Leaders always need their eyes and ears about them — but they also need a different kind of sense. The ability to sift signal from noise. Today’s leaders are bombarded with data, information, misinformation, fake news, and expert views, assertive opinions, and armchair advice.
In 2021, the amount of data created was estimated to be between 64 to 79 zettabytes. A zettabyte is 1,000 bytes to the seventh power — that’s 21 zeroes! The leader is flooded with this deluge of data — about business, employees, competitors, problems, opportunities, not forgetting the sports teams the CXO keeps track of.
This is input for a leader’s decisions — small and big that one has to make every day. Noise leads to poor decisions. Signal nudges better and more effective decisions. What should leaders do to discern what matters?
In the book, Black Box Thinking, Matthew Syed tells a remarkable story. During World War II, allied bombers were getting shot down during their bombing runs over Germany. The Centre for Naval Analysis was tasked with taking a fact-based approach to the problem. They started by collecting the hard data — in this case — bullet holes. Each mission was followed by researchers making the agonising count of the bullet holes and assessing the damage on each bomber.
Soon a pattern began to emerge. The wings and the body were clearly the most vulnerable, pockmarked with holes and most of the anti-aircraft-guns-inflicted damage. The solution was obvious — increase the armour and protection on the wings and body. But one man looked at the data very, very differently. Abraham Wald, a Hungarian-Jewish statistician, asked the big question: What’s not there in the data?
The answer was the data from planes that never returned to base — planes that had been shot down. All the data that the researchers were looking at was from planes that had survived. Wald asked the teams to look at the parts of the planes that had little or no damage — turned out these were the cockpit, the engine, and parts of the tails.
These, he inferred, were actually the most vulnerable parts of the plane. The researchers’ data really showed the strongest parts of the planes. Despite taking hits there, they came back.
Armed with this insight, the action was taken to reinforce the cockpits, engines, and tails and this resulted in fewer planes being lost and more successful bombing missions. Leaders need to constantly ask “What’s not there?” because attention to what’s only there, could result in listening to the ‘noise’ and being deaf to the ‘signal’.
It was amusing to read all the chest-thumping that followed the announcement that India had become the fifth-largest economy in the world. There was much noise extolling the triumph of the government and its leader in taking India out of the ‘dark ages’ and into its rightfully deserved world-beating place in the sun. The signal that nobody bothered to listen to?
The data showed India languishing at 126 on per capita GDP. India ranks 132 out of 191 countries in the Human Development 2021, a decline in its score over two consecutive years, for the first time in three decades. India continues to be one of the most unequal countries in the world. An Oxfam report showed that in 2017, 73 per cent of the wealth created went to one per cent of India’s population.
What’s not there can lead to different conclusions and the need for different actions.
Carry a telescope
Revlon founder Charles Revson often said that in the factories they made cosmetics but, in the stores, they sold hope. In 2021 Citibank gave Revlon more than hope. In its capacity as a loan agent to Revlon’s lenders, the bank was to transfer $8 million. Instead, in what turned out to be the biggest blunder in banking history, they transferred $900 million! For processes like these banks employ what is called the “six eyes” protocol.
Three people vet a transaction before it is executed. Here, two of those people were from Citi’s technology partner in India, Wipro and the final approval was from a senior Citi manager. With all six eyes — they all saw the same thing and yet missed the big thing that mattered. While it is easy to judge, any of us could fall prey to this kind of a lapse.
By habit, we tune out the signal and just hear the noise. In this case, the ‘maker’, the ‘checker’, and the ‘approver’ — all were blinded to the context of the transaction. Their blinkered view of the numbers prevented them from seeing what the numbers meant.
As leaders, we often get so obsessed with the transactions and tactics of running a business that we can sometimes forget to ask big-picture questions. As I’ve proposed before, leaders need to carry both microscope and a telescope every day.
The first may show us a small, isolated piece of our business — a process issue, a people challenge, a partnership problem, a customer complaint. Our temptation is to deal with only that small piece. But when we bring in the telescope, we begin to see patterns, we begin to see the specific problem or opportunity as part of a broader context. Noise is tuned down and signal is tuned up.
Writing about Kohli’s lean patch in England earlier this year, Suresh Menon, in an insightful article, wrote about the nagging questions and inevitable armchair analyses that kept coming up: “Is this run a result of technical deficiencies, emotional uncertainty, tiredness, trust issues, physical shortcomings (like eyesight), the pressures of the modern game or has the young man ( Kohli is only 33) gone stale with too much cricket? Is it time for the batsman to choose between formats, letting go of white ball cricket to focus on the red?” That’s the noise.
The signal, as Menon pointed out in the article, was the quality of the player, the track record, the resilience he has displayed, the character strengths he has shown, the talent he possesses.
Signal: “Only 15 players have played more than his 463 international matches, and none of them averages over 50. Kohli averages 53.”
Signal: “His bad patch (measured only in terms of centuries scored) has lasted two and a half years. Yet even in that dark phase, he has scored over 2,500 runs in 79 innings across formats with an average of 35.5, which is just under Chris Gayle’s career average and higher than that of Sanath Jayasuriya, Yuvraj Singh and Jos Buttler. That should give us a perspective.”
Leaders should deal with situations by asking the who? Question. A disaster, but in the hands of a trusted teammate, will not send a leader into a panic. A complaint about someone whose integrity she trusts — she listens to it, but she also smiles a knowing smile — she knows better because of who is involved and will not allow the noise to distract her from the signal.
Leaders can get better at this sifting by using both head and heart, by relying on both data and instinct, and by banking on both memory and imagination. But do it they must — often their organisation’s very existence will depend on it.
“Leaders can get better at this sifting by using both head and heart, by relying on both data and instinct, by banking on both memory and imagination. But do it they must — often their organisation’s very existence will depend on it.”
An economist once wrote about the former GE Chairman’s desperate deal-making that “it was not wholly clear whether…(he)…was climbing out of a hole, or digging himself deeper in.”
The first happens when you listen to the signal, the second when you listen to the noise.