Most strategic surprises aren’t really surprises. Somebody inside the company almost always saw the signal early. The question is why the organization didn’t do anything useful with those insights while there was still time.

I think of an organization’s early warning capacity as having three parts. Sensing is whether you pick up leading indicators while the signals are still weak. Discipline is whether there’s a consistent process, with dedicated time and people to attend to these signals. Acting is whether you know how to move during what I call the window of optimal warning: late enough that the signal is credible, early enough that you can still shape the outcome.

Depending on how well developed each of these three factors are, you can begin to anticipate where your organization is likely to get into trouble. 

High sensing, weak process, low acting. People see the change and raise the alarm, but nothing happens until it’s too late. 

Kodak is a wildly misunderstood textbook case of this. Kodak didn’t miss digital photography, it invented it. A Kodak engineer, Steve Sasson, built one of the first digital cameras in 1975. In 1981, an internal market intelligence study concluded that digital would eventually displace film, and that Kodak had roughly a decade to prepare. The sensing was excellent. What failed was having the courage to reshape a very profitable core business in the face of the digital inflection point.   

Even worse, under the leadership of Antonio Perez, the company went all-in on printing just as screens were becoming good enough that nobody needed to print any more.

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