Yoram (Jerry) Wind, professor of marketing at Wharton school and co-author of The Power of Impossible Thinking and Ranjan Kapur, country head, WPP, discuss the power of mental models on CNBC's new series, Lessons in Excellence: The Power of Impossible Thinking, to be telecast on Saturday April 16, 2005, at 10:30 pm, and repeat telecast on Sunday April 17, 2005, at 8:30 pm, anchored by CNBC-TV18's Anuradha Sengupta.
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Anuradha Sengupta: As the world around us changes radically and seems to spin out of control, cutting edge management philosophies are helping us make sense of what is happening. These are mental models about the way we think. When recognised and adapted, they lead to 'impossible thinking' that will, in turn, transform businesses, lives and the very societies we belong to. Taking us on this journey into the mind is Yoram Jerry Wind, professor at the Wharton school and co-author of the book - The Power of Impossible Thinking, and Ranjan Kapoor, one of the most authoritative voices in the Indian communications business.
Jerry, you spent a lifetime researching marketing strategy and marketing-led corporate growth strategies. What prompted you to shift into the sphere of mental models?
Yoram Wind: Three things. First, I started a programme: 'The Wharton Fellow', a life-long education programme for top executive-owned transformation leadership. We realised that one of the major obstacles to effective transformation is the mental models of the participants. This was the first major incentive to start thinking about mental models.
The second is the dramatic changes we have seen in the business environment, especially in terms of consumer behaviour, other changes in technology and the like as well as the fact that a lot of businesses are not reacting to them. If you think about it… you mentioned marketing… think about the changing role of the 30-second commercial - a dramatic impact, yet the industry is very slow to react to it. Napster - major innovation - a huge change of behaviour but the record companies behave as if nothing has happened. You have these changes but no reaction.
The third thing that has always disturbed me is why so many innovations start not from the incumbent, but from companies coming from other industries. Think about Federal Express. Think about Diet Coke… a variety of breakthrough innovations all came from outside the industry. Why is it that the industry is not capable of leading the change? The mental models of the participants explains it.
Anuradha Sengupta: Ranjan, you have read the book. At some level this concept of mental models is pretty breathtaking in its simplicity, isn't it? Do you feel, that we tend to overlook them or are we conscious of them?
Ranjan Kapoor: Once you put a concept down, it always looks blindingly obvious and simple. Most solutions look very simple after they have solved the problem and you say, "Hey, I could have written that book!" It sounds very simple - it is common sense - but then common sense is most uncommon.
Anuradha Sengupta: Do you see organisations and individuals as being aware of what these mental models are?
Ranjan Kapoor: I don't think people are aware of it because, as Jerry mentions in the book - and I'm paraphrasing it here - frankly, one's conditioning through one's upbringing, education, etc, develops blind spots and you see the world only as your own mind sees it.
Anuradha Sengupta: Jerry, what would you attribute as the main reasons why we are not aware of these mental models, when they are unconsciously guiding so many of our actions?
Yoram Wind: We must realise that mental models are critical to our survival; we cannot operate without them. We are subject to thousands of stimuli everyday and we have to have this heuristic short cut - this ability to operate in a complex environment. If I am in a room with hundreds of people out there and I see you - now that I know who you are - I'll recognise you. That is a mental model. I know who you are and I can immediately recognise you. I don't have to study the situation anymore.
Given this, we develop and evolve over the years. Now the thing that is critical to understand is that we are being enforced by what we do. Most people in positions of critical decision-making, power and influence, are those for whom this is not their first decision. They have done certain things in the past, were reinforced by their success and, given this, there is very little incentive to change.
Change often happens in crisis. Most companies are receptive to change only when they are in trouble. The challenge is, how do we recognise the early warning signals? How do we know that the mental models which we have cherished - and that have helped us to achieve what we did - are no longer appropriate to the changing environment? That is what the challenge of the mental model is all about.
Anuradha Sengupta: Can you give us an example of where you have seen this kind of thing happen?
Yoram Wind: Resistance to change? Take all the major companies over the years: General Motors, how they suffered; look at IBM before Gerstner took over. They became successful, large and arrogant, and they really resisted changes even though it was obvious. Look at the current situation. The record companies still don't get it.
Anuradha Sengupta: Is there a cultural spin that we can put on these things? Is it the human condition that makes us like this, Ranjan? Can we say that a certain culture or society makes one more adept at either recognising or resisting change…?
Ranjan Kapoor: I'll give you a totally different and dramatic example. I don't think this is a human condition. It applies to all animals. I have just come back from South Africa. Imagine you are in a Land Rover, right in the middle of this pride of lions; two lionesses and eight little cubs playing around. You don't bother them and they don't bother you.
Their mental model has accepted the Land Rover and everything in it as a safe unit - which makes a lot of noise, comes and settles amongst them, but does nothing else. It is a very benign object and that mental model is fixed.
Try stepping out of that and they will start fuming, maybe even attack you. There are people who want to stand up in the Land Rover for a better look but are told: "Do not stand, do not talk," because those are the two things that can immediately create a threat. I am giving this example because that is exactly what it is about.
Yoram Wind: I love the example of the lion. I think that is a great example. I don't know enough about all the world's cultures to find out if there is a cultural difference between different societies, but I do know that our corporate cultures are much more tuned and geared to identify the need for change. There are corporate cultures, which are very still and conservative and would be anti- almost any change. This relates to top executives and to the values they can engender, the culture they can create, their attitude towards failure. If a company punishes - if you fail you are out - you can never get experimentation or a willingness to change. It will have a very conservative culture.
On the other hand, take a company that encourages learning lessons from failure. There is a wonderful story about 3M. A person who was in charge of a large project came to Ron Mitch, who was its vice chairman at the time, and said: "I assume that I have to prepare my resume. We just realised that we lost over 40 million dollars." Ron looked at him and said: "You must be kidding. I just invested 40 million dollars in you. Now go and show me what you have learned." I think that is a corporate culture that encourages people to learn from mistakes, to take risks, to experiment…
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