“Therefore it is said, ‘Accumulate learning by study, understand what you learn by questioning’.”
Jiufeng Annals (Zen lessons c. 12th Century CE)
Classical strategy is now under serious threat. Why? The volatility, uncertainty, complexity and ambiguity (VUCA) of modern business makes strategy increasingly futile. Many may think that if it is impossible to predict the value of any given strategy, business leaders should rely on intuition rather than study of all the factors. In fact, this is very wrong; systematic analysis is more important than ever for two reasons.
The planning paradox
In Simon Haslam and Ben Shenoy’s book, Strategic Decision Making published in 2018, the authors discuss the planning paradox. Put simply this states that we often make the biggest decisions when we know the least. The sub-heading for Haslam and Shenoy’s brilliant book is “A discovery-led approach to critical choices in turbulent times”. For reasons that will become clear, an iterative approach to strategy often makes sense in the Information Age, so it appears this book is likely to be an important guide in the turbulent years ahead. And so it is.
As many scholars of strategy have pointed out, working environments today are often VUCA (volatile, uncertain, complex and ambiguous). VUCA is, in fact, a military term developed by the US to describe the asymmetric threat they have faced in the 21st century. As the title suggests, Haslam and Shenoy suggest an iterative and discovery-led approach to strategy. This strategy has much to offer in an age of wicked problems. Wicked problems were introduced, as we know them, by Charles West Churchman in 1967; they are problems which are difficult or impossible to solve due to incomplete, contradictory and changing requirements.
If top-down planning does not work, we are left with bottom-up evolution: iterative change and adaption to conditions on the ground, hence a discovery-led approach. However, unless this happens within a learning organisation driven by data, lessons cannot be learned and the organisation cannot improve. Let’s face it, it means making mistakes and learning from them. Most organisations are still culturally incapable of embracing this approach. This is because they are unaware of the second paradox.
The paradox of success
Matthew Syed’s Black Box Thinking is one of those books that fundamentally challenges how we think and exposes the appalling errors of judgement humans are apt to make. The principal issue is our attitude to error. We find making mistakes deeply affecting; we avoid them and stigmatise them. As a result we can often fail to learn from our mistakes. The paradox at the heart of this is: that without failure we learn less efficiently, some problems cannot be solved without first making mistakes. Therefore the crowning summits of success are invariably built upon a mountain of failures.
A great privilege of being a consultant is that one can observe many organisations and make comparisons. It is true that some businesses fail to learn because their culture commands mistakes are buried. In such organisations narrative fallacies emerge: stories which are told throughout the workplace and treated as rock solid fact. Systematic business analysis can quickly undermine this received wisdom and reveal the truth. When successes occur, they are often attributed to individuals and yet it is extremely rare that individuals will bring success to a complex environment. Success is more often a hard won gain built on a litany of failures. The narrative of a hero who turns a business around is far more compelling than the mundane tweaking, experimenting and trialling of tiny innovations; the gradual creep of progress.
This is where data science comes in. Whilst leaps forward are an indispensable part of progress, they are less common than supposed. Thomas Edison did not invent the light bulb overnight, it took many attempts. When asked about his failures, he replied that “I have not failed. I’ve just found 10,000 ways that won’t work”. But he also catalogued every failure. To learn from failure it is important that data is collected and sensible metrics are created. This, again, is where many organisations fail. Modern businesses collect vast amounts of data, but the resource is often squandered
Overcoming the paradoxes
There are many organisations which will probably never understand or harness the power of failure as a key feature of an iterative and experimental strategy. The lean start-up, conversely, does not have the resources for grand strategy and is forced to apply a discovery-led approach. While many will fail, those who survive demonstrate the resilience and innovation that larger firms envy and aspire to. Companies that succeed rely on luck to some extent but also the ability to learn from trial and error; that is the fundamental meaning of data driven advantage.
Does your business need help overcoming the two paradoxes?
Systematic business analysis