The Economist was first published in September 1843, “to take part in ‘a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.’”1 The newspaper was founded by James Wilson (1805–1860), a hat maker from Hawick in Scotland, who held an unswerving belief in global free trade with the least possible government intervention. The protectionist Corn Laws, which imposed special taxes and constraints on imports were the decisive factor in the establishment of The Economist, because bread prices skyrocketed, causing the population of England to suffer great hunger. Wilson’s view was that free trade is good for everybody, and although the Corn Laws were repealed in 1846, The Economist continued, remaining committed to cultivating and promoting the liberal ideas of its founder. Today, it is no exaggeration to state that The Economist, now published in magazine format, is viewed as mandatory reading by many top managers and leaders in all sectors of society all over the world. For many leading executives it is one source of information that helps them gain a better understanding of their overall sphere of action.
The original objective of The Economist was not exactly modest and remains unchanged today. For example, Rupert Pennant-Rea, its editor in chief from 1986 to 1993, who was appointed non-executive chairman of The Economist Group in July 2009, described The Economist as “a Friday viewspaper, where the readers, with higher than average incomes, better than average minds but with less than average time, can test their opinions against ours. We try to tell the world about the world, to persuade the expert and reach the amateur, with an injection of opinion and argument.”2
Instead of saying he read The Economist, Peter F. Drucker, the father of management known for his unerring estimations of future trends, is reputed to have said: “I have learned to study The Economist.” What a difference!
As stated at the end of the previous chapter, much of the information that managers need can only be found outside their organization. Accordingly, any organization needs to adopt a systematic procedure determining how it gathers and organizes information from the sphere in which it is active. In addition, it has to specify how that information will be made available and integrated into the decision-making process. Since the vast majority of trends and technologies that change an organization’s own sector stem from other domains or areas of activity, developments over a broad area will need to be monitored. Every organization has assumptions underlying its business purpose and strategy, as well as about their fulfillment and implementation. So the information it gathers from its sphere of action must serve to help it both query these assumptions and repeatedly test them. This same information must also help the organization to spot opportunities and potential dangers in good time.
A broadly based search for information will, of course, focus on an organization’s own market, current rivals, and the technology in use at the time. This is fine, but it is harder to obtain information about noncustomers—that is, people who could be customers of your organization but instead buy from your competitors—or to procure information about seemingly imminent fundamental changes. Where should we look for information on potential new customers and markets, possible competitors, or technologies that could be useful or pose a threat? And how should we interpret and organize information on current and basic social issues with a view to using it in the right way?
These are just some of the general questions that have to be asked. Naturally they will need to be carefully honed according to the specific situation of your organization. Not all contextual information is readily available, but when organizations systematically seek it out, they usually unearth far more than they deemed possible. Developed information systems steadily improve over time, and the steady fall in the number of surprises is proof of their effectiveness. This happens because managers who use their information-gathering system will already have identified what is most important to them and long ago paved the way for any ensuing decisions. If you stop to think about how dependent managers’ decision making is on such contextual information, it soon becomes clear that obtaining such data must be made an absolute top priority. Many organizations are too focused on their own organization and the present and pay far too little attention to their sphere of action and the future.
As one of Peter F. Drucker’s superiors said to him when he was a young man: “Make your nose twitch, when you read the daily paper. If there is something you don’t understand, look it up. Don’t just read on—try to understand.”3
Which previously unused sources of information could help you enhance your understanding of your organization’s sphere of action?
Which domains and key factors do you need to monitor particularly closely to minimize risks or exploit opportunities?
What do you need to do in your organization to ensure that relevant contextual information (e.g., about your organization’s customers, noncustomers, markets, competitors, technology, social developments, and other similar factors) is available and can be put to better use?