What distinguishes exceptional business leaders from merely competent ones? The best leaders manage to anticipate change, see the new opportunities it offers and postion their companies to best seize advantages.

In short, they are prepared. And being prepared in this way has become more crucial than ever, maintain Bill Welter and Jean Egmon, authors of The Prepared Mind of a Leader: Eight Skills Leaders Use to Innovate, Make Decisions, and Solve Problems.

Thanks to globalisation and new information technologies, change is unfolding faster than ever. It is becoming harder to determine how a rival’s strategic move or a shift in customer preferences will affect your business, but leaders must make such determinations at speed.

Right mindset

It is a tall order but not impossible if leaders prepare their minds properly.

Prepared leaders ‘sense the early signals of the future and make sense of these signals, especially if they conflict with today’s truths,’ write Welter and Egmon.

Such leaders also help others in their organisations prepare their minds in the same way.

The result is a community of prepared leaders who create a more competitive future for their enterprise.

Welter and Egmon define the eight skills that are essential for cultivating a prepared mind as:

1. Observing: searching out confirming and disconfirming data about a problem or a course of action.

2. Reasoning: articulating to yourself and others why you want to do a particular action.

3.Imagining: visualising new possibilities for your company’s policies, practices and products.

4. Challenging: questioning your organisation’s assumptions and testing their validity.

5. Deciding: making or influencing decisions that will let your organisation benefit from change.

6. Learning: using information and personal experiences to make smarter choices and engineer midcourse corrections.

7. Enabling: offering the people around you the knowledge, means and opportunities to act.

8. Reflecting: investing time thinking about what went well and what went poorly in your previous decisions and considering the possible outcomes of your current strategies.

These eight skills are closely interrelated. For example, to learn, you must be able to reflect on your experiences. When you strengthen your ability to learn, you make smarter and more informed business decisions. Practised in concert, the skills help leaders turn challenges into opportunities to improve their company’s competitiveness.

Imagining the possibilities

Though all eight skills are necessary for preparing your mind to lead, some are more difficult to practise than others.

“Imagining is the least developed skill in the business world,” says Welter.
“We all find it easy to envision something new when we’re kids, but we lose this ability when we become ‘responsible’ adults. Yet imagining is at the heart of strategy,” he says. “It helps you figure out how to do things differently from your competitors. It’s about dreaming – not crunching numbers.”

Corporate culture can make practising some of these skills difficult. For instance, in some companies, a person who challenges top management can lose his job. And cognitive limitations can throw up obstacles.

Many people seek only evidence that affirms the value of an idea they are excited about; gathering information that suggests the idea may not work is uncomfortable, so they avoid it.
Such cognitive blinkers can also hamper decision-making. “Most executives think they make decisions skilfully,” says Egmon. “But they often neglect to anticipate a decision’s long-term impact. So they generate consequences they didn’t intend – or want.”

For example, one CEO hired to rescue a company on the brink of bankruptcy saw that people were shifting jobs at every opportunity to stay ahead of the layoff curve.

To stabilise the organisation, he introduced a rule stipulating that employees could not change jobs until they had been in their current roles for three years. Eighteen months later, when the company had recovered and was thriving, he learned that talented, ambitious employees were dissatisfied with the company. The reason why is that the three-year rule had trapped them in jobs they no longer found fulfilling. His decision had generated short-term benefits but created longer-term problems – such as eroding morale – he had not anticipated. Finally, time pressures can prevent us from exercising some of these skills. “We’re all time starved,” says Welter. “Few people feel they have the luxury of stopping to reflect – to assess what they did right and wrong in a decision they just made.”

Despite such difficulties, Welter and Egmon say that all leaders can acquire and strengthen the eight skills. They suggest viewing every interaction at work as an opportunity to practise a particular skill.

A conversation with a customer, for instance, may be the ideal time to gather evidence that disconfirms your assumption that a product’s features deliver value to consumers.

Try running meetings in a new way. “Instead of starting a meeting by cutting right to the agenda invite participants to discuss the big picture of what’s going on in their industry. Seemingly minor observations can lead to valuable new insights and ideas,” says Egmon.

Helping others

Leaders not only have a responsibility to strengthen their own prepared-mind skills, but they also must help others – bosses, peers, direct reports – to hone these same abilities.

One powerful way to enable others to sharpen their own skills is to invite them to teach those skills to you. “Ask people how they use a particular skill, and express your interest in learning from them,” says Egmon. “When people start thinking about how they do something, they begin practising it more often.” Welter also recommends asking others questions that prompt them to view the business and their own assumptions in a new way.

He cites the example of a mid-level manager who posed what turned out to be a transformative question to former General Electric (GE) CEO Jack Welch.

Welch had historically told unit managers that he would sell their units if they did not occupy the No. 1 or No. 2 positions in market share within their industries.

The mid-level manager asked Welch: “If we’re No. 1 or No. 2, where is there room to grow?” The query caused Welch to redefine how he assessed the value of GE’s units – and to consider additional criteria beyond market share.

“To help employees hone their prepared-mind skills, make it clear that you expect them to think every day on the job,” says Welter, who points to Seven-Eleven Japan as an example.

“Decision-making is decentralised,” he says. “Store managers – not corporate officers – make choices about product selection in a particular store. Their bosses encourage them to observe customers, reason through what forms of value customers want and decide what product offerings will best suit their needs. This is a hugely successful company.”