company that has been a pioneer in the concept of organic organizations. As a "consigliere" he has worked with founders, managers, CEOs and board members at startups, mid-sized companies and some of the Fortune 500 across North America and Europe. Laszlo is based in Prague, Czech Republic, supporting clients across Europe.

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