Red team thinking forces you to think differently about your business and consider alternative points of view. Red team thinking makes critical and contrarian thinking part of your company’s planning process and gives you a set of tools and techniques that can be used to stress-test your strategy.
Although he did not know it by that name, Fujio Cho at Toyata, he was advocating the same sort of rigorous, self-critical analysis that red teaming provides. And red teaming is exactly what Toyota did.
In August 2004, Toyota Motor Corporation chairman Fujio Cho was asked to give a presentation at the annual automobile industry conference organized by the University of Michigan’s Center for Automotive Research.
The Japanese automaker still considered Michigan hostile territory back then. The company had a modest research-and-development facility not far from the university in Ann Arbor and had just opened a new design studio there. But Toyota was so concerned about the backlash from its seemingly unstoppable march into the market space once dominated by Detroit’s Big Three that it kept its name and logo off the buildings.
For the past decade, Toyota’s share of the U.S. car market had increased year after year, while the share controlled by General Motors, Ford, and Chrysler steadily declined. That was the reason for the low profile in a state that was home to thousands of unemployed auto workers. It was also the reason why Cho had been asked to deliver the keynote address.
There was lukewarm applause as he took the stage. The auditorium was filled with executives from all the world’s major automakers, but the crowd was dominated by suits from the three home teams.
Cho began with a detailed slide presentation showing how Toyota was exceeding each of its strategic goals in every market around the world. It was impressive stuff, and many of the American automobile executives in the auditorium were scowling jealously by the time he was finished.
Then Cho stopped, looked up from his notes, and declared that the time had come for Toyota to rethink its strategy.
“Any company not willing to take the risk of reinventing itself is doomed,” he said.
For Toyota, the time to do that was now, while it was at the top of its game.
“The world today is changing much too fast,” Cho warned as he began detailing the steps Toyota was taking to reevaluate and refine its core business strategy. “Our industry has never been more competitive.”
There was dead silence in the room when Cho finished his remarks. Nobody seemed to know what to make of them. Half the executives there were smugly confident they could keep Toyota at bay, despite its impressive gains.
As one GM executive told me over coffee that afternoon, GM would stay number one because, well, it was GM. The other half were dismayed by Cho’s declaration. They were working overtime trying to match what Toyota was already doing, and here was Toyota’s boss talking about how worried he was about the future and vowing to make his company work that much harder to figure out how to confront the challenges that lay ahead.
What Cho was calling for that day in Michigan was red team thinking. Instead of taking its success for granted, instead of waiting for its competitors to catch up, Toyota figured out how to do what it was already doing well even better.
The next five years would see Toyota catapult to the top of the global automobile industry. It would stumble along the way, but it would take an unflinching look at the reasons for those missteps and move decisively to correct them.
GM would also stumble, but it would respond only with more excuses as Toyota gobbled up its market share, snatched its crown, and became the largest automaker in the world. That is what can happen when you bring red team thinking into your organization—and when you do not.
Companies like Toyota realize they will never have all the answers. That is why they continue to ask questions, the same sort of questions red teams are designed to answer. Done right, red teaming can pay huge dividends to any organization, not just by testing its plans and assumptions and making sure they are sound, but also by making everyone who learns about it more aware of potential problems, pitfalls, and opportunities.
The process of red teaming makes managers better planners and deeper thinkers. In the companies where I have been a consultant, red teaming discussions do not end in the conference room but continue outside in the hallway and at the next staff meeting. Red team thinking rapidly becomes part of a company’s lexicon, and the phrase “Let’s take a minute and red team this” becomes a common refrain.
You do not have to be in charge to benefit from red teaming. Yet if you are in charge, let me be clear about one thing: If you are just looking for validation of your existing strategies and plans, red teaming is not for you. But remember that the best companies and the most effective leaders know there is always room for improvement. If your red team fails to find it, then it is not doing its job.
So only use red team thinking when you are willing to make changes—changes that will make your organization more competitive and more successful. If you are happy with where you are and do not want to change, then don’t red team. Just sit back and wait for one of your competitors to do it for you.
Adapted from RED TEAMING: HOW YOUR BUSINESS CAN CONQUER THE COMPETITION BY CHALLENGING EVERYTHING Copyright © 2017 by Bryce Hoffman. Published by Crown Business, an imprint of Penguin Random House LLC.