… snip, snip …
It is easy to point to opportunities that were missed.
As everyone knows hindsight is perfect or ’20/20’ as the saying goes.
Writers of books such as this rarely point to the apparent opportunities that were rightly dismissed.
Nor do they point to the apparent opportunities that were taken up and proved disastrous.
We know that Du Pont spent $100 million trying to launch the artificial leather ‘Corfam’ before dropping the project.
Over recent years several companies such as RCA and the Xerox Corporation have seen an opportunity in the rapidly expanding computer field and have bought their way in.
But the opportunity has turned out not to be an opportunity and they have retreated with heavy losses. ¶¶¶
In setting forth the examples my purpose was not to castigate Western Union for turning down the Bell patents and IBM for turning down the Xerox process.
My purpose was to show the reality of opportunities.
I wanted to show the reality of opportunities that were missed and the reality of those that were taken.
I wanted to show that a new idea, a new way of doing things or a new way of looking at things can make a huge difference to an organization. ¶¶¶
Most of the examples I gave referred to large corporations but opportunities exist at all levels.
In this book I shall be dealing with opportunity search both at senior management and at middle management level.
Everyone is surrounded by opportunities.
But they only exist once they have been seen.
And they will only be seen if they are looked for. ¶¶¶
… snip, snip …
The opportunity search
We must take note of the pious executive waffle that appears in the corporate image advertising in magazines like Fortune.
But we must realize that saying something on the advice of an image-building consultant and even feeling the emotional truth of what we are saying is not always the same as doing it.
Over the years I have worked as lecturer, instructor, problem-solver or consultant with a large number of corporations including Shell, BP, Unilever, Proctor and Gamble, IBM, 3M, Merck Sharpe and Dohm, American Airlines, the Prudential Company and Kodak.
I have been invited to talk at a large number of conferences and meetings such as those of the Young Presidents’ Organization (YPO) and the Institute of Institutional Investors.
I have travelled all over Europe, to Canada, the United States and Argentina, to Australia and New Zealand, and to Japan.
Yet I have never come across a corporation that operated a systematic approach to opportunity-seeking.
This is not to say that such an approach does not exist but merely that I have not come across it even though I have looked for it in a wide variety of areas. ¶¶¶
Many organizations look to the R & D division to generate or develop new opportunities.
Others operate New Business divisions or even Venture divisions.
It is often assumed that opportunity seeking is the concern of the Corporate Strategy team or the Diversification program.
A large number of corporations operate suggestion schemes at lower levels.
The calling in of consultant groups for cost-cutting exercises or feasibility studies is also a common practice.
All of these activities have to do with opportunity-seeking but each of them only covers part of the field.
Many parts of the field are left out.
And even in the case of those parts that are covered there is no integrated approach. ¶¶¶
… snip, snip …
My objective in writing this book is to focus attention on the area of opportunity search.
I shall set forth a systematic approach which covers opportunity-seeking both at the corporate level and also at the level of individual executives.
This book is the handbook for the operation of this systematic approach.
The book is designed in such a way that it may also be used by someone who is operating outside the executive framework. ¶¶¶
I am well aware that there are people who have demonstrated their brilliance at spotting opportunities.
I am also aware that there are others who are highly motivated to look for opportunities.
In addition there are those who for sound logical reasons do not wish to be distracted by opportunities.
In a subsequent section I shall be discussing attitudes to opportunities and why so many executives find it difficult to be opportunity-conscious.
Nevertheless what I shall be proposing is a formal framework within which a variety of different attitudes can operate — and in operating pay deliberate attention to opportunity search.
Without such a formal framework opportunity search will always remain a matter of mood, chance and individual motivation.
Form of the book
If executives are to be motivated to look for opportunities they must be given a reason for doing so.
There are many sound logical reasons why someone should not look for opportunities and these must be discussed honestly.
Persuasion through exhortation has only a short-term effect.
The first part of the book will be devoted to people, motivation, the need to look for opportunities and some of the difficulties involved.
I shall be dealing with the attitudes towards opportunity.
I shall also be dealing with different types or styles of executive and how they see their role: the train-driver type, the doctor type, the farmer type and the fisherman type. ¶¶¶
In this first part of the book we shall need to distinguish between problem-solving and problem-finding.
What are we trying to do when we look at a problem?
What are we trying to do when we look at an opportunity?
The key distinction between important and urgent must be made. ¶¶¶
I shall do my best to spell out quite clearly the real dilemma of opportunity search: opportunities involve risk, effort, hassle and dilution of effort, yet we cannot afford not to look for them.
There is a secondary dilemma: an executive can function very well without ever looking for opportunities and yet a corporation made up of such executives will stagnate to disaster.
Having set up these dilemmas I shall propose a concrete solution. ¶¶¶
In the second part of the book I shall put forward a corporate structure for opportunity search.
This structure will operate on two levels.
The basic level is that of each executive who will be required to examine, his own ‘opportunity space.’
This concept will be discussed.
At regular intervals an executive will be given the opportunity to carry out an ‘Opportunity Audit.’
This is a formal exercise designed to sanction initiative on the part of the executive: he is encouraged to say where he sees the opportunities and what he would like to do about them as distinct from being told what to do. ¶¶¶
At the corporate level a group is given responsibility for opportunity search and is designated the ‘Opportunity Team.’
This team will have a liaison function with other established divisions such as R & D or Corporate Planning but will have the centralized responsibility for focusing directly on opportunities.
This opportunity team will also have the responsibility for collecting the input from the opportunity audits carried out by each executive.
These inputs will be integrated and assessed by the team.
The team will also be responsible for arranging the help and support that an executive may require in following up an opportunity that he has put forward in his audit return. ¶¶¶
This second section will also discuss the role of outside consultants in terms of organization, feasibility studies, and the value of a fresh look from outside.
The training and instruction involved in setting up the opportunity search framework will be indicated. ¶¶¶
The morale-boosting value of the opportunity search procedure will be discussed.
It is likely that this will be even more important than the actual opportunities discovered. ¶¶¶
The third and final part of the book will cover the methods used for discovering opportunities.
I shall go in detail into the thinking methods that an executive would employ when he sets out to find opportunities.
These methods include both analysis and provocation.
I shall introduce the concept of an ‘idea-sensitive area’ (i.s.a.) in which the pay-off from a change of idea can be considerable. ¶¶¶
Sometimes in our thinking we need to ‘move-in’ towards a goal or objective.
At other times we need to ‘move-out’ from an existing asset in order to see how best to employ it.
The distinction between ‘moving-in’ and ‘moving-out’ will be made in this third part of the book.
A check-list of areas for attention will be provided.
For example, the better we become at doing something the more likely we are to leave behind us an area of opportunity.
The concept of ‘de-averaging’, although an ugly word, is useful in opening up opportunities. ¶¶¶
I shall be introducing the notation of an ‘opportunity map’ as a help in making external our thinking about opportunities.
The opportunity map will be made up of ‘if-boxes’ and ‘action-channels.’
In this way risk and uncertainty can be crystallized so that they may be dealt with more effectively. ¶¶¶
The important areas of benefit, assessment and evaluation will be examined in this part of the book. ¶¶¶
The third part of the book can be used, on its own, by anyone who is looking for a methodology of opportunity search but is not concerned with the corporate structure suggested in the second part of the book.
Lateral thinking and opportunity search
Imagine that you are attracted by tall blondes and that you are at a party and spot a tall blonde at the other end of the room.
The room is crowded.
You move about the room asking your friends whether any one of them knows the blonde well enough to introduce you.
It is a tiresome process.
Yet had you looked around you before starting off on the quest you would have seen that standing just behind you was an even more attractive blonde conversing with a good friend of yours.
The moral is that opportunities may not be difficult to see in themselves but they remain impossible to see if we happen to be looking in the wrong direction. ¶¶¶
The excellence of our brains as information-processing systems lies in their ability to make sense of the outside world.
This the brain does by allowing the incoming information to organize itself into channels or tracks.
Once these channels have been set up we can find our way around because as soon as we spot something we can follow the established channel and so have access to all our knowledge about that thing.
This is an immensely useful system but it does have the disadvantage that the brain achieves its excellence by establishing fixed ways of looking at things.
Sometimes we may need to break out of these fixed ways in order to find new and better routes. ¶¶¶
It is this switching of channels, this breaking away from a fixed approach, this moving sideways in order to change concepts that I called ‘lateral thinking.’
The term is now officially recognized in the Oxford English Dictionary which operates the final acceptance of new expressions. ¶¶¶
Though I shall touch upon it briefly in the third part of this book, I do not intend to go into the details of lateral thinking here.
Both the way the brain handles information and the process of lateral thinking are described in other books of mine.1
The response to these books has suggested that many people are aware of the type of thinking required to switch from one way of looking at things to another.
The books have been translated into seventeen languages including Hebrew and Japanese.
In fact the sales in Japan of my first book exceeded (on a per head basis) those of the famous novel Love Story in the USA.
The explanation is that the Japanese are conscious that theirs is a rigidly patterned culture.
As a result they are interested in methods of switching patterns other than the traditional Western method of polarization, opposition, clash and change — which they regard as inefficient and wasteful. ¶¶¶
Lateral thinking is rather different from creative thinking.
I have done quite a lot of work with art colleges, and creative thinkers in the artistic sense are are not especially good at lateral thinking.
An artist may be valuable to society because he has a perception that is different from everyone else’s but the artist may be stuck quite firmly within the channel of that perception.
He does not have the flexibility of the lateral thinker who is forever switching concepts and putting things together in new ways.
Information and ideas
In our management thinking we tend, quite rightly, to rely heavily on information.
A good financial reporting system leads to profits.
A speedy sales reporting system results in effective marketing.
Detailed market analysis information brings about the correct product choice.
An examination of trends and forecasts provides the information required for planning.
It could be said that the size of any decision is proportional to the inadequacy of the reason for making it.
If our information was complete then the information would make its own decisions.
If a shipowner for instance had complete information about oil transport requirements, future cost of finance, the firm plans of his competitors, knowledge of political and labour stability, information about government subsidies and regulations and so on, he could feed all this into a computer and the decision would be produced for him.
It is only when our information is inadequate that we have to make a human decision.
And the greater the inadequacy of information the bigger the decision will seem. ¶¶¶
Our hunger for information should not, however, blind us to the fact that information alone is insufficient.
In addition to information we need ideas.
Ideas are the spectacles through which we look at information.
I once gave the following problem to a group of chief executives: ¶¶¶
‘A man buys a dog as a watch-dog.
He then finds that the dog does not bark.
What should he do?’ ¶¶¶
I got the following suggestions: ¶¶¶
‘Buy another.’ ¶¶¶
‘Take it back and complain. Report the matter to the Consumers’ Association.’ ¶¶¶
‘Train it to fetch its handler.’ ¶¶¶
‘Train the dog to press an alarm button.’ ¶¶¶
‘Switch on a photo-electric beam across the dog’s kennel at night so when the dog leaves his kennel he will break the beam and activate an alarm.’ ¶¶¶
‘Have a sensing device strapped to the dog’s back so that his rising hackles will trigger the device and activate an alarm.’ ¶¶¶
‘Train the dog to switch on a tape-recording of a dog barking.’ ¶¶¶
‘Find out why it does not bark and put matters right.’ ¶¶¶
‘Install burglar alarms as well.’ ¶¶¶
There is a wide variety of different ideas here.
But there is still room for more.
We could actually treat the silence of the dog as an opportunity.
We would erect an illuminated sign stating: BEWARE OF SILENT WATCH-DOG.
The idea of a vicious dog creeping up quietly and attacking might be even more frightening than a barking dog. ¶¶¶
The Nigerian Government intends to introduce universal primary education into the country by 1980.
This means increasing the number of children in school from four million to eighteen million and the number of primary teachers from 150,000 to 450,000.
This could be done by building teacher training colleges and training student teachers in the same way as is done in most industrialized countries.
An alternative idea, which arose in the course of a lateral thinking exercise I conducted with some Nigerians, would be to give each existing teacher two assistants who would follow the teacher around wherever he went (almost to the bathroom).
The assistants would sit in on every lesson and then take over half an hour of a lesson or a whole lesson or a whole day.
They would be trained in an apprenticeship manner.
It is estimated that this approach would save $300 million.
The new teachers could always be sent on to college for further training when the training colleges had been established. ¶¶¶
Ideas without information are pretty worthless.
Information without ideas can still be useful.
The best of all is abundant information supplemented by ideas.
The mistake, which so many people make, is to assume that collecting more information will do away with the need for ideas.
The need for ideas
In the course of my seminars I often ask the participants to write down an area or problem to which they would like to apply lateral thinking.
The response is always poor.
These executives are trained to solve problems as they arise.
They are not trained to pick out areas in which the generation of ideas could be useful.
That is why deliberate creative effort is so rarely used outside the world of advertising.
An advertising Creative Director knows that he has to produce an idea to win or to service an account.
Other executives like the idea of creative thinking in the abstract but never seem to have an actual need for it in their day-to-day lives. ¶¶¶
But when an executive consciously sets out to find opportunities he quickly finds areas that are in need of ideas.
In this way the opportunity search provides a framework that excites and focuses the creativity of executives. ¶¶¶
Ideas thrown up for no good reason are rarely used.
But ideas generated to satisfy the idea-hunger of an opportunity search are more valuable because they fulfill a need. ¶¶¶
Many years ago I was working to design a safer cigarette.
The usual approach might be to make a stronger filter that would extract more particles from the inhaled smoke.
Using a lateral provocation I decided to ‘add’ something to the smoke.
The obvious thing to add was air.
This could be done by making tiny holes through the cigarette paper near the butt end so that air would be drawn in and would dilute the smoke.
Since the deposition of smoke particles in the lungs is by Brownian motion which depends on the concentration of particles, the air dilution reduces the particle deposition in the lungs.
At that time no cigarette manufacturer was very interested in the process because there was no obvious need for milder or less harmful cigarettes.
Today several brands (notably Benson and Hedges in the UK) use the ‘ventilated filter’ process. ¶¶¶
We know that market-pull innovation is much more effective than technology-push innovation.
So it is with the generation of ideas.
The first stage is to generate a need for an idea.
The second stage is to generate the idea to fit that need.
That is what opportunity search is about.
Part I: People attitudes and opportunities
The most important thing about an opportunity is the person who sets out to look for it.
Even the most obvious opportunity can be ignored by a person who is not motivated to see it.
In this part of the book we shall examine attitudes towards opportunity-search.
There is no point in pretending that opportunities are wonderful and that everyone should be out looking for them.
An honest appraisal of the difficulties, problems and risks is required.
There are ‘opportunity-negative’ structures within which it is madness for an executive to look for opportunities. ¶¶¶
‘Thank goodness the sun has gone in and I do not have to go out and enjoy it,’ is a common attitude towards opportunities which are seen to bring hassle, risk and distraction.
Through selection, training, inclination, performance pressures and a logical assessment of the best survival strategy, executives are rarely opportunity-seekers.
In this part of the book we shall distinguish between problem-solving and problem-finding.
We shall also make the vital distinction between what is urgent and what is important. ¶¶¶
We shall look at cultural attitudes towards opportunity-seeking, at corporate attitudes and at individual attitudes.
We shall see why many corporations are content to ‘ride the business cycle’ and others are fearful of an ‘opportunity war.’ ¶¶¶
Finally we shall look directly at the nature of opportunities and at their benefits — which is the only way of motivating people to want to look for them.
The distinction between what is urgent and what is important
Some executives never learn to make this distinction.
The more senior such executives become in a corporation the more disastrous it is likely to be.
Putting out a fire is urgent.
Planning sensible fire regulations is important.
It is no use sitting down to work out the best way to refinance the payments on your house when the upstairs bathroom tap is leaking and flooding the house.
The re-finance decisions are much more important but turning off the tap at the stop-cock is urgent. ¶¶¶
It is obvious that whatever is urgent must come first.
An executive may have to deal urgently with an impending strike or a serious loss of quality control or an expected rise in raw material supplies.
Such matters have to be dealt with as soon as possible.
They have priority over everything else.
They are more ‘important’ than anything else.
It is urgent that a fisherman repairs the leaks in his old boat otherwise he will be unable to go fishing. ¶¶¶
Because something must be done at once it becomes more ‘important’ than anything, else.
But in the long term it may not be more important at all. ¶¶¶
New Zealand depends very heavily on its exports of agricultural products — for instance, butter.
Lately there has been a substantial loss of the butter market to the margarine-makers.
This is not just a matter of price because even margarine that is more expensive than butter has increased its market share.
It is felt that the margarine makers have been cleverly using that section of medical opinion that proclaims that the cholesterol in butter increases the danger of heart attacks.
The matter is urgent so in 1977 the Butter Information Council were given $NZ 2 million to fight off this challenge by the use of counter-propaganda.
Yet it is far more important, in the long run, that the butter-producers should spend thinking-time and money re-packaging and re-marketing their product so that it is treated as a branded product not a commodity.
I have seen housewives in New Zealand use margarine in preference to butter simply because it is easier to spread and the housewife has to make sandwiches for her children.
There is spread able butter and there are refrigerators with special butter compartments, but in terms of convenience these do not compete with margarine.
I would like to see all butter being as easily spreadable as margarine.
There could then be ‘Family Butter’ marketed for wives and children with an emphasis on the natural product.
In addition there would be ‘Butter Plus’ with the addition of polyunsaturated sunflower oil for the man in the family.
Minding the store
If you run a store you have to serve the customers as they come in.
That takes priority over everything else.
It is urgent.
Stock control and ordering may be more important but they are not urgent.
All executives are aware of the danger of getting so caught up in ‘minding the store’ that they have no time to devote to anything else.
But few do anything about it.
In these days of increasing problems there is even less time to spare.
There are increasing problems connected with labor relations, with inflation and pricing, with government regulations and almost everything else.
In a survey in the USA in the early 1970s chief executives claimed that they spent as much as forty per cent of their time on public relations: countering ecological attacks and presenting their case to government and public alike. ¶¶¶
It is bad enough that urgent problems are increasing all the time.
On top of this an executive can also increase his load of ‘urgent’ matters by refusing to delegate and a concern with detail.
There was a time when executives prided themselves on working eighteen hours a day.
Then someone realized that a man who had to work so long was in a job that was too big for him.
Today it is more fashionable to work short hours, delegate the urgent and reserve one’s thinking for the important. ¶¶¶
I have always felt that if an executive works right through the day to five o’clock there is no way of telling how well he is doing his job.
He may have needed to work until seven or eight o’clock to complete the job.
If, on the other hand, an executive was allowed to leave for home as soon as he had finished his work then he could make an effort to improve his efficiency.
A worker who left at 4:55 p.m. under this new scheme would be in a totally different situation from one who left at 5.00 p.m.— even though the actual difference was only five minutes.
The first worker would be declaring that he had done his work; the second might have needed another two or three hours. ¶¶¶
The test is quite simple and it takes the form of a self-administered question: How much of my time do I spend on urgent matters and how much on important matters?
The question is easy enough to ask but it is rarely answered honestly.
The usual escape is to protest that the ‘urgent’ matters are also actually ‘important.’ ¶¶¶
An opportunity search attitude relies very heavily on the distinction between what is urgent and what is important.
An executive who fills his life with urgent matters is going to have no time to devote to the important matter of seeking out opportunities.
Yet in no way can the pressure of urgent matters make it unnecessary to look for opportunities.
An increase in the number of influenza cases that have to be treated urgently does not make unnecessary the search for a better anti-flu vaccine.
Problem-solving and problem-finding
‘Problem finding is just as important as problem-solving but much more difficult and much more rare’
A few years ago with the help of a grant from the Perstorp company in Sweden, I ran a national ‘inventions’ competition in the United Kingdom.
The response was good because the prizes were good.
There were over five thousand entries and the standard in some cases was high.
That is to say the standard of problem-solving was high.
But the standard of problem-finding was surprisingly low.
Most of the inventors were inventing things that did not need inventing — over fifteen per cent of the entries were for rotary internal combustion engines. ¶¶¶
We find problem-solving much easier than problem-finding because in our thinking we like to have something to ‘react’ to.
We like to have in front of us some information and some desired goal.
Then we work to achieve that goal through skilled use of the information. ¶¶¶
With the Cognitive Research Trust (Cambridge, UK) I run what is now the largest curriculum program in the world for the direct teaching of thinking as a school curriculum subject.
It is fascinating to see how the emphasis in education is on ‘reactive’ rather than ‘projective’ thinking.
In reactive thinking we analyze and sort the information that is presented to us.
However, in projective thinking we, ourselves, have to generate the information and even create the context as we try to bring something about.
We get the ‘Everest effect.’
An able child will love to have his mind stretched by a difficult problem.
Like Mount Everest the problem is there in front of the child and he sets off to scale it.
But give the same child a simple problem around which he has to generate the context and he feels uncomfortable.
Such children plead: ‘Please give us the information and the problem so that we can solve it.’
They are unable to find the problem in a situation. ¶¶¶
Reactive thinking includes problem-solving and it includes judgement.
Most executives have got where they are because they are good at both these skills.
There is a problem to be solved.
There is something to be judged.
In both cases there is something out front — something that you can look at and tackle.
But if you were to say to an average executive: ‘I think there is an opportunity somewhere in that situation, can you find it?’ the performance would be less impressive. ¶¶¶
A problem is something you want to do but cannot. ¶¶¶
An opportunity is something you do not yet know that you want to do — and can. ¶¶¶
By training, inclination and expectancy executives tend to be problem-solvers.
This is because they are able, intelligent and sensible.
Any deficiency in the smooth running of an organization is a problem and it is the executive’s business to solve the problem and keep things running smoothly until the next problem arises.
An executive is somewhat in the position of a forest fire control team.
As soon as a brush fire appears he has to rush out and extinguish it.
Between fires he spends his time watching over his domain so as to spot a fire as soon as it breaks out.
Executives are expected by their superiors to behave in this fashion.
Executives are also expected to overcome the problems that may arise in the course of implementing a policy decision that is handed down to them.
If they want to get promoted they have to be good problem-solvers and trouble-shooters.
A problem is always urgent.
An opportunity is only important. ¶¶¶
I was once having lunch with Sir Arnold Weinstock, the much respected chief executive of the General Electric Company in the UK.
He it was who made a successful company out of an odd assortment of relatively unsuccessful companies that had been lumped together.
In the course of lunch he said that he was happiest when there were no problems in any of his divisions: when things were running along smoothly.
At first sight this would suggest that he saw himself as a problem-solver not as an opportunity-seeker.
But to be fair we can consider some alternative explanations.
Opportunity-seeking may have been delegated to each division and so a smooth-running division included opportunity-seeking.
Perhaps the company had so much opportunity momentum (things in the pipeline) that smooth running would include the development of these opportunities.
Perhaps the company had been so racked by problems in the past that problem-solving still needed to be the dominant idiom.
It could be any of these explanations.
Otherwise problem-solving without opportunity-seeking would lead to stagnation. ¶¶¶
The great Nestlé corporation in Switzerland obtains about thirty per cent of its profits from one item: instant coffee.
This is a very successful product and may long continue to be so, but it puts Nestlé in a very vulnerable position.
A continued rise in coffee prices might change people’s tastes in an irreversible manner.
A newer technology might replace instant coffee.
Problem-solving alone would not be sufficient for Nestlé.
Opportunity-seeking is essential.
Three types of problem
Three different types of problem are shown in Figure 1.
The first type is the ‘block’ type of problem.
We know the road we want to take but there is a block in the way.
The block may be the need for a metal with certain heat characteristics, it may be a labour relations upset, it may be a government regulation.
The point is that we can locate, identify and focus upon the problem.
We then attack the problem with our problem-solving kit and either remove the block or find our way around it.
In the second type of problem we ‘run out of road.’
In order to proceed we need more information.
We may need more information about market resistance to a new vegetable protein product.
We may need more information about the government’s thinking on exhaust emission standards for cars.
We may need more information about agencies in Nigeria that could handle our exports to that country.
This information type of problem may not be easy to solve but at least we can try to solve it by getting the information.
The third type of problem is the most difficult to solve because it is the ‘problem of no problem.’
There is no block, the road is wide and open.
There is nothing to react to or focus our problem-solving skills.
We proceed down the open road and completely miss the opportunity turning.
Later, if the main-road peters out (market disappears), narrows (low profits), or is blocked (by government regulation) we may have to come back and search for the opportunity track.
It is common knowledge that when people are faced with a problem they often devise a solution that not only solves the problem but opens up an opportunity.
The tragedy is that in many cases the opportunity could have been opened up long before the problem arose.
In 1975 the insurance companies in the USA reacted sharply to the increases in malpractice damages being awarded by the courts.
Malpractice premiums payable by doctors rose by as much as 400 per cent.
As a result doctors started their own insurance companies.
They were in fact in a better position to assess the competence of their fellows and could also be harsher and more selective.
By early 1977 some 60,000 doctors belonged to one of these groups.
The groups proved profitable.
It is true that the rise in rates might have made profitable what would have, been unprofitable before.
But since insurance companies are not philanthropic institutions it is reasonable to suppose that the advantages of a doctors’ own insurance group would have applied before.
I was once involved in a discussion on the value of house journals as an advertising medium.
The head of the sales force maintained that if the money was not spent on the house journal he could increase his sales force by five per cent.
So I asked him whether, in his opinion, this extra five per cent would earn their keep.
He said he was sure that they would not only earn their keep but contribute substantially to the company profits.
‘If that is the case,’ I said, ‘why don’t you go ahead and employ them anyway?’
I was once having dinner at the high table at Trinity College, Cambridge, and fell into a discussion about the difficulty of getting computers to play chess.
My neighbor happened to be the famous mathematician, Professor Littlewood, and we agreed that as a game chess achieved difficulty by being complex.
We discussed whether it would be possible to design a game that was difficult to play and yet simple by nature.
This created a problem or challenge and I set out to design such a game.
The result was the ‘L-game’ in which each player has only one playing piece.
The game can be played with a high degree of skill and in fact there are over 18,000 possible moves on the tiny four by four board.
The game is now patented and marketed quite widely.
And yet I could have set my mind to designing such a game at any time.
The American company Stuart Hall Co. found that with a fall in school enrollment its market in school supplies was disappearing.
As a result the company re-designed its products to make them more fashionable and attractive — for example using such cartoon characters as the Pink Panther.
Another change was to sell through chain drug and discount stores.
As a result revenues increased from $14.1 million in 1975 to $18.8 million in 1976.
But the opportunity for these changes had existed all along.
[Constructing What if problems]
A problem is so powerful a stimulus to the development of an opportunity that we can actually mimic the process in searching for an opportunity. ¶¶¶
We can say to ourselves, ‘What if the school market fell by half?’
And then we see what ideas come up as we tackle that situation. ¶¶¶
This method, along with other provocative methods, will be described in the third part of the book.
The difference between problem-solving and opportunity-seeking is nicely illustrated by the attitude of a recruiting officer who receives a resume from an executive who had been ‘dehired’ by his previous employer.
The problem-solver might say we have an unfilled post for someone like that or he may say that he is sorry but there is no vacancy.
The opportunity-seeker will look carefully to see if the applicant has an unusual combination of abilities and experience that could be of value to the company.
If so a job will be created for the applicant.
A classic example of opportunity-seeking or problem-finding is given by the development of Databank in New Zealand.
This is a unique network that connects all banks and branches throughout the country to a unified computer system.
New Zealand is therefore ahead of anywhere else in the world in terms of electronic banking, funds transfer and so on.
This came about because Cordon Hogg did not wait for the individual banks to have ‘problems’ with their data processing but found the problem ahead of time, so creating an opportunity for Databank and for the banks themselves.
[About executive styles]
As far as I can see, in discussing styles there is no way of avoiding the too-easy caricature.
It is not unlike characterization by means of the signs of the Zodiac: Taurus has these features and Virgo has those.
In order to illustrate the key-points of difference one has to exaggerate them to the point of caricature.
I shall therefore apologize in advance for doing precisely this. ¶¶¶
What concerns me here is not so much an executive’s style of management but his role with regard to the corporation that employs him.
The style may be formed as much by the traditions of the company and the expectations of senior management as by the personality of an executive himself.
Trains have schedules.
Trains have tracks.
The train-driver sees his role as taking the train smoothly along the track to meet the schedules.
Efficient performance with the established framework is the measure of achievement and success.
The train-driver does not question the schedules or the tracks.
He knows he cannot leave the tracks and therefore does not develop any inclination to do so. ¶¶¶
The train-driver is the caretaker and operator of the established system.
He must deal with all problems that arise to delay him or interfere with the ordained running of the system.
When a problem with which he cannot cope arises he calls for help.
If the decision-makers alter the schedule he operates the new schedule to the best of his ability. ¶¶¶
In a large organization many executives are expected to be the train-drivers of the established system.
This is certainly the case in the civil service or public service but it is almost as true in many large corporations (with the difference that performance is more easily monitored through such things as sales figures). ¶¶¶
The train-driver may eventually get promoted to the position where he is making the scheduling and destination decisions.
Suddenly he will be expected to acquire an ability to design systems rather than just operate them. ¶¶¶
Those organizations that require their executives to operate as train-drivers do so for two reasons: either they assume that the system is so perfect that any alteration can only detract from that perfection, or they feel themselves unable to cope with the variety that would arise if executives were given decision and opportunity space.
The doctor is a problem-solver.
He deals in ill health.
Unlike the train-driver the doctor does not operate the bodies with which he deals.
The doctor realizes that bodies are independent and follow their own nature.
So the doctor type of executive is content for each semi-autonomous part of his organization to go its own way — provided it keeps healthy. ¶¶¶
This type of executive keeps a close eye on the information that is fed back to him in the areas of finance, sales, productivity, quality control, etc.
As soon as he detects the beginning of ill health he moves in with his diagnostic kit and treatment recommendations. ¶¶¶
So long as things are running smoothly — and by implication successfully — the doctor-type executive is happy. ¶¶¶
‘Don’t tamper with success’ is an old adage that can be used either to reward the strategy in successful companies or to condemn the strategy in unsuccessful ones.
It depends what you mean by success.
‘Smooth running’ and ‘lack of problems’ is not the same as success.
A company may quietly stagnate as the Addressograph-Multigraph Corporation did while its competitors made technological breakthroughs that eroded its duplicating equipment market (forty-five per cent of total sales). ¶¶¶
As we have seen the problem-solver is not by nature inclined to search out opportunities although he may use a lot of creative thinking in his problem-solving.
After all the fire-fighter does not go around starting fires.
There are expansion-minded farmers but here we are concerned with the farmer who is content to stay within his own patch.
Within that patch he is open to innovation, change and a search for opportunities (new strains of crop, new breeding methods for pigs, new herbicides, cultivation without tilling, etc.). ¶¶¶
The farmer is an operator, a problem-solver and an opportunist.
We may note here that in 1977 US farmers could feed twice as many people as ten years before. ¶¶¶
The executive ‘farmer’ is willing to search out opportunities but only in a defined direction.
He would be disinclined to change direction or to diversify.
If he was in the ‘table-cloth’ restaurant business he would be disinclined to get into the expanding fast-food market ¶¶¶
There is nothing wrong with the farmer style.
It includes characteristics that are lacking in the doctor or train-driver styles.
The fisherman type is the risk-taker.
He owns no farm.
He cannot guarantee that when he ventures out he will return with a catch.
He puts down his nets and hopes for the best.
He is a pure opportunist. ¶¶¶
Yet the fisherman is not the gambler he would seem to be.
He has invested in skill, experience and equipment.
Through such investment he reduces the uncertainty and increases the chance of substantial pay-offs: as witnessed by the success of the tuna fleets before they ran into dolphin troubles. ¶¶¶
We can contrast the fisherman with the farmer.
The farmer owns his farm and his effort is invested in it.
He is unwilling to look for opportunities outside.
Indeed, taken away from his farm he may no longer operate effectively.
In the case of the fisherman, however, there is no farm so he invests in his own capability. ¶¶¶
When we translate the comparison into management terms we find that the ‘farmer’ approach invests in a product line or a market.
The ‘fisherman’ approach leads to an investment in management skills and techniques that can be transferred to any field or used to follow up opportunities wherever they arise.
With the farmer the emphasis is on the field of operation; with the fisherman the emphasis is on the operator himself. ¶¶¶
We can now summarize the four different attitudes: ¶¶¶
Train-driver: Let me carry out to perfection the assigned tasks in the established system. ¶¶¶
Doctor: Let me keep the system healthy and functioning well by detecting and solving any problems that arise. ¶¶¶
Farmer: Let me get the maximum yield that I can out of this established area of operation. ¶¶¶
Fisherman: Let me put myself in such a position that I can look for and follow up any opportunity wherever it appears.
The opportunity-negative structure
Within certain organizations, like the civil service, the odds are loaded so heavily against change, innovation or the exercise of initiative that it would be quite illogical for an executive to look for opportunity.
Let us look honestly at the downside risk of innovation in such an organization — and bear in mind that it is more the fault of the structure than the people operating it. ¶¶¶
A civil servant must be relied upon to do what he is told without the variations introduced by personal initiative. ¶¶¶
A highly complex system cannot work unless all of its parts work in a predictable fashion.
An individual executive cannot be expected to have enough perspective to assess the far-ranging effects of his initiative. ¶¶¶
A civil servant must be a team man.
Otherwise he will arouse competitiveness and jealousy.
Since there are no tangible criteria of skill, such as profits or sales, all enterprise is seen as self-promotion. ¶¶¶
If someone deservedly earns the reputation of being an ‘ideas man’ because of the brilliance of his ideas he will simultaneously acquire the tag of being ‘erratic’ or ‘unsound.’
Those less brilliant than he will comfort themselves with the thought that if he is brilliant he cannot also be competent.
‘Too clever by half’ is another way of saying the same thing. ¶¶¶
Some ideas work and some do not — that is the nature of all innovation.
If a civil servant has an idea which works he will gain no special credit because it is part of his job and there is no sudden and obvious rise in sales or profits.
If, however, an idea fails that failure hangs around the neck of the innovator for the rest of his career: ‘he is the fellow who botched up …’, or ‘he is the fellow who thought up that crazy scheme for … ‘ ¶¶¶
In the commercial world an executive can offset mistakes by successes.
In the United States no one is especially blamed for going bankrupt.
Within a few months he can start off again even with the same backers.
So long as his track record contains successes then the occasional failure is overlooked.
In the civil service there is no way of offsetting a failure. ¶¶¶
The person who can be relied upon to do what he is told, to operate the system as it is set up and ‘to drive the train on schedule’ will get promoted into a position where in time he will promote people with similar abilities. ¶¶¶
Virtually the only activity that falls within the opportunity space of a civil servant is that of report-writing. ¶¶¶
Because any suggestion has to pass upwards through several layers of hierarchy there is little chance of its approval.
It only requires one of these ‘switches’ to be in the off position for the idea to be killed. ¶¶¶
Because when there is little else to do and no chance to be constructive, the mind falls into a critical mode where there are likely to be many more people against an idea than there are in favor.
In the commercial world this problem can-be overcome if someone senior enough fosters and protects the idea.
No one is to blame
The civil service is an extreme instance of an opportunity-negative structure and yet it is the fault of the structure more than the people running it.
I have seen civil servants become opportunity-seeking and even entrepreneurial once they have left the service. ¶¶¶
Few commercial organizations would be as opportunity-negative but it is worth looking at the characteristics listed above and noting which ones may apply to one’s own organization. ¶¶¶
‘Just before it comes into existence every business is an opportunity that someone has seen,’
Obstacles to opportunity search
A difficulty is an obstacle unless there is a will to overcome it.
On several occasions I have asked a roomful of chief executives to list the difficulties they saw in looking for opportunities.
Below I have put together the main difficulties that were suggested.
The list could be extended and with more time for consideration the executives could, no doubt, have improved the list.
Nevertheless, the list gives a credible picture of the difficulties.
Each difficulty was discussed with the group and the comments given below are related to that discussion.
Urgent matters always have priority.
The difference between what is urgent and what is important has been discussed in a previous section of this book. ¶¶¶
Today much of our thinking has to deal with the urgency of labor problems.
This is a variation on the first but it does suggest that a whole new area of concern is making it more difficult than ever before to escape from what is urgent.
No time to think.
The complaint was that there was no definite time set aside for thinking as such.
Executives were supposed to do their thinking on the golf course or in their baths.
The style of management: the boss knows everything.
The feeling that there was no point in looking for opportunities in an autocratic company.
Communication is always downward from senior executives to lower levels.
There was no willingness to listen to ideas or suggestions.
There was no discussion or dialogue between the different levels.
Opportunity search is always delegated to too great a distance.
It was felt that there was a tendency to delegate opportunity search to R & D departments, Corporate Strategy teams or other backroom analysts and then forget about it.
It was felt that this act of delegation often seemed to satisfy the delegator as to his need to take any action over the matter.
Availability of resources.
A general point which covers availability of people, risk capital, cashflow, time and the people to hold the line whilst opportunities were being explored.
Shortage of expertise in implementing opportunities.
This is an interesting comment because it suggests that certain executive skills might be necessary for opportunity development.
Shortage of imaginative thinkers.
Lack of projective thinkers who could do more than just react.
Difficulty in obtaining information from which to generate opportunities and with which to evaluate them.
This was related to the size of the company and was an especial problem with smaller companies.
There are for instance 10,000 journals published in the field of chemistry alone.
Risk-taking related to small resources.
The suggestion was that a large corporation had a certain availability of resources that could act as a cushion to absorb the risk of a new venture.
With a small company a failed venture could have serious consequences.
Short-term profit problem.
Accounts, financial managers, the balance sheet and the stock market all required short-term profits. ¶¶¶
This made it difficult to develop opportunities that would initially give a negative cash-flow but were important in the long run.
Union involvement and restrictions.
Everything had to be cleared with the unions first.
For example, it might be impossible to take the opportunity of introducing a new technology because the unions would not agree to a reduction in the work-force.
Fear of hassles with the unions made executives reluctant even to look for opportunities.
Legal, government and quasi-government regulations.
The complex bulk of standards, control, tariffs, licenses, and other requirements were seen to stifle opportunity.
For example — the FDA requirements for the launching of a new drug in the USA were seen seriously to retard the development of new treatments.
In addition sudden changes in government requirements could wreck an investment in a new product line.
This covered the time delays involved in getting such things as planning permission or product approval.
It was not the regulations in themselves that were restrictive but the apparent inefficiency with which the regulations were administered.
It was suggested that a sort of industrial ombudsman could be used to speed up the process.
Tax and price controls.
It was stated quite forcibly that the biggest disincentive to opportunity development was that if a corporation were successful the government taxed away the rewards but if the corporation were unsuccessful it paid its own losses.
This asymmetry between risk and reward was seen to discourage any venture attitude.
A company would fight shy of any venture which might just conceivably excite the wrath of environmentalists.
It was felt that the time involved and the bad publicity made it un-worthwhile.
It was also seen that ecological issues usually offered a temptation to politicians to get involved.
The size of the domestic market.
A small domestic market would make it impossible to look for those product or service gaps which were too small for the large corporations to concern themselves with.
In a large domestic market like the USA even the most exotic product (like the pet rocks which were at one time selling at the rate of $10,000 worth a month) could be sold in sufficient volume.
A large domestic market would also provide a base for exporting.
Lack of risk capital.
Lack of risk capital in the money market.
Lack of venture capital groups or true merchant banking.
Complaints that the banks had an unenterprising policy and were only prepared to lend where little risk was involved.
By definition opportunity development entailed risk.
A tendency to follow trends elsewhere and to borrow ideas.
The basic second-in-the-field or me-too philosophy.
Let someone else carry the risk and development cost and establish the market.
A protectionist atmosphere breeds managers who are not competitive.
If local industry is protected or subsidized there is no incentive to look for opportunities.
Love of a quiet life.
Opportunities create hassle and problems and risk.
Why look for opportunities if things are ticking over satisfactorily?
Preference for reacting to situations rather than thinking about them in advance.
The preference for reactive over-projective thinking that was discussed in a previous section.
Preference for action rather than thinking.
Executives have chosen business rather than an academic life because they prefer action.
The preferred outcomes encouraged by management training.
Management training emphasizes decision-making and problem-solving.
Such training encourages coping, not opportunity speculation.
Managers learn to play by the rules of the game and these rules do not contain an attitude to opportunities.
The difficulty of evaluating opportunities once they have been generated.
It may be difficult to tell whether an opportunity is worthwhile.
It may be difficult to tell which opportunity is the best from amongst several, if evaluation is so difficult, generating opportunities may simply be making work for oneself.
We look at things in traditional ways and therefore have great difficulties in perceiving or appreciating anything new.
Lack of encouragement.
There is poor motivation because opportunity-seeking attitudes are not encouraged in business.
Lack of financial motivation.
Insufficient reward for innovative effort.
The income tax structure that removes the bulk of any personal gain.
Lack of confidence.
Many people think that looking for opportunities is difficult and therefore do not try.
Lack of focus.
Nowhere in the management structure is there a deliberate focus on opportunity search.
Lack of technique.
Need for some methodology or systematization of opportunity search.
Many of the difficulties listed above would apply to any organization.
Others apply to a greater or lesser degree depending on the size of the company and the country in which it is located.
I do not propose to provide here instant solutions to all of the difficulties but I would like to make a few general comments. ¶¶¶
While trying to increase its resources any organization must always work with what is available.
It is possible to tailor one’s opportunity search to the available resources.
Another suggestion would be for a consortium of smaller companies to pool resources with regard to new ventures.
If expertise is not available within the company it may be possible to hire it on a consultancy basis.
In this way it is possible to use the expertise of a person it would not be possible to have on the payroll. ¶¶¶
With regard to the environmental difficulties it must be admitted that these provide severe disincentives.
There is a genuine feeling that almost every government, intentionally or otherwise, makes it more and more difficult for a business to expand.
Where this is not already done it would clearly be in the interests of business to set up some powerful lobby to present the case for business and to work for the reduction of restrictions.
Such a representative body should be able to take initiatives rather than just object to what the government proposes.
It must also be said that a true opportunity takes the restrictions into account.
An opportunity that would be an opportunity if there were no restrictions is not an opportunity at all but just wishful thinking.
In some cases an opportunity may actually arise from a restriction.
I remember being told by one entrepreneur that he loved the inefficiency of bureaucracy because once he, himself, had got through the tangle of red tape this then served as a ‘barbed wire’ barrier to keep out his would-be competitors! ¶¶¶
The difficulties that arise from a particular management structure, for example downward communication, can be overcome by a conscious change in management structure.
It becomes a matter of awareness followed by action.
Cultural attitude towards opportunity
The words ‘opportunity’ and ‘opportunist’ have bad connotations.
They suggest a hovering vulture rather than a hovering eagle.
They suggest someone who is hovering and waiting for an opportunity to emerge.
Then that person swoops down and seizes the opportunity ahead of anyone else. ¶¶¶
The negative attitude is partly based on jealousy (‘why didn’t I spot that opportunity?’) but also on the feeling that an opportunity is only taken at someone else’s expense.
There is a feeling of expediency and short-term gains.
Opportunity is equated with the activity of a speculative builder who builds and sells shoddy houses and then disappears from sight.
There is a feeling of irresponsibility or even outright exploitation.
The black-marketeer and the wartime spiv were seen as arch opportunists.
The fast-buck merchant and the fly-by-night operator are also opportunists. ¶¶¶
Even the entrepreneur is contrasted negatively with the established businessman because there is a tinge of exploitation.
Any gains are automatically regarded as being at someone else’s expense.
The go-getter and the go-go operator are also opportunists. ¶¶¶
It cannot be denied that the irresponsible, selfish, exploiting, short-term profiteering opportunist does exist.
But it must also be acknowledged that if it were not for people who saw and developed opportunities the standard of living would be very much lower.
The United States was a land of opportunity.
Henry Ford saw a way of making motor cars that would enable every family to buy a car.
Corporations were sometimes slow to see the opportunities turned up by inventors but in the end the developments came about: radio and television, telephones, artificial fibres, air travel, anti-biotics. ¶¶¶
The opposite of opportunity-seeking is not stability or conservatism, it is stagnation and atrophy.
It is wrong to think of opportunity in terms only of new gadgets and expanded industrialization.
It may equally be a matter of expanding food production, better methods of birth control, new sources of energy, redesigning jobs so that they are more enjoyable, increasing leisure time, improving education and so on. ¶¶¶
We can seek opportunities in any direction we wish and for any purpose we wish.
We may seek opportunities for the good of society as much as for the good of our corporation or ourselves.
The trouble is that no one would believe such altruism.
Society finds it difficult to believe that an organization like IBM can operate opportunities for its own benefit and at the same time serve society by developing and providing improved computers. ¶¶¶
Society may well need to change its directions, goals and values but that does not necessarily imply an abandonment of the need to progress or improve.
And that is what opportunity-seeking is about.
Corporate attitude towards opportunity
Badly run companies tend to assume that all their troubles are external (market, inflation, wages rises, union troubles, government interference and regulations, etc.) and that there is nothing wrong with their thinking. ¶¶¶
Successful companies feel that they are successful because of the competence of their thinking and they regard external problems as difficulties to be overcome. ¶¶¶
In the heyday of management seminars it was noticeable that the more successful companies sent their executives along to the seminars.
It would be unfair to suggest that the companies were successful because of the excellence of what was learned at the seminars.
It would be easy to suggest that only successful companies had the spare cash to be able to send executives to expensive seminars.
My own view is that sending executives to the seminars indicated the vital attitude of the successful companies: an attitude that implied that thinking was important; that there might always be something to learn; that their executives were worth developing.
It is this attitude that probably made the companies as successful as they were.
For example it was noticeable that British Leyland rarely, if ever, sent executives on seminars.
No doubt they felt that it was a waste of time. ¶¶¶
We can look now at some sound corporate attitudes towards opportunity-seeking.
Ride the cycle
Business has its ups and downs.
There are boom times and recessions.
There is nothing one can do to alter these or ‘buck the trend.’
In boom times you ride up the cycle and reap the profits.
In times of recession you batten down the hatches and ride out the troubled weather.
In recession times there is no point in looking for opportunities because the market is not there.
In Australia (contrary to Keynesian theory) after-tax savings increased from 9.8 per cent of income in 1970 to 18.3 per cent in 1975 — which suggests that the consumers were just, not consuming.
The cycle-riders’ theory is that in times of recession the poorly placed competitors may be forced out of business so leaving a wider share of the market to the survivors when good times came round again. ¶¶¶
So the cycle-riders do not look for opportunities in times of recession.
They are probably going through a cost-cutting exercise anyway (admittedly this is a form of opportunity search).
In boom times everyone is so busy concentrating on sales and production in order to derive the maximum benefit from the boom that there is no spare effort, or motivation, available for opportunity search. ¶¶¶
A contrary view is held by those companies that regard a recession as the ideal time to look for opportunities.
Their reasoning is that no one else is doing that and when the boom does come round they will be ideally placed to benefit even more than before.
Survive the pressures
Here a corporation feels that all its thinking skill is required just to survive.
Management feels that its main function is to find a survival strategy amongst all the pressures, problems and constraints.
It is somewhat like a man defending himself against a hail of blows and not having time to think about buying new clothes. ¶¶¶
Such corporations feel that management has now become a survival skill: dealing with financial and labour problems, dealing with the government.
Some managements feel that this may only be a temporary phase and that when the pressure lessens there will be time to look for opportunities.
Other managements suspect that the survival idiom will become permanent. ¶¶¶
The survival attitude is one of permanent problem-solving — of permanent reaction to urgent situations that demand attention.
There is always a fire somewhere that needs to be put out. ¶¶¶
The distinction between what is urgent and what is important may need to apply here.
A deliberate allocation of time and effort to opportunity development may serve to reduce the problems; for example, entry into a counter-cyclic field.
Something will turn up
This is the passive approach.
Something will turn up.
It always has done before and will do so again.
There is no need to look for opportunities because they will come along of their own accord. ¶¶¶
There are different degrees of passivity.
At one extreme is a corporation that will do nothing until a competitor, or a rapidly eroding market, forces action.
At the other extreme is a corporation which will not develop opportunities itself but will undertake an active ‘opportunity search’ in terms of licensing ideas, borrowing them from abroad, imitating, being second in the field, and buying up small entrepreneurial outfits of the Boston route 128 variety. ¶¶¶
There is no doubt that the ‘me-too’ philosophy can be successful — as in the case of Penthouse magazine which followed on the success of Playboy.
The me-too philosophy is based on the consideration that the advantages of being first in the field are outweighed by the risks and that there is always a substantial market share available to late-corners who can build on the paid-for experience of the pioneers.
It is easy to give contrary examples like the massive domination of their fields by IBM and Xerox.
It may be best to hope that the first-in-the-field is an inefficient company with a poor product!
Buying up smaller companies that have had the entrepreneurial drive to develop new opportunities may also be a cheaper way than running one’s own R & D department.
After all you only buy success and do not fund failure. ¶¶¶
The truly passive approach is based on the expectation that when the time is ‘ripe’ an opportunity will present itself.
If that were true then there would be no failed companies ever.
Furthermore, the ability to spot the opportunity depends on an opportunity-conscious attitude of mind and that has to be developed.
It is almost impossible to distinguish between justified complacency and unjustified complacency. ¶¶¶
‘Our executives are all bright fellows, sensitive to market changes and with an eye open for opportunities.’ ¶¶¶
We have a New Business division which is all the time sifting through the many opportunities that are put before it.’ ¶¶¶
‘Our R & D department is very active and I can tell you that we have several new products in the pipeline.’ ¶¶¶
‘Our problem is not to generate opportunities.
We are inundated with them.
Our problem is to choose the right one.’ ‘We have an entrepreneur as chief executive.
If there is any opportunity around he is sure to spot it before anyone else.’ ¶¶¶
Now all these things may well be true but they bring to mind the fellow who said that he did not need to buy a book ‘because he already had one at home.’
Few companies are not doing something, somewhere that would qualify as opportunity search.
But it may only be tokenism or a tiny part of what could be done. ¶¶¶
It has been my experience that truly creative people (as demonstrated in their work) have been interested to read my books on creativity but the less creative have felt that they knew all there was to know.
Complacency is not usually the characteristic of someone who is genuinely interested in a subject. ¶¶¶
Complacency is a particularly dangerous attitude because it contains no possibility of change.
A company that within its own perspective thinks it is doing a lot about opportunities may have a perspective that is very limited.
There is a justified fear that a technological development will create an opportunity that will in turn mop up so much of the available resources that the company fails.
It happened to RollsRoyce where the development of the RB 211 engine and the hyfil blades combined with a massive Lockheed order to destroy the company. ¶¶¶
Certain types of opportunity do require a heavy investment in research, product development, product launch or plant.
The cost of developing the Xerox process was $75 million.
Polaroid is said to have spent $600 million on developing the SX camera.
There is always the fear that a technological innovation may seem so impressive that the company is forced, willy nilly, to pursue its development.
Companies run by scientists or engineers are particularly prone to this danger because such people are apt to look more closely at the elegance of a solution to a problem than at its market potential.
A Californian company that successfully developed commercial uses for the laser eventually had to sack the chairman and founder because he could not resist developing a super surveying laser that would have been accurate to within millimeters over a twenty-mile distance.
The companies that came together to form the UK General Electric Company had tended to be run by engineers and were technologically driven. ¶¶¶
Faced with a technological breakthrough a company may be tempted to put all its ‘opportunity’ eggs in one basket and even with the most promising product this is a dangerous strategy.
Fear of an opportunity war
In service industries like banking and insurance and in some other industries the cost of innovation is not very high.
But many corporations are restrained in their opportunity search by fear of setting off an opportunity war.
If a service company offers some new service, its competitors will match this and perhaps go one better.
As in a price war no one benefits in the end.
The same sort of thing happened in the United States in the cosmetic industry.
One company offered premiums as an inducement to customers.
Competitors matched this and went further.
In the end hitherto high profit margins were eroded and no one increased their market share.
A company that is just breaking into a market can of course open up opportunities that an established company with the major share of the market cannot match.
On the other hand an established company could, in theory, lower prices so as to drive the newcomer out of business.
In the USA the anti-trust laws would be invoked if this were to happen. ¶¶¶
Fear of an opportunity war also includes the situation where a company is unwilling to invest in the development of a new product because the lead time over possible competition is too short to recoup the development expenses.
The price of fertilizers rises.
Entrepreneurs see an opportunity and build new plants.
There is over-capacity in the industry and the prices fall again.
The cycle repeats itself until the operators grow cautious.
In certain industries, such as the production of polytene or plastic piping, production has to be on a large scale in order to bring down unit costs.
So even when a genuine opportunity exists the response almost inevitably leads to over-capacity and the opportunity fails to materialize.
The same thing can happen in paper and board mills and in the chemical industry. ¶¶¶
A ship-owner reads his figures and interprets his trends and orders a new tanker.
His competitors have read the signs in the same way as he has and they also order new ships.
Eventually all the ships are built and there is a glut. ¶¶¶
For reasons such as these there is a great deal of caution in following up the apparent opportunities offered by a rise in prices or poorly supplied demand.
Disinclination to expand
There was a time when the American attitude to business was a high volume one: expand sales and let the profit margins look after themselves.
Those days are gone, possibly for ever.
Too many businesses found that they were expanding sales with no real increase in profits.
An airline might put on extra flights in order to cope with an increase — real or projected — in traffic.
The increase in traffic did create more sales volume but many of the planes were flying with only partial loads and so profitability declined.
An airline like Qantas with a loyal home market would, in contrast, restrict its flights even if this meant turning away some passengers.
As a result it would operate with a much higher load factor and therefore higher profits. ¶¶¶
In 1977 US industry was more interested in keeping prices high than in lowering them and increasing output.
As a result much of industry continued to run at between seventy and eighty-per-cent capacity.
Volume for the sake of volume no longer made sense. ¶¶¶
The idea that expansion for the sake of expansion does not necessarily make economic sense dampens enthusiasm for opportunity-seeking.
But since return on capital is the name of the game there is still a good reason for looking for opportunities to expand in those directions in which the return on capital is higher.
The corporate attitudes listed here do not encourage opportunity search.
And yet they are really only qualifying factors.
They do not make an opportunity search unnecessary but they do emphasize the importance of the direction in which the search takes place and of the exact type of opportunity that is required. ¶¶¶
Executive attitude towards opportunity
‘Unfortunately opportunity hunger arises from appetite and not from starvation.”
If it is difficult to generate a corporate opportunity hunger it is even more difficult to generate within an individual executive a feeling that there is a need to look for opportunities.
Such a need seems to arise from personality, ambition, motivation, curiosity and that vital desire ‘to make things happen.’
Nevertheless, we can look honestly and objectively at all those things which make opportunity search so unattractive to executives.
We can divide executive attitudes into: indifferent, reluctant, complacent and blocked.
This leaves out the eager group.
But apart from saying that executives eager to search out opportunities do exist, there is not much more to be said about such people — except that they seem rare.
It never occurs to many executives that they should concern themselves with opportunities.
To be fair, there are executives who are not even opportunity-conscious as regards their own careers.
Opportunity search is not seen as part of the ordinary executive role.
That role is seen in ‘train-driver’ terms: running the organization as it is set up without seeking to alter things.
Opportunity search is seen as being the concern of senior management, strategic planning groups, R & D, new business groups and the like.
To some extent this is a matter of semantics.
Opportunity is often seen as a large scale undertaking — like a tobacco company diversifying itself into the ice cream business.
Such large scale decisions are seen to be outside the opportunity-space of an ordinary executive even though he may have views about the opportunity.
Yet opportunities do not have to be large scale.
There are opportunities in cost-saving, personnel relationships, procedures and innovations at all levels. ¶¶¶
Another reason for executive indifference towards opportunities is that many executives feel that they are not expected by senior management to search for opportunities: they feel that they are just expected to get on with the job and leave the thinking to senior management.
In many corporations it is undoubtedly true that independent, thinking by middle management tends to draw frowns from their seniors.
In the hierarchy of management it only needs one person to disapprove of opportunity thinking to kill that attitude.
For its encouragement every person in the hierarchy needs to be seen to be in favor.
In practice this is most often achieved by a dynamic chief executive who is interested in opportunity and feeds this attitude down the line. ¶¶¶
Opportunity means hassle of one sort or another.
Most executives are aware of this objective truth.
What hassle really means will be discussed under the next heading. ¶¶¶
An indifference to opportunity can arise from the energetic application of the ‘train-driver’ attitude or it can arise from sheer laziness.
Paradoxically, laziness may, in certain circumstances, be a spur to innovation.
This is in the area of innovation concerned with saving time, effort or money. ¶¶¶
Basically indifference arises from only two causes: lack of understanding of opportunity and the executive role, and lack of motivation.
In a survey of executives in the UK it was found that most of them wanted no-limit pay rises to be related to productivity.
These executives went on to say that they felt they could increased company profits by six to ten per cent.
Such an increase in productivity represents an extraordinary opportunity.
The implication, however, is that the executives were unwilling to work towards this opportunity unless financially motivated.
It may seem difficult to believe that a self-driven executive would deliberately turn down an opportunity because of lack of reward but over a period it seems likely that an executive does need some tangible indication that opportunity development is part of the game.
High income tax rates in countries such as Sweden and the UK effectively remove the reward for extra risk, work or responsibility.
Stock options can go some of the way towards providing an incentive but tend to be a little remote in a large corporation (since an individual executive cannot easily see that what he is doing is really going to affect the stock market valuation).
I would favor ‘project-pay’ whereby the extra work involved in operating an opportunity project is directly rewarded.
This would apply equally to the projects set up, as opportunities, by the executive himself as to those delegated by senior management.
In countries with high taxation increased leisure or other perks might be the only rewards that mean anything. ¶¶¶
Promotion-consciousness can also lead to indifference to opportunities.
Opportunities have a longer time scale than direct executive coping and so the executive who relies on quick results may disregard them — trimming and cost-cutting opportunities are an exception.
The risk of failure is also there.
Failure of at opportunity project may be blamed on the executive who initiated the project even though failure is not his fault at all.
An executive who is indifferent towards opportunity pays the subject little or no attention.
The reluctant executive is concerned with opportunity but reluctant to get involved because the downside risk is so out of proportion. ¶¶¶
If you start looking for opportunities you create work for yourself both in the search and in what you have to do next when you h’e found what you think is an opportunity.
This extra work involves thinking time and thinking effort.
There are decisions to be made and uncertainties to be coped with.
There are worries and anxieties that were not there before.
There is a cost in time and money.
My own feeling is that an executive who shies away from work and involvement of this sort should never be an executive but that is a harsh judgement.
After all the attempt to make and keep simple one’s life is intelligent behavior. ¶¶¶
Reluctance to get involved in an opportunity search also arises from the trio of dilution, distraction and dissatisfaction.
An executive fears that his own efforts and those of his subordinates will be diluted by opportunity exploration.
The fear is that the focused and single-minded effort required to solve a particular problem will be weakened by such dilution.
The second fear is that of distraction.
In the early stage of exploration an opportunity can be enticing, even exciting.
The fear is that an executive will be tempted away from a routine task that needs to be done, in order to deploy his enthusiasm in an opportunity search.
The third fear is that of dissatisfaction.
There is a feeling that even to look for an opportunity implies dissatisfaction with the existing state of affairs.
This ‘divine’ dissatisfaction, as it is called in the progress of science, is useful if it results in genuine improvement.
But if it does not the dissatisfaction remains without the solace of an improvement.
Some executives feel that it is better not to generate the dissatisfaction in the first place. ¶¶¶
The need to achieve balance between operating the system as it is (the train-driver attitude) and seeking new opportunities (the fisherman attitude) creates difficulties.
The human mind is not at ease with balance.
We prefer to rest at one or other extreme.
But over-indulgence in an opportunity search leads to a sort of butterfly behavior with energy being directed at one thing after another and never settling on any particular thing long enough to get something done.
It is hardly surprising that the opposite extreme is preferred: ‘Don’t waste time dabbling in what might be but get on with what is.’ ¶¶¶
There are many minds that find uncertainty uncomfortable.
It is not that such minds are any less capable of coping with uncertainty than others but they just find dealing with uncertainty uncomfortable.
They have the sort of feeling an accountant might have if a client told him that he was uncertain about some of the figures put forward.
Since opportunity search involves uncertainty at least at two stages — the uncertainty of even finding an area of opportunity and the uncertainty that it will prove valuable — such minds are reluctant to get involved in an opportunity search. ¶¶¶
An executive who knows that he is competent at his job may be reluctant to stick his neck out and risk making a mistake over an apparent opportunity.
In many organizations the penalties for making a mistake are so much greater than the rewards for opening up an opportunity that this reluctance constitutes intelligent behavior.
In other situations it may just be a fear of having one’s competence tested or overextended.
It is a sort of combination of Parkinson’s Law and the Peter Principle: ‘An executive will fill his working time with matters that fall within his competence.’ ¶¶¶
Quite apart from a reluctance to risk his own career or peace of mind, an executive may be reluctant to risk the well-being of the company.
He may feel that the company is not in a fit state to chase after opportunities.
He may feel that the resources are too slim to be stretched over several opportunity fields.
He may feel that it is best if the company concentrates on what it knows how to do best.
The complacent executive is not indifferent to opportunities, nor is he reluctant to get involved with them: he just feels that he is already doing all that needs to be done.
He feels that he has a high degree of awareness and is sensitive to what is going on both inside his company and in the market place.
He feels that as soon as an opportunity comes along he will be able to spot it and seize it.
For him an opportunity search is not an active hunt that needs to be organized but a passive waiting.
To use the fisherman analogy, he is a fisherman who puts down his nets and waits for the fish to come his way — instead of setting out to discover where the big shoals might be. ¶¶¶
Opportunities do, of course, arise.
But they are not always self-evident.
An opportunity may only be spotted long after it has become possible.
The specific and particular opportunities that arise within a particular company cannot be developed by copying what a different company is doing.
In the disposable razor market Gillette cannot easily follow the behavior of the Bic organization because Gillette would be competing against its own products whereas Bic is not. ¶¶¶
The problem with complacency is that it can never be faulted in particular.
In general we know that most complacency is totally misplaced but an individual may still feel that he has earned the right to be complacent.
It is true to say that the people who have good reason to be complacent very rarely are, but again this is a general comment ¶¶¶
Perhaps the simplest test of complacency is to measure dissatisfaction.
Instead of asking an executive why he thinks he is satisfied with his approach to opportunity-seeking, it may be more useful to ask in which areas the executive is dissatisfied.
If there are no such areas of dissatisfaction the complacency is very likely to be misplaced.
This is a valid test because complacency usually arises from a limited vision: an executive sees only a small world and feels he is doing all he can in that small world.
An executive who sees a larger world will always be able to see some area in which he is dissatisfied.
It is somewhat like a true craftsman rarely being complacent about his work.
An executive may not be indifferent, reluctant or complacent in his approach to opportunities he may simply be blocked.
The structure of a corporation may be such that an executive is allowed so little initiative in his behavior or his thinking that he never gets a chance to look for opportunities.
Such restrictive structures do exist but even in their absence a passive corporate attitude may be just as blocking.
An ‘inertia block’ is one where an idea just died for lack of interest or support.
At some point every worthless idea should be expected to die but that death should follow some initial interest which explores the value of the idea. ¶¶¶
A corporate block may be brought about by a single executive in charge of some division.
He may create throughout that division a negative attitude towards opportunity because he does not want to cope with the extra work thrown up by opportunity-eager subordinates. ¶¶¶
At a lower level there can be personality block when the opportunity-seeking of one executive is persistently blocked by a colleague with whom there exists a personality clash.
In this case the blocking effect is not universal but applies only to that particular executive. ¶¶¶
There is a common fallacy that a person who is good at spotting opportunities should also be capable of doing something about them.
Yet this is not so.
A person may be very perceptive at spotting opportunities for others but unable to follow them up himself.
There are bank managers who expertly advise their clients on investment in the stock market, commodities or gold but keep their own money in low-yielding government stock through timidity.
A person may see a good opportunity but through caution or timidity be unable to follow it up.
If an opportunity involves ‘selling the idea’ or persuading someone of its value, then one type of personality might be able to accomplish this whereas another type who sees the benefits of the opportunity even more clearly may be incapable.
Caution, timidity, lack of drive, fear of failure can all interfere with the follow-through of an opportunity, yet the ability to spot an opportunity may be there.
We tend to dismiss too easily those people who are unable to follow through the opportunities they have perceived.
We tend to feel that the benefits cannot be so real if the originator cannot first sell the idea to himself.
Yet we ought to remember that the designer of the Grand Prix racing car may not rate highly as a Grand Prix driver and may even be too nervous to try. ¶¶¶
An executive may be unwilling to move abroad, change jobs or accept promotion because his wife will not let him.
It may be unfair to castigate him as ‘hen-pecked’ for the same lady might have had an equivalent effect on many other executives with more compliant wives.
An honest and objective assessment of blocks to performance is better than a blanket expectation that an executive should be able to overcome such blocks on his own. ¶¶¶
A rather specific block to opportunity search occurs in the reaction of a listener to an opportunity idea that is proposed.
There are many lukewarm and negative reactions.
Perhaps the most dangerous of them all is the killer phrase: ‘the same as …’
I have personally seen this simple phrase used time and again to kill the most valuable ideas.
The listener sees some resemblance between what is proposed and something that is already being done or has been tried and failed.
It is a way of saying: ‘That is not worth doing because we are already doing it or because we have already tried it.’
The reason the phrase is so dangerous is that it can be applied with all innocence.
The receiver of the idea can genuinely see only the resemblance between the proposed idea and the old one.
This is the only way he can understand the new idea.
The receiver may be quite unable to see the crucial points of difference.
It must also be said that if we make enough effort and are prepared to shift to a higher level of generality, most new ideas can be seen as being ‘the same as’ some other idea.
It is not unlike the attitude of those people who claim there are only three basic types of joke and then proceed to focus on those features in a joke which will allow it to be forced into one of these categories.
The simple antidote is to say: ‘Let us focus on the points of difference.’
This is a habit which every executive needs to develop for himself in order to counteract the natural dismissive tendency which he will find himself applying to most new ideas.
A tiny point of difference may sometimes decide whether the new idea really is an opportunity or not; for example, the addition of an extra column of pegs made all the difference between success and failure for the best-selling game ‘Mastermind.’
What is an opportunity?
'An opportunity is a course of action that is possible and obviously worth pursuing.'
[Dimensions of Opportunity Thinking]
To many executives an opportunity is a high-risk speculation.
There are better ways of making profits than the pursuit of high-risk speculations.
An opportunity does have to be a speculation because it is about the future.
In that sense almost all our activities are speculations because we are trying to bring something about and believe that our actions will do this.
But the ‘high risk’ feeling is erroneous.
A true opportunity is not a high-risk area.
A true opportunity should be obvious in its benefits.
What is risked is the thinking time taken to consider an opportunity and to bring it to the stage where it is obviously worth pursuing further.
An executive may have to do a deal of thinking before he perceives that an opportunity is worth pursuing.
It is this appreciation of benefits that motivates anyone to explore an opportunity.
As an executive continues his thinking in pursuit of the opportunity the promise of the benefits may wax or wane or go through cycles of either.
Further thinking may show the benefits to be illusory or smaller than initially supposed.
Further thinking may show that the benefits are as imagined but that the cost and difficulty of achieving them diminish their value to the corporation.
All this is thinking time and that is what is being risked.
The difference between an opportunity and wishful thinking is that an opportunity is possible.
At the first sight an opportunity may not appear possible but with focused thinking the possibility should increase.
If this does not happen then it is no opportunity.
The possibility should increase both as regards the course of action that can be taken and also as regards the benefits that might arise from that course of action.
In short an increasingly satisfactory answer to the two questions:
‘What course of action could we take to bring this about?’
‘What are the chances of the benefits being generated by our course of action?’
To turn an idea into a real opportunity requires thinking time and thinking effort.
The first purpose of the thinking is to formulate the opportunity idea.
The second is to assess the benefits.
The third is to work out a course of action that is feasible.
It must be self-evident that the better the thinking the less risky is an opportunity.
When an opportunity is defined as ‘a course of action that is possible and obviously worth pursuing,’ it should not be supposed that the course of action that is worth pursuing refers only to undertaking the whole project.
The course of action could just as well refer to getting more information; doing a market study; carrying out further research; or setting up a pilot project.
It is the first step that may be obviously worth pursuing and depending on the result of that step the next step may be equally worth while.
When looking at a large opportunity it is the executive’s business to break that down into preliminary steps that are obviously worth pursuing.
Even if the only step that is obviously worth pursuing is to ask an expert in the field, that is the step to be taken.
There is no short cut to opportunity search and development.
Deliberate thinking time is required.
The more of that we can risk the less we risk other resources.
Nor should it be imagined that the thinking time is wasted if the opportunity is turned down.
That thinking investment may prove useful in another situation later on.
There are some opportunities that seem to be open to anyone who wants to get into the field.
For example, the growth potential in the fast food area in the United States seems to be huge.
There are other opportunities that are only opportunities for an organization that is already engaged in that area.
The distinction between the two is not always clear.
The consumption of polystyrene in Brazil is only 1 ½ lb per head per year as compared to 22 lb in the USA.
The consumption is likely to increase rapidly in Brazil’s exploding economy.
Is the opportunity there for anyone who wants to get into the field or only for someone who is already engaged in the plastics industry? ¶¶¶
The classic curve of diminishing returns or marginal effectiveness is shown in Figure 2.
Every executive is aware of the curve since his main aim in life is to stay on the steep initial part where an investment of money has the greatest effect.
The curve crops up in all sorts of situations.
More expenditure on advertising may produce relatively less return once a certain point has been passed.
The same may apply to research, to price-cutting and to many other things.
In order to understand the nature of an opportunity we can use the same curve—but reverse the axes.
Instead of a cost-effectiveness curve we get an effect-cost curve.
We are now interested in the situation where for a relatively small increase in cost we can get a large effect.
In other words a particular company by using its established resources may be able to achieve and effect a lesser cost than would anyone else.
That becomes an opportunity for that company—but not for everyone.
As an illustration, when the Bic corporation decided to go into disposable razors it had the technical—and marketing—know-how for producing small plastic items in large quantities because it had already made a success with disposable ballpoints and lighters. ¶¶¶
The resources of a company may simply be financial.
Flush with cash a company is in an expansionist mood.
In the heady conglomerate days the resource was an attractive price earnings ratio on the stock market.
The resource may be one of management strength which can be injected into an ailing company that has been taken over.
The resource may be one of know-how in a particular field, such as plastics, glass or consumer goods.
The resource may be a technical one, for example an enzyme that more effectively converts corn starch into high fructose sugar.
The resource may be that of market muscle which involves warehousing, distributing networks and outlets plus a promotions budget.
The resource may be one of market position or market recognition.
When Volvo took over the Daf car company, Volvo was able to produce a small car with the market image of Volvo reliability and so charge a price few other manufacturers could have got away with. ¶¶¶
The Santa Fe railroad started as a railroad.
It has now been involved in real estate for one hundred years; in road transport for fifty years; in timber for thirty-nine years; in coal for eighty-nine years and in petroleum for seventy-eight years.
It became involved in all these things because an opportunity to do so arose from its basic transport activity. ¶¶¶
A distinction does have to be made, however, between new activities which are properly costed and are profitable in their own right and activities which simply mop up spare capacity.
The latter are only profitable if the fixed costs involved in the main activity have to be incurred anyway.
The danger is that activities which are started for this reason are then continued, unprofitably, when the spare capacity no longer exists because of a change in technology or increased production.
In these matters the allocation of costs determines whether an activity is an opportunity or not.
Opportunities for expanding and opportunities for contracting
Figure 3 illustrates the two alternative types of opportunity.
The top square suggests the existing activities or status quo.
The middle square suggests an expansion in activities and the last square suggests a contraction.
This contraction is not just a contraction in activities but may be a contraction in costs for doing the same things. ¶¶¶
An expansion may involve an increase in plant capacity.
For example Erol Beker of Beker Industries calculated that fertilizer would be in short supply so he increased capacity four-fold in three years.
This resulted in serious over-capacity.
The expansion may be in terms of market penetration not only in depth but also in breadth.
The brilliant position of Bacardi rum in the market allowed it to increase sales by 13.5 per cent in 1976 so giving it third place in the brand sales of spirits.
Bacardi was marketed as a mixer, in particular with Coke, and even for making rum cake (70,000 cases of half pints for this purpose).
The Dow corporation wants to expand down-stream towards consumer products because the margins are better.
A Pan-Am pilot James F. Zockoll had to buy-some drain-clearing equipment one week-end when no one would unblock his drains.
From this he expanded into a profitable franchised drain-clearing service. ¶¶¶
New products as an extension of existing lines or as new departures are obvious examples of the expansion type of opportunity (or, in many cases, replacement).
Too often this type of opportunity is regarded as a luxury: ‘We are doing quite nicely with our present product range.’
But product obsolescence, pressure from competing products, shifts in the market all combine to make this type of opportunity an absolute necessity.
Most executives find it difficult to decide how much expansion of this type is really essential replacement and how much is speculative luxury. ¶¶¶
The contraction type of opportunity has much more appeal to most executives because the end results are so much more tangible and the risk is much less.
Cost-cutting exercises of all sorts come into this bracket.
If you can be seen to be carrying on the same activities at a lower cost then the increase in profitability is obvious.
There is a multitude of well-established techniques of operations research (for example cost-cutting in distribution); value analysis; value engineering (cost-cutting in product design or production); work study; clerical work study and the like which are designed to increase productivity by cutting costs in this way.
They are well worth considering as part of an opportunity search.
The difficulty is that repeated application of these methods tends to yield less and less since there is less and less fat and inefficiency to be trimmed away.
In other words there is a natural floor whereas with expansion there may not be. ¶¶¶
Product-trimming is another part of the contracting type of opportunity.
It may be a decision to get out of a certain field which is proving unprofitable (like RCA’s $490 million decision to get out of the computer field).
Or it may be a decision to trim product lines (like RCA’s decision to cut down the number of products in its mobile radio division).
Application of the traditional eighty/twenty rule continues to be as valuable as ever: twenty per cent of our activities generate eighty per cent of our profits and eighty per cent of our activities only generate twenty per cent of our profits.
There is a small danger here that some of the unprofitable activities might be essential for the success of the profitable: as in the case of a motor company that has built its reputation on its sports cars but gets most of its profits from family saloons.
This effect needs considering but is sometimes exaggerated. ¶¶¶
In catering it is estimated that the ingredients cost thirty-eight per cent of what is charged for a dish and labour charges contribute thirty to thirty-five per cent.
Clearly there are opportunities in choosing ingredients, reducing wastage and pilfering, buying policy, reducing labour content and associated areas.
A fast food chain that thought only in terms of expansionist opportunities (opening new sites) would soon get into trouble with a high sales volume but no profits. ¶¶¶
Figure 4 shows in a visual way some approaches to opportunities: ¶¶¶
We can look for a simpler and more direct way of achieving what we want. ¶¶¶
We may find that by re-thinking what we want to achieve it becomes simpler to reach. ¶¶¶
We can look to see whether with our resources and established direction there is something else we could achieve as well.
Direction, destination and means
You can look in a defined direction: north, south, upwards or downwards.
Within that direction you may then see several destinations which you may want to reach.
It is the same with opportunities.
There may be broad directions in which a corporation wishes to look for opportunities or the direction itself may be an opportunity.
For example an organization may wish to move from being production-oriented towards a market orientation.
An organization may look in the direction of opening up new markets in the less developed countries.
More specifically, looking in the direction of Nigeria as an expanding and rich market would also qualify as a direction. ¶¶¶
A destination is more exact than a direction.
There are many towns we could reach by driving north but we need to decide which one is to be our destination.
A destination may be a particular product or a product line (like Kodak’s entry into the instant camera market) or it may be a market position (like Avis aiming to be first in Europe and succeeding).
The only difference between a direction and a destination is that a direction is broadly defined but a destination can be defined tightly. ¶¶¶
Once a destination has been defined it becomes possible to examine the means of getting there.
This is a further area of opportunity search.
There may be a variety of different routes, many of which are not all obvious until we have discovered them.
Some routes may be better tried or less risky or more reliable or cheaper.
Even when a route has been chosen there may still be opportunities to simplify or improve it.
It may well be that an accepted route might have escaped scrutiny because the present users have never bothered to question it.
A new user does have the chance of doing this. ¶¶¶
Too often it is thought that opportunities only exist in terms of directions that are discussed at corporate strategy level (for example, a diversification strategy).
Far less thought is given to searching for opportunities at the destination level and even less at the means level.
The thinking involved
In this section I have emphasized that it is deliberate thinking that will uncover opportunities and turn a fanciful idea into something that is obviously worth pursuing — a true opportunity.
Some of this thinking is concerned with information-gathering, assessment and analysis.
But a great deal of the thinking — perhaps more than in any other management field — is concerned with perceptual change.
Perceptual change involves both what we are looking at and the way we look at it. ¶¶¶
Figure 5 suggests that in one case we may fail to see an opportunity that is obviously worthwhile, because we are not looking at all. ¶¶¶
We are either too content with what we have to bother to look or too busy with our day-to-day survival problems. ¶¶¶
In the second case there is a strong commitment to look for opportunity but the gaze is directed in the wrong direction. ¶¶¶
In the third case we are indeed looking in the right direction but we cannot identify the opportunity because we are looking at it in the wrong way or because it is lost in the midst of something else. ¶¶¶
In the fourth case we do see the opportunity but we cannot immediately see its value and therefore have to do some more thinking in order to uncover the value. ¶¶¶
We can therefore list some simple strategies that could overcome these different problems: ¶¶¶
Decide to spend some time and effort in a deliberate search for opportunities. ¶¶¶
Use a scan approach which allows you to broaden the direction of search instead of being too eager to pursue one direction in depth. ¶¶¶
When something comes into view make an effort to look at it in different ways (lateral thinking) before hurrying on to something else. ¶¶¶
Spend some time on a deliberate search for benefits in a situation instead of always expecting the benefits to be self-evident.