Test Your Assumptions: Past Success May Lead To Dumb Mistakes

Mark Hurd, the golden boy CEO of the Hewlett-Packard turnaround was forced to resign recently amid a sexual harassment scandal. As a colleague of mine described in a recent post on his blog, “Hurd was a no-nonsense, low key, under the covers (no pun intended) manager who engineered a remarkable turnaround for HP.”  What went wrong?

This announcement happened coincidently just one day after I interviewed thought leader Peter Winick about “Who Do Smart People Make Dumb Mistakes?”  Our discussion wasn’t focused on the irrational tryst seeking decisions of Hurd, Tiger Woods, John Edwards, and Eliot Spitzer or the career-sabotaging behavior of superstar ball players like Michal Vick, Plaxico Burress, and the shocking list of characters we read about daily. Our conversation was more targeted, focusing more on business than personal decisions – although you’ve got to wonder if you can separate the two.

One of the reasons Winick sees smart business people making bad decisions is that “they fail to question their assumptions.”   That’s particularly true for managers with years of experience and a successful track record.  But that example only highlights the need for every leader to ask himself if what worked in the past will work in the future.  In other words, is the assumption that past performance is a good indicator of future success wrong?  Winick believes that many decisions that work out badly can be traced to a lack of questioning:  what were the circumstances that surrounded success in the past?  “Does the history surrounding the success really matter…or can it be a detriment?” asks Winick. “We don’t ask that question enough.”

One example given by Winick is the fate of a manager who climbed the career ladder in a locally-based physical plant gets promoted to manager of a globally dispersed business with a virtual workforce.  “If all you know is working in an office peering over your reports’ shoulders, history may not be repeated when forced to manage people thousands of miles away.”

Another business example we discussed was the failure of government bureaucrats and hospital administrators to consider the costs associated with implementing electronic health records.  The assumption is that electronic records will improve portability, continuity of care, and minimize mistakes. Those potential outcomes are all true.  However, the actual process of entering the data alters the way most health care providers have learned to practice medicine.  The cost and challenges presented by converting from a paper to electronic records was and still is woefully underestimated.   The assumption that doctors and other providers will simply begin tapping on a keypad instead of pushing a pen on paper without affecting the way care is delivered is naïve.  Unfortunately much of the success of the recently passed health care reform rests on a successful conversion to electronic medical records. 

Members of a Vistage LinkedIn group are currently discussing what they did differently during the past year to change the way they did business to recover from the recession.  Several common themes evolved, mostly using words like “retrenchment,” “refocus,” and “going back to our core competence.” While many Vistage and non-Vistage members seem to be enjoying the fruits of their labor, looking inward for strength is not a universal panacea.  In fact, for quite a few companies, refocusing on their core competence of old was just comfort food.   New strategy was just a mental exercise.  Why?  Unfortunately for many businesses, the assumption that what worked in the past will work in the future is based on too much hope and not enough reality.

Winick suggests that leaders need to quickly pass through their early stages of grieving for the loss of business and seeing “their 401Ks shrink to 101Ks.”  They need to get beyond denial and anger, he says.

Unfortunately Winick sees many smart and successful people currently trapped in the beginning stage of grief.  Winick is completely flabbergasted when he hears business owners and executives say “flat is the new growth.”  When he hears business people accepting their current state of affairs as fate, he cringes.  “Flat is not the new growth,” he says empathetically. “Growth is still growth. Somewhere there are 2 guys sitting in a garage like the two Google boys.  In 3 to 5 years, we’ll see a new generation of smart guys who really took advantage of opportunity during the recession. Once you get to a place of acceptance, you can see the new world and now ask: how am I going to win?”

Winick also doesn’t encourage executives and owners to throw out everything.  He recommends just taking inventory and testing assumptions.  The first thing Winick suggests small business owners do is realize that, for many, their business is an extension of their personality. The personality of the owner in the past became the default culture of the organization.  If that’s the case, changing the direction of the business may now require shifting the mindset of the owner.

Heed the advice of Peter Winick. Test assumptions.  That’s what successful thought leaders do.  Have you tested yours today?

Listen to the full interview with Peter Winick on Workforce Trends Blog Talk Radio.


Ira S Wolfe