Paying for Bad News #4: Beyond The Themes
By Mark Chussil
This series of four posts was published as a single article by SCIP in the April-June 2012 issue of Competitive Intelligence Magazine. (SCIP is Strategic and Competitive Intelligence Professionals.) You can read or download that version of the article.
Introduction
With his heartfelt goodbye-cruel-world article “Peak Intel: How So-Called Strategic Intelligence Actually Makes Us Dumber” in The Atlantic, Eric Garland sparked an electronic blaze on LinkedIn. His article fired up many people (see Acknowledgements), including me, in the fields of competitive strategy and competitive intelligence over a few days in April 2012.
The article and commentary hovered around three themes, which I’ll call Closed Minds, Distorted Markets, and Stormy World. Those themes are perennially old and current-events fresh.
I’m not saying the themes are wrong. I am saying I don’t think the evidence establishes they’re right. They might be right, but they aren’t right yet. Until they are right I believe it’s worth considering other perspectives.
This essay, Beyond The Themes, is the last of four. It is my commentary on Mr. Garland’s article, and my commentary on the commentary on his article. See the others: Closed Minds, Distorted Markets, and Stormy World.
Beyond The Themes
So far I’ve argued that the Closed Minds, Distorted Markets, and Stormy World themes have some truth to them although they do not, in my opinion, adequately explain the client resistance many people encounter.
I’ve also proposed alternate explanations for that resistance. When flipped around, many of those explanations imply antidotes. If you suspect communications problems, work on communicating better. If your audience will be hypersensitive to bad news, tread delicately or do a preview with the boss. If distortions interfere with your usual analysis, use other forms of analysis. If you’re not confident with point (single-number) forecasts, look at multiple futures and think like a meteorologist. If you get pushback, ask for feedback to build your skills. And so on.
Now, I’d like to toss in a few other ideas that might help us open minds and navigate through distortions and storms.
A Cultural Shift
I think there’s an important change that explains some of the resistance that frustrates CI and strategy professionals. It’s less like a stormy world and more like climate change: imperceptible increments that gradually poison the environment. It’s about our culture. Is it a real shift? I don’t know. It rings true to me but perhaps only for me.
All the talk of clients becoming more resistant to bad news, first from Eric and then echoed by many others, makes me wonder: if it’s true that they have changed, why have they changed? They didn’t suddenly locate or jettison IQ points. They didn’t suddenly leave their jobs en masse, only to be replaced by similar but less-competent people. (Steven Wright: “Someone broke into my apartment while I was away and replaced everything with an exact replica.”) They didn’t get infected with a virus that caused them to mutate into Eric’s silver-haired alpha dogs. So why have they changed?
My conjecture: a cultural shift toward what we might call severity.
It has become imperative to be successful this day and every day, to generate an eternal monotonically-positive trend line. We have zero tolerance for perceived failure. “You should have known.” “If you don’t get the job done, we’ll get someone who will.” And we don’t want to wait, either. We see this shift in how we talk about business leaders (and politicians).
The shift finds a natural home in large corporations, precisely where people claim to observe clients’ resistance to taking on challenges and accepting bad news. We are quick to elevate perceived heroes and quick to terminate perceived failures. Then add in cost-cutting, the business equivalent of austerity. Loyalty to our people down, disposability of our people up. If that doesn’t make people fear bad news, what will? For many people, contesting bad news is defending their financial lives.
The dynamic is quite different in upstarts and small companies, which have qualitatively different perspectives. They think “investment” instead of “budget.”
Prediction, Precision, Perfection
Let’s talk more about the bad predictions that clients don’t believe, due to the analytical horrors of the Distorted Markets and Stormy World themes. (Hmm. If the predictions are bad, maybe it’s just as well they don’t believe them.)
I agree that precise predictions aren’t going to happen. The thing is, unlike the themes, I don’t think that’s anything new. Fortunately, we can imagine alternatives, and because the need isn’t new the alternatives are already here. I’ve been working on my version for a long time, and others have worked on theirs.
There are many possible futures because there are many moving parts. People in your company make decisions about price, product features, innovation, marketing messages, make-or-buy, segments to enter or exit, and more. Your competitors do the same thing. Customer preferences evolve. Distribution chains convulse. Supply chains snake around the world with all the vagaries of treaties, protectionism, state support, transportation, and more. Toss in a presidential election where we believe one party will grow the economy and the other will make it implode, though we don’t agree on which party will have which effect. Many possible futures indeed.
And even if we don’t go so deeply into all the possible futures, companies still need to combat complacency and overcome overconfidence. Start by ditching spreadsheet thinking and extrapolations from the past. Replace them with business war games, contingency planning, scenario planning, or even just plain brainstorming about what could happen.
With so many possible futures, it is absurd to believe we can pick the most-likely one. Even if we could, it is absurd to believe that even the most-likely future is highly likely to come to pass.
Predictions “work” when the problem is simple: short-term forecasts in grindingly dull situations. They fail otherwise. Meteorologists know this, and that’s why they will tell you the likelihood of precipitation three days from now but not three months from now, unless you are a place with grindingly consistent weather.
The alternative is to explore multiple scenarios. You may not know which one will come to pass but you get to test or develop strategies under different conditions, which tells you a lot about the potential risks and rewards of your strategy options. Business war games are highly effective at exploring competitive dynamics. Monte Carlo simulations can look at environmental uncertainties. My company’s strategy decision tests simulate and analyze your options against your competitors’ options.
Can you achieve predictive precision or perfection with those tools? No, of course not. But that’s a useless standard. We don’t know everything but that doesn’t mean we know nothing. Remember that the objective is to make better strategy decisions. The question is not whether an analysis is perfect. (How would you know?) The question is whether you can make a better decision with an analysis than without it.
To gauge the value of an analysis, ask yourself whether benefit of the analysis — the better results you can expect with a higher-quality decision — is likely to be higher than the cost of the analysis. I’ve seen clients figure that their benefits were five thousand times their costs. Strategy decisions are high-leverage.
The Last Word
As with everything in life, we do the best that we can. That means clients, that means you, and that means me.
No matter what, decisions will be made. Our goal is to improve the odds of happy results, which we do by improving the quality of those decisions. We won’t get perfection but we don’t need perfection. A few percentage points is enough separate the gambler from the casino.
One last point regarding the notion that strategic intelligence makes us dumber. Would we really prefer to have less of it?
And I’m sure that’s not the last word on these subjects.
Nobody ever gets the last word. — Jack Balkin
Acknowledgements
The LinkedIn e-conversation, in the Corporate Planning, Strategy & Strategic Market Segmentation group, contained wisdom from James Andrus, Babette Bensoussan, Ben Gilad, August Jackson, Alan Michaels, Seena Sharp, and many others. People cited Benjamin Franklin, Daniel Kahneman, Friedrich Nietzsche, and Michael Porter. We covered blind spots, business war games, the curse of success, honing the craft, industry databases, News Radars, oligopolies, political influence, and strategy simulations. I have done my best to reflect that commentary in my essay. Blame mistakes on me, and credit wisdom to them. Thanks also to Sean Campbell for sage advice.
[1] Fun facts! The summit of Mount Wai’ale’ale on Kaua’i is said to have between 335 and 360 days with rain per year. The Atacama Desert, in northern Chile, has river beds that some studies suggest have been dry for 120,000 years. Three months from now — remember, you heard it here — it’s going to rain on Mount Wai’ale’ale and it’s not going to rain in the Atacama Desert.