By Judee Beaman, Guest Contributor.

The business world is a strategic game that is full of events that may either spark your triumph… or lead to your downfall. The fundamental task of the game of strategy is to appraise the situation and then to organize your resources better than your competitors.

In the search for competitive advantage (and efficiencies, too) organizations are increasingly digitizing nearly everything, capturing information about locations, purchases, and preferences. Many people predict a “digital transformation” that will fundamentally change business models as they gain new ways to create scale and efficiency.

What Is Data Science?

In a nutshell, data science is a practice that involves the capturing, archiving, extracting, and analyzing data for the purpose of producing useful knowledge. When combined with enabling technology, individuals and organizations gain the capability to sense patterns and anomalies.

We often hear the buzzword, “big data” which refers to massive sets of data that aggregates millions of entities. Through data science, we have the capability to identify patterns that might have significant positive (or negative) impact on the business.

Data science provides a form of technology augmentation that enables evaluation of the information found in large data sets. Its techniques can help separate signal from noise. Data science has helped multiple industries extract crucial insights and knowledge through scientific methods, intricate processes, and intelligent algorithms.

Data Science Improves Strategic Thinking

Strategic thinking is a set of individual skills. No matter how intelligent or educated the individual, the fact remains that people have limited ability to sort through large data sets.

How to Think Strategically, describes 20 microskills of strategic thinking. Following are four key strategic thinking micro-skills and a brief discussion of how they can leverage the principles of data science.

Storytelling. In data science, the phrase “data storytelling” is typically associated with practices like data visualizations, infographics, dashboards, and other kinds of data presentations. In this narrow sense of story, the goal is to package data in so as to be easily digested by even those who are not familiar with the subject matter.

Story telling, as understood by strategic thinkers, recognizes that stories are a tool for sense making in ambiguous environments. Each person may look at the same event and interpret the facts differently.

People retain and tell stories based on a handful of familiar “story anchors.” Organizational culture is a repository of those story anchors and the strategic thinking task is to understand if a signal (that is, a story in the narrow sense) leads to a better understanding of reality. People have a discourse about “where we’ve been” and “where we are.” This naturally suggests speculations (and visions) about “where we’re going.”

Often the stories told in organizations are biased towards the status quo and explains why the pull of nostalgia is so strong. Strategy involves taking old stories and replacing them with better stories.

Sharpness. Strategic thinking requires the ability to detect nuances. The microskill of sharpness is the individual’s acumen to spot subtle discontinuities that can spark new understandings.

Data science approaches can help to identify the signals within the noise. Here, the data scientist helps to set the level of specificity versus sensitivity. Too high sensitivity and you get false positive signals that might be distractions. On the other hand, too high of specificity can cause you to miss patterns that have significance.

For example, many companies in the insurtech industry use chatbots that use algorithms to find out if a person is lying about a claim in only a few lines of conversation.

Reframing. The goal of reframing is to obtain better understandings of the situation.

In a purely objective sense, data science produces a set of digital patterns. Yet, those patterns are defined by definitions and assumptions which introduce ambiguity into the analysis.

The art of strategic thinking recognizes that one set of data can tell you one story, yet a different person can find yet a different story in the same data set. This kind of sense making is what sparks insights.

For example, instead of manually having to go through each employee company review, you can use a program that aggregates data. The resulting analysis might reveal that the “employee’s story” is different than the “manager’s story.”

Abductive reasoning. The “science” aspect of data science refers to an appreciation of scientific methods. The person generates a hypothesis, collects data and tests the hypothesis, resulting in a conclusion to confirm or reject the hypothesis.

It is through this process that science moves us toward understanding of truth and how the world really works.

Abductive reasoning is the mental process used to generate a hypothesis. Abductive reasoning basically means having a set of observations and predicting the next likely outcome. Using data science’s different statistical and analytical tools, in-house or outsourced data analysts can help organizations simulate and test crucial business and industry data. In turn, the analysis can help business leaders make more educated decisions that will advance their enterprise forward.

Many business leaders rely on deductive logic to cope with uncertainty. That is, they assume that everything that is worth knowing is already known. This feels safe to the individual, but often perpetuates the status quo.

Abduction requires the use of imagination: What could this trend in data mean? Will it continue? Or is it an anomality? Does the presence of an emerging justify making a large investment?

Conclusion: Integration of Data Science and Strategic Thinking

Data science offers significant benefits to organizations. But it is not a magic bullet. Like any tool, data science methodologies must be integrated into the organization’s culture.

The answers to these three questions can help to shape the direction forward:

• Are the data contextualized to the organization and its ecosystem? The external context of a business or industry affects the approach use by the data scientist. The data scientist needs to be sensitive to that context and the success factors of the organization. She uses her domain expertise and understanding of needs and goals so that she can design useful approaches to pattern detection, analysis, optimization, and prediction.
• What are the biases that are baked into the data structures? For example, the definition of markets and industries are convenient categorizations. By redefining the market or industry, organizations can create new value logics.
• Are people asking high-quality questions? Our strategies are often limited by the box that we put ourselves in. To think outside the box is to ask better questions with the expectation that better questions will spark better strategy.

For more on this topic:

‘Strategic Thinking is Defined’

CIO explains how the information used in data science

Maryville University’s graduates of data science

That’s why the paper Abductive Reasoning in Strategy

Smart and talented executives can fail at the common-sense tasks of looking at the long term, considering the big picture, and embracing multiple points of view. Degrees from prestigious universities are not a vaccination. Knowledge of benefit-to-cost calculations is not a vaccination.

If smart executives are vulnerable to mistakes of impulsiveness, in-deliberation, and narrow framing, might they also be susceptible to taking mental shortcuts when they craft strategy?

The answer to the question must be yes, a sobering thought for any organizational stakeholder. It’s easy to become dulled, and this is an obstacle for competency in strategic thinking. Any organization is subject to the potentially disastrous consequences of a decision.

What might be the solution to dullness?

Andy Grove, former chairman of Intel Corporation, provides one answer. In his book Only the Paranoid Survive, he comments on why incumbent organizations become undermined by disruptive organizations. He explains, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”[i] Grove used the word paranoid rhetorically, intending to remind people to pay attention to the presence of external discontinuities and avoid attitudes of entitlement and laxity.

Shoulder angels

A shoulder angel is a familiar literary trope, a bad angel and a good angel each sitting on a shoulder. For this analogy, the angels are named dullness and sharpness, respectively.

The good angel is the person’s conscience encouraging her to take a moral path. This contrasts with the malevolent figure on the other shoulder, which encourages her to indulge her selfish desires or reminds her that she’s tired, busy, and can take satisfaction in her achievements.

The good angel is encouraging you to be more attentive to weak signals. The dull angel retorts, “Those good and noble intentions are hard, take time, are impractical, and may be irrelevant.” Further, the dull angel will sneak in some distracting illusions: “Everything is fine” and “You’re successful and should follow your intuition.”

A competent person is a reasonable person. A useful question for metacognition is to imagine yourself as an observer of the situation and ask, “How would a reasonable person act?”

.…The above is an excerpt from Chapter 10 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Greg provides a wonderful resource. I recommend it as a primer or a refresher as it covers the entire gamut of strategic thinking and practical application. I really enjoyed the chapter on the shoulder angels and the practical tips it has on achieving success as a strategic thinker. Good mix of text and graphics that complement each other and reinforces the concepts. Greg really helps you understand the difference between goals and strategy and how to make it work.”
― D Davis – customer review on Amazon

This article was originally published on LinkedIn.

Perspective is the combination of an individual’s personality blended with her point of view. Her perspective is the foundation of all aspects of her strategic thinking: the way she senses her unique situation, makes sense of data, synthesizes, and programs her strategies.

Throughout this book, I have valorized the concepts of being unorthodox, unconventional, nonconformist, and unordinary. A person’s strategic perspective is grounded in their personality, life experiences, and present point of view. No two people will have the same perspective because each person has a unique path in life during which she accumulates resources: experiences, knowledge, attitudes, ambitions, common sense, and outlooks. That path establishes her perspective and influences her strategic thinking.

My advice is to regard your unique self and perspective as a strength. It adds diversity to the organization and, through that diversity, resilience. An individual’s perspective on strategic thinking, combined with her perspective on leadership, provides an important source of power for helping the organization advance its interests.

.…The above is an excerpt from Chapter 10 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“This book has opened my eyes to see that during my career as an engineer, designer and manager, I did more operational thinking than strategic thinking. Thinking more strategically I believe would have greatly benefited my career. The book provides what you need to learn to become a very competent strategic thinker.”
― Bob Engineer – customer review on Amazon

In the year 1996, cell phones were mostly used by business professionals and less than one percent of Americans considered them a necessity. Within a decade, as expected by many industry observers, the cell phone became an everyday part of people’s lives.

An interesting tangent to this story concerns the addition of small, cheap, digital cameras to cell phones. This enhancement began around the year 2000. Now, nearly every person carries a digital camera embedded into their cell phone. The digital camera innovation was in plain sight to anyone, including executives at Eastman Kodak, a firm investing billions of dollars to adapt digital photography to its consumer business model. We can plausibly imagine that Kodak’s executives might have declared, “A camera on a cell phone is irrelevant to our business. It’s just a distracting, odd, fanciful curiosity.” It is possible that the Kodak executives might have similarly dismissed any significance from the emergence of MySpace (shifted its business model to social networking and media sharing in 2003), Facebook (founded in 2004 and by 2006 available to nearly anyone with a valid email address), Instagram (founded in 2010), Pinterest (founded in 2009) and digital imaging initiatives from tech companies like Google, Apple, and Yahoo.

With the benefit of hindsight, we now know that digital cameras on cell phones are commonplace and social media companies are now among the most valuable of all enterprises. We also know that Kodak declared bankruptcy in 2012, abandoning the consumer business.

William Gibson remarked that,

“the future is already here, it’s just not very evenly distributed.”

The statement means that in the present moment, an observant person can find some detail that’s currently low in prevalence but will become common in the future. A person who noticed, in the early 2000s, the presence of cheap digital cameras on phone, had found a pocket of the future in the present.

A pocket of the future is defined as an observable practice, idea, or thing that is rare and insignificant in the present moment but has the potential to become more prevalent and impactful. Pockets of the futures are important weak signals that have the potential to profoundly influence the organization’s core challenge.

.…The above is an excerpt from Chapter 7 of How to Think Strategically: Sharpen Your Mind. Develop Your Competency. Contribute to Success., available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Greg’s portrayal of ambiguity as a critical component of strategy development was eye-opening and truly the embodiment of what strategic thinking is about, rather than the rush to create a strategy (as it is many times inappropriately labeled). Well done!”― Vincent P. DiPofi

Some people are comfortable with being known as smart and are uncomfortable with feeling stupid. They feel that they should know. However, this emphasis on concrete knowledge could be said to be the conventional and orthodox value.

Strategic thinkers focus more learning rather than knowing. Its fundamentals include a sensitivity to context, a willingness to tolerate the discomfort of ambiguity, and an ambition to explore the unknown.

Martin Schwartz, a scientist, reveals that, as a researcher, he has gotten used to the discomfort and unease associated with not knowing something. He actively seeks out opportunities to feel the discomfort. He notes, “We can’t be sure we’re asking the right question until we get a result from an experiment or an answer from some other valid source.”[i]

The lesson for strategic thinkers is to keep stretching, putting aside the feelings of stupidity and frustration. The fuzzy front end of strategy is a venture into the unknown. The better your questions, the more you increase your probability of learning something interesting and useful.

.…The above is an excerpt from Chapter 6 of How to Think Strategically: Sharpen Your Mind. Develop Your Competency. Contribute to Success., available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Careful in its research and organized in a logical fashion, How to Think Strategically is a deft business text. Both effective and complete, the guide is convincing, pushing its readership toward success and toward becoming a more skilled leader. It will be of significant value to senior executives and managers alike.”― Barry Silverstein, Foreword Reviews, August 2019

I encourage you always to have an adjective to associate with the word strategy. For example, use the adjective clever to describe a configuration of ways and means of strategy (a clever strategy) that results in a relatively weak competitor gaining the advantage.

Another example is the use of the adjective good, which is explained in Richard Rumelt’s excellent book, Good Strategy, Bad Strategy: The Difference and Why it Matters.Good strategy has three distinguishing characteristics: a diagnosis of the situation, a set of essential choices (called guiding policy), and coherent action in the organization to pursue those essential choices. Good strategy is mostly the hard work of identifying and solving problems and exploiting opportunities. Rumelt explains that a bad strategy is one that’s all about desired performance outcomes. Bad strategy is “a stretch goal, a budget, or a list of things you wish would happen.”[i]

Everyone wants to have a strategy that’s clever or powerful or good or effective or brilliant or nuanced. Similarly, no one would be satisfied if their strategy was labeled stupid, weak, bad, ineffective, dull, or generic.

Adjectives also tell you something about strategic thinking, which is why I’ve chosen to associate the word competent with the individual strategic thinker. I encourage you to assess the individuals around you: Are they sharp minds in touch with the situation? Are they acting reasonably?

A competent strategic thinker is more likely to craft good strategy. An incompetent strategic thinker is more likely to craft bad strategy.

.…The above is an excerpt from Chapter 2 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Without question one of the most useful books I have read — a must-read for all who wish to build their skills and expand their views beyond just creative, critical and systems thinking.” Paul O”Connor

[i] Bad strategy is: See Richard Rumelt, Good Strategy, Bad Strategy: The Difference and Why it Matters (New York: Currency, 2011), 42.

Many people have been told in their performance reviews, “You need to be more strategic.” With a definite tone of frustration in their voices, they ask, “What do you mean be more strategic?”

The phrase be more strategic likely was not meant to invite the person to participate in developing enterprise strategy. The speaker more likely intended it as an instruction to enlarge one’s perspective to be less absorbed in their specialized daily work and to coordinate their efforts with the efforts of others, including sacrificing their personal efficiency to serve the broader interests of the organization.

In this sense, a person who is more strategic holds a more systematic view of the organization and its fit with the external environment. She has learned the structures and disciplines that characterize her organization and its context of stakeholders, suppliers, regulators, and the like. With this knowledge, she is able to more adroitly coordinate her activities with others.

As an adjective, the word strategic is often used as a decoration – for example, strategic leadership, strategic plans, strategic decisions, and strategic markets. Mostly, when people use strategic as an adjective, they are signaling their opinion of the importance of the noun being modified. Used this way, the adjective strategic is self-indulgent and many people use it to advance their personal status within the organization.

Most organizations have too many strategic things, a cacophony of goals and aspirations in competition with each other. The indiscriminate use of the adjective strategic adds to the ambiguity and doesn’t reduce it. Ideally, the adjective strategic should link to the organization’s strategy and ideally the organization’s strategy should be good and not bad.

.…The above is an excerpt from Chapter 1 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Provides all the necessary tools and insight to help you become an influential strategic thinker. A great read.” Jeroen De Flander