Knowing History: A Strength or Weakness of Strategic Thinkers?

Historical ThinkingOne of the most important things we can do to advance strategic thinking is identifying and removing misconceptions. In this article, I want to challenge popular advice: being well read in history develops strategic thinking. I’m defining “well read” as having read and account of the characters and events of history. A well read person can explain what happened and why that specific event happened. Too many people have a superficial knowledge of facts. This results in a mindset, explained by historian Robert Crowley(1):

We are left with the impression that history is inevitable, that what happened could not have happened any other way, and that drama and contingency have no place in the general scheme of human existence.

Superficial knowledge of events and characters is fine for entertainment, but dangerous if we need to problem solve and create policy. Deeper understanding of the past is needed if we are to make decisions about the future.

Here is my proposition:

Many people enjoy a good historical narrative, but knowing the historical facts does not translate into strategic thinking talent. This is because most histories are written as coherent stories of conflict and competition. The resolution is frequently narrated so that the outcome seems inevitable. Further, most accounts of history severely discount the role of chance. A frequent reader of history comes to accept personal character as vitally important, and overlook chance. This historical-thinking mindset hinders their ability to make futures-ready decisions.

An Example

I know several people (all men) who enjoy reading history books about great historical leaders, wars, and movements. They describe it as an enjoyable hobby. These histories provide coherent, consistent, logical narratives.

These same people are among the first to criticize leaders of business and government.

I’ll illustrate this with Terry who I’ve known well for 20 years. Terry is an avid history reader and is intelligent. When it comes to contemporary affairs of business or politics, though, Terry will frequently criticize with comments like, “they have no commonsense” or “they’re idiots and don’t know what they’re doing!” In the spirit of having a good conversation, I try to get Terry to see if there is room for another point of view. I point out that situation is complex. I suggest that maybe the policy might have benefits that will become more obvious in the future. Usually, my words have little impact. Terry has determined all those business leaders and politicians (it doesn’t matter what political party) are incompetent and it’s settled.

Now, let me add this element to my example: Terry once ran a successful business. Unfortunately, he made some decisions that didn’t pay off. His bank and creditors forced him into personal bankruptcy. Terry’s decisions could also be characterized as lacking commonsense and lacking smarts. Although it ironic that Terry freely criticizes others for their strategic deficiencies but he doesn’t see it in himself. (Of course, it’s no surprise the find stories that protect their egos.)

Little Emphasis on the Role of Chance

Like many books on strategy, histories are written with the benefit of hindsight. The more entertaining story is one of leadership, conflict and decisions. An entertaining story is a coherent story. Readers are drawn towards those stories that “feel right,” and which engage the natural optimism that “it will all work out.”

The role of luck is too-often treated as context. Competent strategic thinking takes us in more nuanced direction. In particular, a strategic thinker recognizes the value of Daniel Kahneman’s note on the importance of luck: (2)

Luck plays a large role in every story of success; it is almost always easy to identify a small change in the story that would have turned a remarkable achievement into a mediocre outcome.

Forecasting & Plans: Is the Future Inevitable?

When you believe that “history is inevitable,” you’re also more likely to rely on trend forecasting. If there was a 10% change in a variable over the past year, you’re likely to assume that this same 10% will apply to the coming year. Your mindset is anchored to a number, and the status quo is often the result.

A similar idea characterizes planning. People create plans as if they will unfold in an inevitable way. There is little consideration for the role of chance.

Historical Thinking and Strategic Thinking

Historical thinking involves reading the works of other historians. As an element of critical thinking, you critique the choice of evidence, the framing of that evidence, the tone and word choice, and the resulting conclusions. Instead of the inevitable “march of history,” historical thinkers look for alternative “second stories” that might equally explain the past.

Strategic thinking is not oriented towards understanding the past, but rather towards making futures-ready decisions that take into account the uncertain shapes of the future and the implications of that future. Here I paraphrase historian David J Staley: (3)

Strategic thinkers understand that surprise, contingency, and deviation from trend lines is the rule and not the exception. Context matters. Strategic thinkers explore alternative possibilities of what might be, rather than definitive predictions of the future.

A good historical analysis, like good strategy, probes into deeper layers.

Do you agree that knowing history does not mean you are a historical thinker? Do you agree that a superficial knowledge of history is a detriment to strategic thinking? What are the strongest and weakest parts of my argument?

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  1. From the introduction to What If? 2: Emininent Historians Imagine What Might Have Been. 2001. Berkely Books.
  2. Daniel Kanneman. Thinking Fast and Slow. Farrar, Straus and Girious ebook
  3. A History of the Future. David J. Staley. December, 2002. History and Theory.

Three Healthy Practices for Enhancing Strategic Foresight

Strategic Risk Probability Impact GraphBy definition, strategic thinking is concerned about success in the future. It is a style of thinking that imaginative AND systematic.  As contrasted with reading palms or charting the movement of the Zodiac constellations, strategic thinkers look to rational methods that fall in the discipline of “futures” or “strategic foresight.” The goal of the strategic thinker is to develop insights and design strategy that recognizes that the future cannot be predicted.

I tell audiences that leaders must prepare for multiple potential futures, enabling them to adjust faster to rapidly changing geopolitical, economic, regulatory and technical developments. Envisioning such possible futures and determining how to best meet those requirements can help leaders create a more agile and responsive set of strategic capabilities. To create a more agile and change-capable organization, you should focus your efforts on becoming “futures-ready.” Here are three healthy practices that can assist you in developing a robust perspective future:

Healthy Practice #1: Be Skeptical of Vision Statements

Visioning is an exercise to develop perspective and dialogue about the future, not a “locked in” objective. Many vision statements assume that the future will look a lot like the past. In this case, vision becomes the sole hypothesis about what will happen. It becomes a prediction. This single-hypothesis assumption, in a nutshell, is the difference between long-range planning and strategic planning.

Healthy Practice #2: Use Risk and Opportunity Analysis as Inputs

Most organizations spend some time with formal risk assessment, resulting in a list of “things to watch for and manage.” Although many times the risk analysis seems to be more of a litany of standard problems, I find that the effort could be used to create a greater awareness of the future.  After all, isn’t the risk analysis simply recognizing that there is a cause-effect relationship between a risk event and its consequence?

Healthy Practice #3: Imagine the Best Case and Worst Case Scenarios

Since no one can anticipate the future with certainty, it’s wise to consider scenarios. What is the best that could happen to you? What is the worst?

This is just a few of many healthy practices for developing a strategic foresight. How have you used them? What other practices do you suggest?

How to Improve Your Ability to Imagine the Future

how to improve your ability to imagine the futureStrategic thinking is a style of thinking that – among other things – is concerned about the future.  When done well, we could say that strategic thinking makes a person more “futures ready;” that is, having an attitude that is comfortable with change, anticipates change, and proactive with responses. Unfortunately, this futures-ready stance is not common. However, we can train people to be more futures ready. This article provides an approach that starts with the individual.

A Thought Experiment

Try out this exercise. Imagine yourself 15 years ago. The year is 1998.  Consider these questions:

  • In 1998 mobile phones were gaining widespread use. Could you have imagined how they would have taken over functions like time keeping, photography, and gaming?  Could you have imagined laws being promulgated to restrict texting while driving?
  • In 1998, would you have imagined that any of your friends or family would have died “before their time?” I can say – based on my own experience with a death of someone close to me – that it makes a lasting impression and causes a re-thinking of priorities.
  • In 1998, most babies in the US were born to parents married to each other.  Today, more are born to single women than to married parents. Would you have predicted that?
  • In 1998, could you have imagined these two economic slowdowns: the “dot com bust” and the “Great Recession?”
  • In 1998, would you have imagined a terrorist attack on US soil that would have changed the structure of government, airport security, and entry into sporting events? The scope and far-ranging impact of the 9/11 attacks has created all kinds of change to the daily life of Americans and others.

I have conducted the above thought experiment with many people, and note this pattern: the person realizes that the amount of change has been astounding.  One person called their experience with change, “jaw dropping.” These memories and reminiscences can be quite strong and stimulate some interesting conversations; but, the point is to get them to shift their thinking towards the future.

Now, some readers would answer the thought experiment with this response, “Sure, I could have imagined this.”  However, you probably didn’t. You were probably concerned with the joys and problems of your life at that moment in time. You were (and are) probably like most people: you the present time is your reality. It is concrete, whereas the future is an abstraction that gets little of your attention.

After looking 15 years into the past, I next ask them to imagine 15 years into the future. If I want to really stimulate their imagination (or aggravate them), I ask them to imagine as much “jaw dropping change” for the future as they recall for the past. This is difficult, and requires encouragement.

Most people think tomorrow will be more of today. They develop views of the future that linear extrapolations of the current condition.

Let’s put the 15-year span into perspective. Home mortgages are typically 15 or 30 years.  Some people own their cars for 15 years and are even wearing the same suits and shoes. Fifteen years is the lifespan of a family dog. Those examples show us that 15 is an understandable span of time.

One common pattern is that people — looking back in time –often refer to the passage of time as a “blink” or “time flies.” However, when looking into the future, people tend to discount how fast it will arrive.  This asymmetry tells us that it is tough to be “futures ready.”

Envisioning the Future – Start With Some Easy Questions

The following questions are about the future, and have answers that require only a bit of arithmetic and imagination. Write down your answers to these questions.

  1. What is your age in the year 2028?  Imagine your parents or grandparents at that age and their physical and mental health? How old will your children be?
  2. How many years has your organization (employer) been in business in 2028?

Expand your answers with some written words or images. Linger on this description, engaging your intuition; does it feel right? Then try to look at that future with a different perspective and consider other questions that might help you with envisioning.

Trends – Useful but Remember the Wildcard Scenario

Invariably, the discussion of the future brings in trends and forecasting, so go ahead and make note of the them. The typical list includes: climate change, wearable technology, population growth, nations that we now consider developing are fully developed, more weapons (international and domestic), and more globally-interconnected communications.

Futurists recommend that any futures-ready view include a “wild card scenario.”  Consult the above thought experiment placing you in the year 1998: terrorist attacks and the Great Recession might qualify as wildcards: extraordinary events that might be difficult to anticipate but have far-ranging effects.  Here are a two ideas for wildcards that could disrupt life as we now know it: pandemics and a large meteor strike.

Delight and Disaster Scenarios

Here is one more exercise for your imagination. Imagine two futures. One is optimistic and wonderful. It is the ideal world.  The second scenario is one that is more pessimistic.  Explore what that scenario is like for you personality, your organization, and your network of friends, family, and social organizations. Emphasize the impact of the scenario, rather than the probability of occurrence.

Recognize How Status Quo Becomes a  Barrier

Earlier I noted that people don’t do as well with future imaginings compared to past rememberings.

One reason is that  people tend to remember things that are recent, concrete, and salient. This is often referred to as the  anchoring bias.  A second reason is that the future is ambiguous and people tend to be ambiguity avoiders. People prefer to think and talk about things that they have evidence for, and avoid things that don’t.

What is most real? The present. This shows up as status quo thinking. Recognize it as a barrier, and apply both imagination and analysis to developing a view of the future.

Expanding the Future

These thought experiments add value to your strategic thinking because they place patterns and ideas into your memory. Your subconscious  works with these concepts by recognizing patterns and producing insights.

What other ideas do you have for helping individuals become more “futures ready?”

Alertness for Strategic Opportunities: Hold These Three Attitudes

opportunities are everywhere

All though it is true that strategy involves some sort of premeditation, any experienced general knows that the plan will change with the first shots of battle. Opportunities will open up in unexpected places; so, strategic thinkers want to be alert – watchful, vigilant, and perceptive – for opportunities.

Passive and Active Opportunity Recognition

An opportunity is an event, observation, or option that has the potential to be favorable to someone. The word opportunity in Latin is a contraction of the words “ob” and “portus,” meaning facing in the direction of harbor.  Picture yourself as a Roman seaman, sailing in from the treacherous sea, with the wind blowing you naturally into the harbor. This is passive opportunity recognition: sometimes opportunities happen on their own. Luck is a good thing! Accept the gift and move on.

Entrepreneurs develop a sense of discovering, pursuing, and capitalizing on opportunities that lead to principled success. They are active in their thinking. Again, picture yourself as a Roman seaman entering a port filled with people who want to trade with you.  Your short-term opportunity is to buy and sell. Your long-term opportunity is the recognition of patterns and development of business relationships.

There are three attitudes that can help you be more alert to opportunities.

Attitude 1: Expect to be Surprised

Status quo situations are stable, predictable, and understandable. Although future can be these things, it can also be the opposite. You will be more likely to recognize opportunity if you assume your situation is characterized with these terms: dynamic, ill-structured, ambiguous, and unpredictable.

Evidence is all around us that some industries are undergoing profound and disruptive change. The winners are not those who have the grandest aspirations and goals and most polished processes; they are the ones who can recognize the change early enough and adapt with agility. You will increase your chances for success if you,

Assume the situation is chaotic, and then ask yourself: where are the opportunities?Strategic Thinking Definition

Attitude 2: Have a Mentality of Abundance

Here we choose an assumption that we are blessed an abundance of creativity, talent, connections, ideas, technology, karma, and so forth. Admittedly it is optimistic, but holding an attitude of abundance doesn’t need to be seen as unrealistic.

Here is a personal example: I don’t particularly like to prospect for new clients. However, I find that when I assume (imagine, visualize)  that people will say, “I’m really glad you contacted me,” I find that I am more motivated to make the contacts.  Sometimes the prospecting pays off handsomely!

I see the opposite attitude frequently: the attitude of scarcity. The attitude of scarcity appears when a person assumes that there is finite and limited time, money, people, or resources.  Here is one example of how it manifests itself. In my seminars, I often have an icebreaker game that involves designing a structure out of pipe cleaners where teams have to design and construct it in 10 minutes.  When we debrief afterwards, participants typically note that the time limit restricted the quality of their design. My response to them is, “I would have given you more time if you would have asked for it. I also have more materials available and I would have given you more if you would have asked.”  Their faces show amazement as they realize their scarcity assumption about time and resources has foreclosed on an opportunity.

You will be more alert to opportunity if you hold an attitude of abundance.

Attitude 3: The Criterion is Plausibility, Not Perfection

When opportunities emerge, they are usually messy and incomplete. These imperfections are discouraging if not downright unattractive. Sometimes and it seems little use in building a business case. This observation from venture capitalist Don Rainey shows the value of looking past imperfections,

Your ability to see the imperfection shouldn’t blind you to the larger possibilities. In my venture capital firm, when we hire new, (typically younger people), into the business, we are accustomed to the newcomers hating every deal. They are smart enough to see the imperfection but not yet experienced enough to be confident accepting that the imperfection doesn’t define the opportunity. Endeavor to see the opportunity in spite of the imperfection of the current presentation.

I suggest that you consciously use the word “plausible” as you evaluate the worthiness of an opportunity.  This helps you make a nice conceptual fit with the 4Ps futures that I discussed in this article.

Calm and Relaxed

As with any kind of strategic thinking, you will get better results if you are in a relaxed and playful state of mind.

The right attitudes and mindset towards opportunity will make you a better strategic thinker. In addition to these three attitudes, what mindsets will help you?

How to Use the 4Ps to Capture Future Scenarios: Thinking Strategically

How to Capture The Future

Strategic thinking involves thinking imaginatively about the future. It enables the strategist(s) to articulate answers to two questions,”What are the things that might happen in the future? And, what is the realistic future state that I desire?

Strategic Foresight

Richard Slaughter defines strategic foresight:

Strategic foresight is the ability to create and maintain a high-quality, coherent and functional forward view and to use the insights arising in organizationally useful ways. It represents a fusion of futures methods with those of strategic management.

 Strategic foresight is a sub-discipline of strategic thinking, and it can help you develop answers to those two questions. Strategic foresight not crystal ball gazing (prediction), it is about discerning factors that create the future and describing alternate futures. Why? The purpose is practical: generate insights about the future so that the strategist can make better present-day choices.

The 4Ps

There are four broad categories of futures, the 4Ps: they are the possible, plausible, probable, and preferred futures. (There is a 5th P, potential futures, where the strategist applies unbounded imagination and extends the vision into realms that are best termed fantasy.) Ideally, we approach the 4Ps in the order suggested in the nearby graphic.

The strategist should begin with the possible future with the goal of developing a broad understanding of the situation.  Now is the time to consider “wild card” scenarios or “black swan” events. Divergent thinking (as opposed to convergent thinking) and an expeditionary mindset are appropriate styles of thinking.

  • Questions to Ask: What is the most radically-different unbounded future that I can imagine? What is the best and the worst case?  What is strange, weird, and crazy? Might it happen?
  • Answer to Expect:  Yes, the scenario might happen.

Next, she narrows into plausible future states (those which are “seemingly or apparently valid, likely, or acceptable; credible”). Convergent thinking is used.  An important idea for this is to consider the “narrative arc” of the organization or situation.

  • Questions to Ask: Which future states are feasible, given what we know at present? What would have to happen for this state to arise? How does this future state mesh with the founding mission of the organization and the values of the founders and other stakeholders? Could it happen?
  • Answer to Expect:  Yes, the scenario is plausible.

The third of the 4Ps is the probable future.  The strategic thinker is getting increasingly more analytical and applying systems thinking (being systematic in thinking is one of the four qualities of strategic thinking).  Here, she considers causal factors, delays, and weighting for the contribution of the causal factors to the emerging outcome.

  • Questions to Ask: Which events (that would cause this future) are is most likely?  What other events need to happen, too?  Where can we get data to support our assumptions? How likely is this future to happen?
  • Answer to Expect:  We have a systematic understanding of what would cause each scenario, and an estimate of the probabilities.

The fourth P is the preferred future state.  We can influence our future.  We can find the performance gaps and create strategic initiatives to close the gap.

  • Questions to Ask: What future do I prefer? What choices should I make about scope, objectives, and advantage? (See this article for more on those three elements.) What do I want to happen?
  • Answer to Expect:  This is the scenario that most fits my ambitions and expectations.

Cautions About the Preferred Future

The flow of attention described – possible to plausible to probable to preferred futures – is an ideal. It’s difficult to practice because it starts with imaginative and ambiguous scenarios.

It’s easier for people to start with stating a preferred future. However, that is problematic because the alternatives are feasible and occasionally do occur. You can’t be proactive if haven’t considered the future that you are pro-acting to.  As difficult as it may seem, the strategic thinker will consider alternative futures.

In those organizations that have established and mature process, people often hold unexamined assumptions is that the future will resemble the present. This is a status quo bias, and we see the results continually in firms that have been unable to respond to technology or social trends: film-based photography, newspapers, and bricks-and-mortar retailers of videocassettes to name just a few.

Aspirational visioning is common. Consider a large publically-traded company in agribusiness, a very mature business.  The CEO had seen a presentation on Red Ocean Blue Ocean strategy (The blue ocean is a new wide-open market where you don’t have to fight it out with competitors).  He challenged the Presidents of all of his business units to grow substantially in the next five years. People made some attempts to dream big ideas, but it the goal was soon forgotten as day-to-day operations reasserted their priority. Masked by the “great recession,” the company missed signals that its markets were fundamentally changing. The company ultimately shrank in size!

When managers move quickly to the preferred future, they often make the mistake of confusing the goal for a strategy. Note what UCLA’s Richard Rumelt says about this in his book, Good Strategy/Bad Strategy. He writes,

“Executives who complain about execution problems have usually confused strategy with goal setting. When the “strategy process is basically a game of setting performance goals – so much market share and so much profit, so many students graduating high schools, so many visitors to the museum – then there remains a yawning gap between these ambitions and action.  Strategy is about how an organization will move forward. Doing strategy is figuring out how to advance the organization’s interests. Of course, a leader can set goals and delegate to others the job of figuring out what to do. But that is not strategy. If that is how the organization runs, let’s skip the spin and be honest – call it goal setting.”

By examining the futures in the more rigorous way espoused here – possible, plausible, probable, and then preferred – the strategist increases the likelihood that they are considering real organizational issues that deserve attention and resources. Too, the act of generating alternatives increases the prospects of finding the insights that are necessary for a brilliant strategy.  As practical advice, consider increasing the amount of effort in strategic foresight, and then distributing your time in this way:

  • Possible Futures – 15%
  • Plausible and Probable Futures – 60%
  • Preferred Futures – 25%

You should iterate through versions of the plausible and probable futures.  You might want to occasionally relook the possible futures to see if they might be better categorized as plausible so as to avoid a blind spot.  Too, revisiting the possible futures might cause you to see a strategic driver in a new way.Strategic Thinking Definition

Remember that the definition of strategic thinking is not simply about imaging a future, it is doing with the intent of being better off in the future. Although this could be dismissed as “just a creative exercise,” it has the potential of sparking important creative insights necessary for building a good strategy.

How have you applied the 4Ps to your development of strategy?