Much of this book and its prescriptions for management are about understanding, mastery and redesign of what is happening within a business or organisation. It is about the processes which deliver. But management cannot be restricted to this. It always operates within an external environment, within a context of possibilities and constraints, and these are typically in flux. They have a huge bearing on what is required to be successful and what has to be taken into account when doing so.

The most obvious example is the legal framework within which any business works and its requirement to make money rather than lose it, but it goes much further than this. In many situations, one business will be heavily dependent on another for its success because it is dependent on that business for the supply of essential goods or services, or because it depends on one business or buyer to want most of what it produces or provides. Other rule changes may fundamentally alter what is productive behaviour and what is likely to lead to problems, so for example in health care in England, we have moved from a block grant system of payment to one that relates payment to volume. Under the first system, survival often encouraged and indeed necessitated limiting work. Under the new system, the reverse is much more likely to be true. But a different stance is needed to respond properly to each. And the system never stands still. It shifts, it morphs, it subtly alters emphasis. You have to see that to understand it.

As so often is the case, what I am describing in this book is not unique to management but part of our everyday wider experience. It is relevant to marketing, but it goes much wider and much deeper. In terms of ideas, culture and politics, people often use terms such as ‘the spirit of the age’ or zeitgeist. Whatever we do in management there will be a zeitgeist, what people are expecting now, what is right for now, where the opportunities are now, and how they differ from the past. Sometimes a change in the zeitgeist is obvious, due to a fundamental change in regime or direction, or the circumstances in which everyone operates. You really have no excuse for not seeing this and responding to it. Sometimes it’s subtler. Things change, what is fashionable alters, and so does what people admire and what they stop taking for granted. Managerially, you need to keep looking for this and asking yourself if it means that you need to change your behaviour or your actions – not to conform passively with it but to be in tune with it because it will impact upon what you have to do, what you have to achieve and what you can achieve.

Horizon scanning

The tactic that the good manager should adopt is horizon scanning. This is what it involves:

• Scan what is coming up on the horizon.
• Weigh up everything you see there, not just the most obvious and most obviously relevant things there.
• Check out the things that may be significant.
• Evaluate whether each is a threat or an opportunity.
• Work out what you need either to defend yourself or take advantage of it.
• Ensure you understand the full implications before action is taken.
• But take action if what you discover warrants it.
• Be prepared to do so quickly, if you have to.
• Continually revisit the horizon and repeat the above as often as you need to.

Many people would be of the opinion that George Bush was quite wrong when, at the end of the initial Iraq campaign in 2003, he told American troops on an aircraft carrier on the Arabian Gulf, ‘mission accomplished’. Everyone now realises, including him, that this was far from being the case and has turned out to be a decade or so premature. For the most powerful man in the world and for the rest of us, it is necessary to ensure that our notion of what it is to succeed and to achieve a goal is the same as everyone else’s.

Rule changes

You must scan the horizon for rule changes which may affect your business and its ability to prosper. You don’t need to be their victim even if they might and in some cases do cause catastrophic problems for some people. Here is a recipe for action:

1. Find out exactly what the rule changes are. The way they are presented second-hand is often not the way they are. Be sure you’ve got it before you decide on action.
2. At the same time, immediately start to assess how long you have to respond to the change that is affecting you.
3. Is the timing flexible and can you use that flexibility to your advantage?
4. Find out how absolute the coming rule change is and whether there is discretion in relation to any part of its application. How much discretion is there? Who has that discretion? Who has the power to change things?
5. What will dissuade, encourage or incentivise those people to exercise their power or discretion in your favour?
6. How can you soften the blow?
7. Where are you exposed? How can you fortify yourself or excise the exposed part?
8. How can you strengthen in the areas where you are strong so as to have spare capacity, and defend and buttress the areas where you are weak?
9. How can you use those parts of your organisation that are rock solid, unexposed and impregnable to protect you?
10. In normal circumstances, avoid at all costs an aggressive response. Unless it is so successful it knocks the threat right out, it is likely to reinforce the threat and bring it forward with hostility rather than neutrality.
11. When you are really cornered, a well-timed aggressive response can work, because it may show an agility and fleetness of foot that was not expected of you, but it will always have risks, as to some degree it will threaten others.
12. From the outset develop a plan B and beyond that consider at least the start of a plan C. You should work out and prepare your preferred plan of action fully and carefully. But it simply may not be possible to achieve it. At a certain point a step-by-step withdrawal could turn into a rout. It is vital you have one – or more – alternative scenario, even if it has to be a rather unpleasant one that you can always measure your preferred option against. And if things are really going wrong, at some point plan B will become preferable and will provide an escape hatch, a parachute. If you have no plan B, then your goose may be cooked.
13. Finally, the alternative plan must be realistic and implementable within the needed time frame. So it cannot just be an idle thought. It has to be robust and worked through, even though you hope never to have to use it. Some time ago, I reviewed the viability of a nationally and internationally famous hospital in need of fundamental capital investment. It was seeking nearly $2 billion worth of capital investment, requiring a tremendous leap of faith from government. When I asked what the organisation would do if it failed to get this investment, the response was ‘We can’t afford to fail. If we have an alternative we will show our weakness.’ In my view they were wrong. People expect you to have an alternative, and if you don’t then they are likely to have less sympathy for you.

Togetherness and partnership

The environment is partly a product of weather and landscape, but your ability to live in it is determined at least as much by who else lives there, who you have to live with, your fellow inhabitants. This brings me on to the second part of what it means to gauge the environment.

In my experience, problems become very serious because they are not ‘owned’. There is a process of passing the buck, transferring the responsibility of a growing problem to another organisation, thereby allowing the organisation which thinks it has passed the blame to carry on in a way which will almost certainly be contributing to the problem. I call this ‘default-ual’ decision making: in other words, don’t make the decisions yourself and when they ‘happen’ hope the problem hasn’t come in your direction.

I have seen major problems flare up in a number of cases, over a lack of sufficient finance in a system, a lack of agreement on what projects money should be invested in and a lack of consensus about what has to be done to achieve common targets. Where each organisation behaves to maximise its own benefit, it typically minimises the benefit it gives to every other organisation and overall substantially increases the problem. There is no recognition that there is, if you like, a managerial society where the overall benefit is important. There is no sense of ‘civic’ managerial duties and mutual responsibility, and in those circumstances problems typically snowball.

And the solution? What emerges from the above examples is that, if a point can be reached such that responsibility is shared across organisations and problems are described as ‘ours’ rather than ‘yours’, then the insoluble becomes merely very difficult and the power of unified commitment starts to resolve the problem. Mechanisms which encourage and ensure this sharing, rather than allowing or even buttressing insular behaviour, are vital. They need to kick in very early on when any dangerous signals emerge.

The difficulties of insular behaviour don’t simply occur at the early stages of challenge, prior to failure in an organisation or business. They are also a feature of organisations which are in the middle of failure. At their very lowest points, these organisations are seen as responsible for far more than they actually are. As discussed earlier in the book, they are seen as getting everything wrong. This over-reaction to their failure to see just what they were doing wrong has very negative consequences. Other organisations’ response can also be destructive and create extra problems not just for the failed organisation but for its partners. So what are the lessons?

• When you are faced with insular behaviour you must use the leverage you have not to accept a partial, one-sided view or even a complete misrepresentation of the position. If you do accept it, recovery will probably not be possible.
• In doing this, you will use up some of the credit you have. This may be a problem if what is wrong in the rest of the system is not being tackled as well. Do it nonetheless.
• The space achieved has to be used to ensure improvement and to get ‘buy-in’ from other parties.
• Most difficult of all, the parties seeking to shift blame and responsibility must be persuaded to take on an element of it themselves. A failure on their part to accept responsibility is almost certain to lead to more general failure.

To sum up …

Good management isn’t just about understanding and doing things within your business and your control. It’s also about understanding, then reacting to, coping with and adapting to the whole environment in which you operate. That’s the stuff right in front of you, your day-to-day interactions, partnerships, frustrations and difficulties. But it’s also the stuff that shades away to the horizon and out of sight: government policies, changing legal requirements, changes to economic conditions and the economic outlook, and so on. If you deal with these, not only will it help you to avoid failure and to succeed in your own terms; it will also stop you getting drawn into the broadening failure I described in Chapter 3.