The Sharpness Theorem

Most students of strategy and strategic thinking will find their way to the work of Henry Mintzberg. From him, we gain an elegant statement that serves to powerfully focus our study of strategic thinking. He writes, “The real challenge in crafting strategy lies in detecting the subtle discontinuities that may undermine a business in the future. And for that,” he continues, “there is no technique, no program, just a sharp mind in touch with the situation.”[i] I have taken to calling the Mintzberg quote as the “sharpness theorem” and it is an effective introduction to strategic thinking.[1] It yields at least three notable principles:

A strategic thinker is “a sharp mind in touch with the situation.” Mental keenness is an essential characteristic of strategic thinking. The emphasis is on alertness for patterns and anomalies in the specific situation and not on universal methodology.

The ability to detect nuance is essential.

Detecting subtle discontinuities” is the “real challenge” of strategy. A discontinuity is a break in a trend. A discontinuity should cause your confidence in a prediction to significantly decline. In strategy work, a discontinuity is a difference in the environment that expresses itself over time. A common result is the disruption of the status quo.

A discontinuity transforms a linear phenomenon into non-linear. By contrast, linear thinking is a mindset that emphasizes understandability, predictability, and coherence. That becomes the criteria for whether something makes sense or not.

An ongoing task for the strategic thinker is noticing discontinuities and then proactively addressing emerging threats and the opportunities.

Good strategy is “crafted.” The word craft should suggest to you a design-oriented sensibility. It is a reasoning approach that emphasizes finding and capturing proprietary knowledge that is useful for creating strategy. Importantly, word craft connotes action.

Conventional thinkers tend to tell you that strategy is planned. The basis for any planning (and it is the limitation as well) is that the future can be predicted. The subtle mistake is that people confuse goals (what is wished for) for situational analysis (what is really happening).

Do you agree?

[1] This definition of theorem applies: an intelligible product of contemplation and something that can be proved.

[i] Henry Mintzberg, Crafting Strategy, Harvard Business Review, July 1987

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Why strategic thinkers embrace subjectivity (and are skeptical of objectivity)

Patterns & Strategic ThinkingStrategic advantage comes from possessing a proprietary insight; it means that you know something valuable that others do not appreciate. These insights are “facts” that belongs to you and not to others. That proprietary insight gives you an advantage over your rivals.

Now, if you don’t feel comfortable that an insight is a fact, consider that it is a hypothesis that you want to prove and enhance.  One good example is Starbuck’s growth from a stand-up only coffee bar to a social lounge. By the time that rivals figured out that Starbucks was doing something different, it was already established.

Reality is socially constructed

Imagine one person saying this to another, “I’ll telephone you tomorrow at six o’clock.”  Does that mean 6AM or 6PM? What if the person is in a different time zone? You can’t understand the “truth” of the fact of six o’clock without considering the context of social/cultural conventions like time zones or AM-PM.

Thus, time is subjective.

The overvaluing of objective truths

You’ve probably heard the story about black swans. As Nassim Nickolas Taleb writes,

“before the discovery of Australia, people in the Old World were convinced that all swans were white, an unassailable belief as it seems completely confirmed by empirical evidence. The sighting of the first black swan…. illustrates a severe limitation to our learning from observation or experience and the fragility of our knowledge”

Whenever we hear about objective truths, we’re likely in the realm of conventional knowledge. There is no opportunity for gaining advantage in that space. Facts are not as clear cut as we tend to assume. When we are in a hurry, or not considering the context and the culture, it is easy for our minds to overlook things that will turn out to be important.

Instead, the strategic thinker looks for interesting and small signals: the discontinuities that can be exploited by a good strategy.

The microskill of contextualization

Contextualization is the act of understanding the themes and patterns of the particular situation. A competent strategic thinker notes the particular policies, institutions, worldviews, and circumstances that shape a given moment in time. In other words, the “truths” that are useful to a strategic thinker are those that are shaped by context. To say that competitive advantage is important means entirely different things to a philanthropy, military unit, entrepreneur, or mayor of a small city.

Subjectivity is good. Do you agree?

Five Tips for Recognizing and Avoiding Incompetence

Over the years, I’ve encountered hundreds of executives and managers who were absolutely sure that they had a strategy, and similarly were confident that that they were good strategic thinkers. Their actual performance shows that their confidence is unjustified.

The Dunning-Kruger effect is the phenomenon of incompetent people who act and believe as if they were competent. Let’s take a moment to see some evidence of the Dunning-Kruger effect in the real world. This video is hilarious. It is from the TV program Jimmy Kimmel Live and involves an interviewer asking people at the South-by-Southwest festival their opinions on some non-existent bands. Notice how confidently they provide their opinions!

Writes David Dunning, in an article titled, “We Are All Confident Idiots,”

Incompetence does not leave people disoriented, perplexed, or cautious. Instead, the incompetent are often blessed with an inappropriate confidence, buoyed by something that feels to them like knowledge.

This is because our minds develop by accumulating and associating random bits of knowledge. People are not ignorant, they are misinformed:

An ignorant mind is precisely not a spotless, empty vessel, but one that’s filled with the clutter of irrelevant or misleading life experiences, theories, facts, intuitions, strategies, algorithms, heuristics, metaphors, and hunches that regrettably have the look and feel of useful and accurate knowledge. This clutter is an unfortunate by-product of one of our greatest strengths as a species. We are unbridled pattern recognizers and profligate theorizers. Often, our theories are good enough to get us through the day, or at least to an age when we can procreate. But our genius for creative storytelling, combined with our inability to detect our own ignorance, can sometimes lead to situations that are embarrassing, unfortunate, or downright dangerous.

The Jimmy Kimmel Live video seems like harmless fun. But it shows up in business and government. To see another scary-but-funny example of the Dunning-Krueger effect, watch this analysis of Donald Trump’s answer in a December 2015 debate for the Republican nomination for the US presidency.

The Dunning-Kruger effect is a paradox. Dunning writes,

The trouble with ignorance is that it feels so much like expertise.

Strategic Thinking Tips

A competent strategic thinker will recognize that the Dunning-Kruger effect exists in all areas of life, including strategy making.

Tip 1 – Watch for overconfidence in others.

Tip 2 – Don’t be afraid to say, “I don’t know.”

Tip 3 – Find a colleague to be your strategic thinking partner. Each of you have a responsibility to be a devil’s advocate to the other. This article gives you some develops the idea that strategy making is similar to jury duty.

Tip 4 –  Use the prospective hindsight technique. It involves imagining a future outcome (disaster or delight), and then asks the question “What happened to cause that outcome?”  More can be found in this article.

Tip 5 – Don’t assume that a person’s training or education has been remembered or practiced. I know a senior executive who gets upset when people don’t manage projects well.  “They’ve been trained,” he says, as if it is a definitive declaration. The fact is that they attended a 2-day awareness session and got no follow up support from their organization.

What other examples do you have to share?  

Expectations Casting

 

Fly CastingForecasting and backcasting are common techniques for understanding the future. They have specific meanings. Forecasting is an extrapolation of current data into the future. When I identify a trend, I can choose to forecast that trend to continue. Back casting is the selection of a future  scenario and then identifying the variables that would be needed to bring about that future scenario. An example: I wonder if  a presently-strong company will fail in the future; I identify the premises and arguments that explain what would cause that failure.

Neither of those two concepts quite captured what I wanted to explain about strategic thinking, so I made up a new phrase, Expectations Casting. I’ll use the analogy of casting a fly fishing line to introduce it. In fly fishing, it is the weight of the line that provides the momentum that allows the fisherman to get his fly to the a target. A single cast is not feasible if the target is far off. The fisherman begins by feeding out a little line, and then swishes his rod slightly forward and then back, releasing a little bit of line to extend the distance of each cast. Eventually, the fly fisherman allows the line to fully extend and settle on the target.  It may take several iterations of backward and forward to reach the desired target.

Like a fly fisherman casting his line back and forth, expectations casting is an iterative cycling of looking retrospectively into the past, and then prospectively into the future. The back casts are reviews of your knowledge and memory, typically tied to a short passage of time. The forward casts involve the use of your imagination.

Like casting fly line, you start with a short manageable line, and feed it forward in a controlled way.

Suggestions for the practice of expectations casting

  • Start by making a short retrospective cast of 3 months into the past. Ask yourself, “What in the last 3 months has been interesting, exciting and significant?” Here is a variant that turned out to be very fruitful for me, What’s the most interesting idea I’ve found by participating in social media?” (The answer was finding data on showing that personnel recruiters regarded strategic thinking as a very difficult-to-find skill.)
  • I find it helpful to review the “lab book” that I keep for ideas. I make it a practice to write down interesting things and patterns.
  • I put them into categories. Here are some: career/business, family, personal finances, personal health, community, society.
  • Identify and ask powerful questions (the purpose is to stimulate insights). An example is, “What might happen in next three months?”
  • Which of your observations might qualify as a pocket of the future (POTF)? A POTF is a thing that is presently low in prevalence, but have the potential to increase in prevalence and the potential to be seen by our future selves as significant. We are especially concerned with those trends that would change in a non-linear fashion.
  • Record them in a lab book, and allow room for capturing strategic thinking reflections.
  • It is generally better to pick just one expectation. Relax and take a walk to mull over your speculations. What is the nature of a future opportunity with a given person, client, technology? Record your thoughts, especially if an insight occurs.
  • Repeat, with a longer iteration. Look back 6 months, and look forward 6 months. Then 9 months, then a year. Etc.

The purpose of the expectations casting is to generate a portfolio of educated guesses about the future. Part of the value is in the number of guesses, and part of the value is in the mental process of retrospection and prospection. As with most strategic thinking practices, it is essential to search for powerful questions and to budget time to record and reflect.

I find that I slip into a trap when making educated guesses. I’m basically an optimist, so I am biased to believe that markets will keep going up and that people will love my ideas. I have to put a little extra mental effort into making sure I’ve considered the non-optimistic scenario. Too, I find it’s easier to declare my wishes than my expectations. I need to discipline myself to say, “Here’s what I expect to happen, and here’s my probability estimate.”

Do you think that expectations casting can help you become a better strategic thinker?

Orient Your Strategic-Thinking Map

strategic thikning beaconAll students of strategic thinking occasionally feel just a little lost and frustrated. I imagine the topic of strategic thinking as a map – albeit a fuzzy and dynamic map – with salient landmarks that help you navigate through the subject. Even with the best of maps, you can find yourself wandering about when you’re in the field for the first time. Fortunately, with experience, the landmarks seem familiar and expected. The exploration seems more natural.

This article describes one “beacon” and two “cues” that will help you develop and improve your conceptual map of strategic thinking. By way of introduction, consider these three questions that apply to any orientation:

  • Where am I now?
  • Where should I be headed?
  • What other landmarks are relevant?

Where am I now? (Find Orientation Cues)

An orientation cue helps you locate your position on a larger field of concepts.

Too often, people look for “best practices” on the basis that the external environment is predictable and obvious (which it is not). Instead, a strategic thinker will be sensitive to nuance and relationships. I like Dave Snowden’s Cynefin framework. It takes as a starting point the idea of disorder and diagnosing whether you are in a simple system (causes and effects are obvious and linear), a complicated system (an expert is needed to analyze and design a solution), or a complex situation (the ultimate solution will emerge and each experts brings a distinctive view of the problem).

Pay attention to the current discourse; the conversations you are having with your colleagues as well as with your internal thought process. If the conversations are about productivity, quality, and efficiency, then you likely to be practicing operational (rather than strategic) thinking.

Where should I be headed? (Find Navigational Beacons)

A navigational beacon gives you a point to navigate towards. When you lose sight of a navigational beacon, you practice a kind of “dead reckoning” towards the beacon, making course corrections when you sight the beacon.

The two most useful beacons of strategic thinking are the future and success. By definition, strategic thinking is concerned with “success in the future.” Does your organization have a diagnosis of its strategic situation and policies for addressing that situation (these are essential elements of good strategy)? What threats and opportunities are present? How far into the future are you looking? What metrics are you using beyond basic financial measures?

What other landmarks are relevant? (Find Associative Cues)

An associative cue is an object or concept that contains useful navigational information. It helps you know what to do and what to think about next. In the past, I’ve written that insights are the secret sauce of strategy, so they are an example of an associative cue; when you have an insight, you should consider their use in the design of strategy.

Another tip for associative cues in the strategic thinking map is to stay attuned to the emotional tenor of the discussions: Are people feeling frustrated? Tired? These would be cues to approach the strategic situation with a fresh perspective.

Finally, the search for associative cues gives us a way to build the reflective competence essential for developing competence in strategic thinking. What patterns have you observed? Notice the number and nature of the questions that have been posed. If you are reflecting on the specifics of your situation, you’re not thinking strategically.

What other examples of beacons and cues might be found in a strategic thinking map?

Strategic Thinking Landmarks: Orienting Your Mental Map

StrategicThinkingLandmarks

If you are a regular reader, you are following me because you have accepted the invitation (and the challenge) of  a journey to become a competent strategic thinker. There is much to know, and it can feel a bit overwhelming, much like it would feel being immersed in a new culture.

The above graphic shows 19 strategic thinking landmarks. I consider them the salient landmarks of a mental map.  I encourage you to take select a handful and relate them to your own experience and study.  Too, you can relate them to other articles that I’ve written; such as last month’s article was on high-quality questions. I encourage you to return to that article and review the questions, which will reinforce other landmarks such as interestingness and salience of details. By examining that earlier article in a new light, you are practicing recursive learning.

Associative Cues

I’ve organized them (in the graphic) to show natural groupings. For example, open-mindedness and playfulness are both qualities of a person’s approach to and processing of a situation. As a mental map, as associative cue helps us to organize concepts that have relationships, thereby helping us to learn a new terrain. There are also two other ways that we can organize landmarks: orientation cues and navigational beacons.

Orientation Cues

When a landmark serves as an orientation cue, it helps the person know where they are on the map.  The above map started with seven landmarks, drawn from the introduction of my in-progress book. I started with the landmarks of imagination: I asked the reader to imagine him or herself in the future and asked the reader to imagine that the benefits were sufficient to make a commitment to learning. I used the analogy of visiting a new city, where the problem/opportunity was to learn about the city. I explained that the salience of things helped us to orient ourselves.  As part of the introduction, I mentioned that there are several limiting beliefs about strategy and about strategic thinking.

The remaining eleven landmarks arose through my exercise of analogous reasoning.

Navigational Beacons

Landmarks also give us a target to aim for. Three of the can’t-fail landmarks for encouraging your own strategic thinking are that of interestingness, high-quality questions and sensitivity to context.

(In this article, I assumed that the label on each of the landmarks are self descriptive. Feel free to comment below or contact me if you would like me to elaborate on the specifics.)

I encourage you to experiment with these landmarks and add your own.  Let me know how this helps you with your journey to becoming a competent strategic thinker.

Improving the Quality of Your #StrategicThinking Questions

what are good questionsOne of the most powerful tools in the strategic thinker’s toolbox is the ability to pose high-quality questions. A high-quality question is better than a good question.

Here is an example of a good question: What is going on here? Asking this question would certainly encourage a person to look a little deeper into the situation. It could be made a high-quality question by adding specificity. These are better questions:

  • What is interesting about what is going on here?
  • How are power relationships changing?
  • What relevant things are being overlooked by most people?
  • What are patterns in the evidence and what assumptions being made about those patterns?
  • What are the future implications of what we see today?

Good questions are conversation starters, but they don’t typically encourage answers that are specific to your context and to your ability to secure your fundamental interests. Above, I made a good question better by adding some of the specifics of strategy: interestingness, power, overlooking things, patterns, and future implications.

Here is another example: A good question is to ask about strengths and weaknesses.  A better question (and one of my favorites) is, What could your competitor do to put you out of business? A high-quality questions points you towards insights that are specific and meaningful to your organization.

Good questions are conversation starters, whereas high-quality questions require and provoke deeper thought. Do you agree?