Overly confident leaders
In the 1950s, the Swiss watch industry, known for its elegant mechanical devices, reigned supreme and had a haul of more than half of global market share.
Not surprisingly, a Swiss engineer was the one who invented the electronic watch, which would later lead to the quartz revolution. Unfortunately, his colleagues questioned the quality of electronics over mechanics, much like the later digital-versus-analog debate, and they decided not to venture out of their comfort zone.
Japanese watchmaker Seiko had no such qualms. Attracted by this significantly less expensive innovation, Seiko swiftly developed electronic watches, and on Christmas Day in 1969, the company unveiled the Astron wristwatch, the world’s first quartz watch.
Around 100 gold Astrons sold out within a week.
Japan steadily gobbled up Swiss market share. By 1983, only 600 Swiss watchmakers survived, less than half the number a few decades prior. Employment fell to only a third.
There was no other choice. With the help of a consultant, two big Swiss companies merged into what became known as Swatch, and went head-to-head with Seiko and other Japanese companies. These efforts were successful, and just in the nick of time (pun intended), the Swiss watch industry regained momentum.
But this won’t be for long, unless watchmakers take seriously the advent of the smartwatch (led by Apple). Ironically, Swatch itself has dismissed such threats, deriding the smartwatch as a mere fad.
Last week, we have seen several leadership weaknesses outlined by IMD, Switzerland Global Board Center director Didier Cossin and Stewardship Asia Centre CEO Ong Boon Hwee in their book “Inspiring Stewardship.” These include reputation risks, succession problems and leader conflicts.
Add to these certain behavioral biases especially prevalent among powerful leaders, as exemplified by the so-called Quartz Crisis above.
“Blind spots may be accompanied by overconfidence … which has been defined in three distinct ways: Overestimation of one’s actual performance. Overplacement of one’s performance relative to others. Excessive certainty regarding the accuracy of one’s beliefs, called overprecision,” say Cossin and Ong.
Surveys have shown that people who claim to be “99 percent certain” are simply wrong 40 percent of the time. Studies have also revealed that “the higher up individuals are within an organization, the more likely they are to overrate themselves, and the wider the gap between how they see themselves and how their peers, subordinates and managers view them.”
How can leaders minimize—or eliminate—the risks of such failures? Cultivate humility and self-awareness. Listen to constructive critiques from trusted colleagues. Stay open to new ideas and never stop learning.
The late tycoon Henry Sy, Sr. remained simple and humble all his life, even when he topped the country’s wealthiest list. A lifelong learner, Sy valued education and placed his money where his heart was, contributing to numerous scholarships and school buildings.
Flexible and wise, Sy started peddling shoes, but within one generation, he and his family anticipated change, professionalized their enterprise, diversified into other fields, and forever transformed the landscape of Philippine business.
“Well-stewarded organizations not only keep critical thinking at the top, but also build a culture of diversity in thinking and working at all levels,” say Cossin and Ong. “An open environment with diverse teams with different perspectives, and freedom to share these, promotes independent thoughts and better quality team outcomes.”
Think out of the box. “While this does not imply that all ideas should be acted upon, often wild ideas can serve as the kernel to build upon for another idea. Great innovations are often the combinations of elements of different ideas.”
“Inspiring Stewardship” by Didier Cossin and Ong Boon Hwee (Wiley) is available at Amazon.
Queena N. Lee-Chua is with the board of the Ateneo de Manila’s Family Business Center. Get her book “All in the Family Business” at Lazada.com.ph, or call National’s Jennie Garcia at 0915-421-2276. Contact the author at [email protected].
