Spotlight Interview: Dr. Sridhar Balasubramanian

Peripheral Vision: An Interview with Dr. Sridhar Balasubramanian, SLKone Advisory Partner and Professor of Marketing at Kenan Flagler Business School

Note: The following transcription represents highlights of our interview with Dr. B. Full-length commentary is available in the video above.

Q: Dr. B, thank you for taking the time to talk with us today. To get us started, would you mind giving us a brief introduction about yourself? And then specifically to the topic for today’s conversation, what’s attracted you to peripheral vision?

A: Thank you very much. I’m delighted to be here. My name is Sridhar Balasubramanian, but almost everyone calls me Dr. B.

As for my background, I was born in Chennai, in South India, but soon thereafter, my family moved to Goa, a little Jewel of a state on the West Coast of India, known for its beautiful beaches. I did my undergraduate degree in engineering from the Indian Institute of Technology, got an MBA from the school of management, and then worked in sales and marketing for one of India’s largest food companies, Britannia Industries. I came to the United States and in 1992 to get my PhD from Yale.

I got into academia as an assistant professor at the University of Texas at Austin’s McCombs School of Business. In 2001, I moved to Chapel Hill to the Kenan Flagler business school at UNC Chapel Hill, we’ve been here since, and it’s been an absolutely great ride. I had a career filled with administrative roles, research, teaching, served as senior associate Dean for all our MBA programs at the Kenan Flagler business school.

I have always been very interested in researching and teaching, innovation, and technology. And, in those areas, there is a very urgent need for what we call peripheral vision, which is the ability not just to focus on things that are central to a company’s current existence, but on unexpected things that are critical to its future dominance in the marketplace.

Q: To help contextualize, when we say peripheral vision, what exactly does that mean?

A: Okay. So peripheral vision is literally what it means – peripheral version. Here’s the point. If you think about the human eye, we tend to focus on what we are looking at right now, but humans also have the sense of what’s happening in the corners of their vision, right outside the central focus of their vision. That is an evolutionary trait because today we are the dominant species on Earth, but we were for very long time not the dominant species.

At that time, we had to keep our eyes open for all kinds of attacks by all kinds of creatures, flightless and on the ground from the periphery. So, we developed this acute sense of anything that’s moving along the periphery and then reacting quickly to it in order to get ourselves out of danger, and animals also have that same sense of peripheral vision

However, managers often don’t in the context of work, so it turns out that a lot of companies are pretty good at focusing on the day-to-day business of planning for things and executing things and so on. But when it comes to looking for threats from the periphery, unexpected competitors that come in and take over the marketplace, unexpected technologies that change the rules of the marketplace, managers and companies are not very good at that. Partly, it is due to the fact that managers are busy fighting fires it is hard to look out on the periphery. But largely it is the lack of organizational preparation to systematically scan the periphery every once in a while, and make sure that one is not missing out on important forces that could distort the future.

Q: How is peripheral vision different than what some people may call a hunch, your gut feel or even a sixth sense? Is it similar? Or is it something very different?

A: So, I would say it’s something very different. A hunch or a feel is just intuition, right? And usually, we call it a hunch and sometimes we think that it’s almost like a sixth sense that somehow, we are able to corral and marshal and put to work.

But really when you drill down to it, a hunch is nothing but uncommon ability to make sense of a certain pattern of things taking place, to see correlations and things when others don’t. So that’s what this hunch is all about, quote-unquote.

Peripheral vision, in contrast, I would argue is a very systematic notion. To build peripheral vision implies doing things systematically, so that you’re not overwhelmed unexpectedly by some development along the periphery of the organization.

A hunch is something that is difficult to institutionalize, but I think through the right set of processes and frameworks you can institutionalize better peripheral vision – in other words, become systematically better at it at the individual team and organizational levels.

Q: Does every organization need to build peripheral vision? And, can you share some real life examples in the business world?

A: I think that every organization needs to have peripheral vision because some of the forces that are roiling today’s markets and industries are impossible to predict. No company is so large and dominant that it cannot be upended by some dramatic shift in the marketplace or in technology.

The whole concept of core competencies is becoming redundant and what was a core competency yesterday can very quickly become a code rigidity tomorrow. I would argue that the lack of peripheral vision is particularly harmful to very established competitors. So, the bigger you are the harder you fall if you don’t have that peripheral vision.

There are so many examples across the board, you know, from a technological, economic, societal perspective, etc., that I could provide you, where important highly profitable developments and technology have rolled into the marketplace and the existing giants, incumbent giants, are left out in the cold.

One of the ones that I was thinking about before our conversation today and I always find interesting is BlackBerry, which was the king of the phone and texting in the early 2000s. Then it was totally displaced by Apple with the touchless screen, and they just didn’t think that consumers would want touchless screen and they would always be loyal to a keypad.

Similarly, the traditional lightbulb companies were not the first to capitalize on LEDs. The rush into LEDs was led by companies like Cree that were not really huge dominant presence in the traditional lighting industry.

For decades, the world of automobiles has been dominated by companies like General Motors and Chrysler in the United States and Honda, Toyota and others from Japan, and Mercedes-Benz and Audi and so on. Why on Earth did they not pioneer and dominate the electric car market? Why did it take a Tesla to do that? So, you’ll often find that when companies dominate the markets, for the technology changes those dominant companies are not the ones who are riding this wave of change.

Think about open-source software. One could argue that Microsoft, or Sun Microsystems – they should have opened an open-source software division, which supported and enhanced the profitability of their proprietary software division. But it was Linux by Linus Torvalds that did it. Think about a simple thing like bringing together taxis and apps – Yellow cab companies could have done it. But no, it took Uber and Lyft to pioneer that market. And look, the great example is cars.

Sometimes the economic model can be disrupted Think about overnight delivery - USPS and Airlines were very big in postal delivery, taking Things from X and giving it to Y. But it took FedEx and UPS to revolutionize that market with overnight delivery. Microsoft did not invent search or did not dominate search, Google did! There are all kinds of areas where you can think about companies that were dominant in the traditional marketplaces, but hey, the whole marketplace changed, and new entrants came in. And they disrupted the existing competitors.

So, I think that every company small and big needs to have the sense of peripheral vision.

Q: I’m curious about how you interpret market shifts to decide what signals are a threat or disruptive to your company and which ones are just spontaneous. A lot of these weak signals are the ones that end up being the most disruptive, and humans always have a way of rationalizing things, saying: “Oh, it’s just a spur-of-the-moment trend.” There’s always some kind of bias built into it. So how do you how do you get around that? Why an entrepreneur gets it and not an established player?

A: You almost answered the question when you said humans often tend to rationalize those things that they find, and that’s exactly what they should not do. You’ve got to avoid rationalizing. informative signals away.

The second thing is also you’ve got to put yourself explicitly in well-designed situations where you decide to step away from the history of your company and industry. That is a challenging thing to do but that is critically important if you want to realize what are the new forces that are reshaping your industry, because it is so easy for managers and leaders to come to work under the same assumptions about their company and the industry every day. History can be a great teacher, but history can also be a great jailer, in the sense of marshaling your thoughts and putting them into this little basket and not allowing them to escape and roam the world free and find out about new things and so on.

Now you raise a very interesting sub point over there about entrepreneurs doing stuff. And that directly relates to the conversation that we are just having because entrepreneurs are able to do this better because they have no history. They are starting off from a different base compared to established companies out there that have established technology managers with years of experience, who have grown up, so to say, thinking about the industry and competition and technology in certain ways. But entrepreneurs don’t carry that baggage of history. As a result of which, sometimes – not always, entrepreneurship is always risky – sometimes they’re really able to strike the vein of gold so to say, because they’re looking in places that have not been prospected by traditional firms.

Q: You talked about attachment to history as an obstacle to peripheral vision. How would you answer the objection that time is scarce, and resources are strained? And that as a manager, I can’t spend this time dedicated to looking all around if I’ve got fires to put out in my business?

A: What I believe, at least in my experience, is that the greatest leaders of today are those who are simultaneously strategic and tactical. So, they are focused on achieving the next quarter’s goals and next half yearly goals, annual goals, etc., But they are also thinking about what the world is going to look like five to ten years from today and helping prepare the firm for that future. And that’s where this whole notion of strategic thinking and looking at peripheral vision and all of that comes in. If you succumb to the pressures of doing everything on a day-to-day basis and spend all your time fighting the daily fires, you never have the time to think about things differently or innovate and gather the peripheral vision and insights that emerge from there.

You’ve got to create the time to do both, and paradoxically when you do that, you also find that a lot of the things that you’re spending your daily work on, putting out the daily fires, are useless work and you’ve got to stop doing those things and start doing things that really matter.

**Q: Do you think it’s beneficial to do a historical analysis to say here’s some of the trends that we missed or changes in the market and this is why? Or is it only beneficial to look forward?

A: I would never claim that you need to ignore your history. What I would claim is you should never be a prisoner of your history, and that’s why my comment that history can be a great teacher or history can be a handcuff. And what we need to do is to take watch of what history teaches

Let’s take two industries, the nanotechnology industry and the GMO (genetically modified organisms) industry. GMOs are used to modify food, to build stronger more disease resistant plants, etc., through genetic modification. When those foods were first introduced to the marketplace, all hell broke loose because it was “Frankenstein” food, and customers were very upset, and also, the government was upset. GMO Foods had a tremendously difficult time taking off in the marketplace with a lot of regulation. And even today, one could argue that they are nowhere near the top potential that they could have because of all the social backlash.

Fast forward, nanotechnologies enter involving small particles of different shapes and sizes that can serve a variety of purposes, from lubricating engines to coating other surfaces. One of the challenges with these things, at least the perceived challenges with nanoparticles, is that they can be airborne, and the fear is that you can breathe them in, that they’re settling in the lung and lead to all kinds of lung diseases. However, the nanotechnology industry looked back at history and they saw what had happened to the GMO industry, and they learned from that. They proactively worked with the government, with regulatory agencies, to develop regulations that were fair, but not overly onerous. And when they were introduced, they had such a smooth sailing in the marketplace and today they are all over the place. You don’t even hear about that perception.

Q: If you were going into a large corporation, what would be your first steps from an individual perspective, a team perspective, and the overall structure to implement peripheral vision.

A: The notion of this peripheral vision, building it systematically can be done at different levels. I think there is, of course, some overlap between what you can do at the individual level, what we can do at a team level and the organizational level, but I’d kind of be pushing it too far if I said these were very distinct buckets. Let me talk about some of the approaches that we can adopt - starting off with avoiding rationalizing informative signals away.

First, if we encounter some information that contradicts our central view of how our world and environment operates, we tend to ignore it. It’s a well-known phenomenon in psychology. So that’s one of the things that at a personal level we have to train ourselves to avoid, kicking away these signals that don’t seem to us to be appealing.

The second thing is: how are we managing people as leaders? Are we empowering people to report all kinds of ideas or information they come across, including maybe wild ideas?

You can personally discover some differentiated chunks of knowledge that you can bring back and do some amazing stuff. And this is a kind of habit, right, a systematic habit that any manager can develop and pursue any day.

Peripheral vision thinking works best when you have diverse sets of skills and perspectives and knowledge in the room. Let me give you a simple example. Let us say that you were talking about how do you build a sticky surface for a product that sticks to the wall and they can hang frames on it, etc. The chemist will be thinking about all the chemical compounds that can be put there. The mechanical engineer may be thinking about how you can create a mechanical device that creates suction like the suction cups on your bathroom wall, and so on and so forth. But the unexpected insight can come from the biologists who can say, hey, I know of this animal called the gecko. And you throw the gecko up to the ceiling and they’ll stick there, and you have to almost pry them off the ceiling. They do this sticking just on their tiny little feet. So, let’s look at the feet of the gecko and see what’s microstructures are there that lead to this super adhesion, and they’ve now created an adhesive based on that, but that idea is very unlikely come from the mechanical or chemical engineer.

And that’s why even with a large company that would seem to have very different businesses, it’s often a great idea to get everybody into the room at the same time because they think about problems in different ways.

Q: The one thing I didn’t hear in the structure is the voice of the customer. So is that something to include as well, just from an organizational standpoint?

A: So that’s a really interesting and important question. I’m glad you brought this up.

A lot of those peripheral vision managers can sit down with their teams, with the company, and do it inside the company. But every once in a while, it helps to go outside and meet with customers and understand what’s happening because certainly customers are capable of coming up with ideas that you never thought about. There’s a famous example of financial services company in Europe that did foreign exchange transactions and used to handle all the customer calls, and talking with their families, build great personal relationships. But ultimately, what they found was that customers hated that. They want to a be able to track everything themselves, and that led to the whole online tracking of your Forex transactions. Their customers love that, they didn’t want that deep personal relationship.

Often people think that in-depth customer interviews and focus groups are the way to develop great insights, and those are useful. But another technique that’s becoming really important is just to do ethnographic research. In other words, spend a few days in the lives of your customers and then you can discover some problems that they have that you never even thought that they have and unarticulated needs that even if you asked them: “What do you want?” they couldn’t tell you about because they think you can’t solve them, or they don’t know how to articulate them, or they think that those are irrelevant to what you could do for them. Seeing peripherally what they do is equally important than listening.

Q: Are there any marketing technology or tools in general that you found extremely helpful to get the most out of out of this exercise?

A. Yeah. So that’s interesting. I gave you about nine or ten different techniques that you use. And if you listen carefully through our interview, you can actually write down those nine or ten things that you can use. And if everybody sits down around a table and personally as a team, as an organization, employs these techniques, then anybody can develop better peripheral vision.

Internet, blogs and online communities are the collective consciousness of society these days, and if there are blogs and internet postings pertaining to industry, keep a very close eye on that because what comes up there may provide some excellent ideas for the company.

There are other things as well. For example, you could host contests online, which is to ask people to rethink your products and radical ways. Think about what are the ten most interesting technological developments that are going to affect this particular product in the future and so on.

Also do the deep analysis of what I called peripheral customers and peripheral users because sometimes these peripheral customers and users can come up with some really interesting ideas and ways of doing things that you never thought about.

Technology and demographics are changing the rules of the game and you’ve got to keep your eyes open for this. Check what technologies are developing and how they change your business. There’s a lot of things that companies can do in order to systematically develop their peripheral vision. But to do that, you have to look at how the marketplace is changing, how customer needs are changing, how the periphery is changing in terms of what is new out there that customers want, and you change your entire business model around that.

And, let me give you couple of these techniques that I have not discussed so far. Imagine destroying the current set-up completely, and think about if you were to build it from scratch, how do you build it? That’s how Bell Labs came up with the whole concept of message recording and autodialing, call forwarding, and all of that in the late 1970s when they said, “Let’s say that the entire US telephone system was destroyed. We’re going to build it back up today. How would we build it up?” That’s an exercise that any company with a group of open-minded managers can do.

The other approach is to think about absolutely the worst-case scenario possible for the company and work your way through it. So, this is a nice story of how the Enron Federal Credit Union - at that time Enron was one of the world’s probably most admired companies. They actually undertook this exercise, if Enron went bankrupt, what would we do? And people chanted, “Why are you doing this? We are the world’s most brilliant and most well-regarded company.” And guess what? In a year’s time Enron imploded, but because they had gone through the exercise, they practically didn’t skip a beat. They quickly moved, rebranded themselves, and continued serving ex-Enron employees for years until they were taken over by StarTrust Federal Credit Union.

So about 10-12 techniques in all that we talked about, heeding the internet and the blog, learning from history and so on. And if you systematically work through these techniques, as a team, with the consultant at the table or without a consultant at the table, but with open minds and willing to put in the effort every once in a while - maybe do it once every six months or so - you can develop a whole inventory of ideas related to peripheral vision and that will help you prepare much better for the future unexpected, unexpected changes in technology and so on.

Q: How do I know as a manager and a leader, that I’m fully employing peripheral vision without it becoming a detriment by over balancing that direction?

A: I think the important point is to do the exercise and then come up and discuss the ideas that you have come up with as a group. And, if you have smart managers who are forward looking at the table talking through these ideas, you will realize which ones to pay attention to, and which ones not.

I think foresightful managers need to be in the spirit of scenario analysis and prepared for multiple imagined futures. If this happens then are you prepared? Have you created the small bets, created the options today that you can invoke if that future happens? Organizations that have prepared for multiple imagined futures and have become agile is at the heart of succeeding with peripheral vision.

Q: Whether you’re bringing in consultants or taking time to teach your employees various techniques that help with peripheral vision, all of that takes time, and time is money. So, what are some measurements of success?

A: I think building peripheral thinking is part of how you live and breathe versus “I’m going to make an investment into this asset”. This is a new way of thinking, for the organization.

If you teach the employees the techniques to develop peripheral vision, it doesn’t take a whole lot of time. It takes you maybe a couple of hours. And then you meet every six months to assess, maybe for a quarter day or half day. They come prepared with ideas and discuss what they’ve found. What are the things we need to watch out for? I would say that is such a trivial investment, I wouldn’t apply an ROI thinking to this at all. I would just think of something that this addresses, something the company needs to do in order to prepare better for their future.

As a both as a business professor and as a consultant, I tend to be very heavy on toolkit-based approaches because I believe that that’s what can be easily embraced across the board by every manager. You don’t need to have some special qualifications or even personal characteristics to do it. But then it is always important for the leaders to kind of push in this direction. To allow, to encourage the development of peripheral vision so that everybody in the organization is always keeping an eye out in the periphery.