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Strategic Insight is Not on the CEO Radar

January 26, 2012

In 2001, Peter Drucker wrote in The Economist that “businesspeople stand on the threshold of the knowledge society. In this society, a company’s competitive advantage will come from an historically underdeveloped asset: the ability to capture and apply insights from diverse fields.”

It’s a compelling argument. But our research at ECSI suggests that very few CEOs have actually bought into it. According to a CEO survey we recently, creating the ability to generate strategic insight (which we defined as a perception that could trigger the creation of a distinctive and winning value proposition), was not considered to be a top ten priority for most CEOs. And as we know from behavioral research, human beings can remember and focus on no more than 3-5 items at time.

So strategic insight, for all the importance that Drucker placed on it, simply doesn’t get a look in. But why do western business leaders in a knowledge economy, with shrinking average margins in many market categories and weak macroeconomic scenarios, care so little about it? You would have thought it would top the to-do list.

Our research also uncovered four possible causes for CEOs’ lack of interest:

  • Insight is confused with innovation: Insight is often confused with innovation, which is on the CEO top-ten list. But the two are not the same thing. For a start, innovation is about creating something new. A strategic insight is not necessarily about recognizing something new. It could even suggest doing something old. If you simply put strategic insight into the innovation basket you limit its potential straight away and degrade its importance.
  • Insight has no owner: Most organizations don’t have an owner of the insight generation process. The Market Research Department owns a small piece of it. But Market Research people focus more on tools and techniques and are ill-suited to own what should be a company-wide capability. Moreover, they report to the Marketing Function, which usually doesn’t have the legitimacy and C-Suite visibility to drive insights into company’s strategy.
  • • Schumpeter’s bias: We all pay lip service to Schumpeter’s vision of the lone and creative entrepreneur. This image is so entrenched in our mind that we unconsciously tend to believe that the magic of an insight is not replicable. Many business leaders have the belief that we depend on “individual” insights. Consequently, they implicitly assume that it is impossible to systematically build a capability for strategic insight.
  • Lack of internal integration: For companies to get good at capturing and acting on insights, product development, strategic planning, marketing planning processes need to be closely linked. Entrepreneurs — who do all these things themselves — don’t have a problem here but in large corporations the processes are often unconnected both from each other and from the often missing insight generation process.

None of these hurdles is insurmountable; they’re about language, accountability, motivation, and organization. Good leaders know how to work on all four of these problems. And there ought to be plenty of motivation: Drucker pointed out in the same article I referenced above that many CEOs of large US corporations were fired precisely because they had failed to capture and exploit strategic insights. How many more CEOs are going be fired before they learn the lesson?

Alessandro Di Fiore

Alessandro Di Fiore

Alessandro Di Fiore is the CEO of the European Centre for Strategic Innovation, based in Milan. He can be reached at adifiore@ecsi-edu.eu

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