Does the Model Have a Reverse Gear?

As we noted earlier, mental models lead to a locus focus, that is, selective attention on a few metrics that capture the spirit of the mental model. For example, customer satisfaction may capture the essence of a customer-centric mental model. However, what is also noteworthy is not only the selection of a model-specific metric but also a commitment to the direction in which to move it. In most cases, revenue-oriented metrics are always expected to move up, and cost oriented metrics are always expected to move down. While there is fundamentally nothing wrong in this approach, the focus on the metric prevents managers from asking questions about what would happen if the metric were to move in the opposite direction and whether it is appropriate to let it do so. We once came across a flourishing medical practice that diligently followed its customer satisfaction scores and had a major research firm collect the data and provide a consolidated report. However, at one point in time, it discovered that its satisfaction scores were slipping and its profitability was improving. Of course, several factors might explain the inverse correlation between satisfaction and firm profitability. However, the discovery of this unexpected relationship was troublesome because it violated the mental model around which the practice built its entire customer-centric strategy. It violated the directional premise that the way to drive profitability higher was to drive the satisfaction score higher.

Therefore mental models not only drive the strategic energy of organizations toward the metrics that become the locus of attention but also influence the direction in which these metrics need to be moved in order to succeed. Strategic choices that circumvent these key metrics and yet are profitable are moved off the table, and a drop in these metrics is interpreted as an indication of a failure to achieve the strategic goals.

The point is that as soon as we embrace a mental model, we embrace the metrics surrounding it; we fail to ask questions about what would happen if we were to turn them on their head. What would happen if we were to let satisfaction levels of certain stakeholders slip? Will we necessarily be worse off? What would happen if quality levels went down or brand equity was lower than what it is now? Therefore, before we embrace a mental model of strategy, we should clearly ask if it has a reverse gear. Will it ever advocate a course reversal? And if so, then does it have built-in indicators that would start flashing that a reversal is indeed warranted? Or will it be left to us as individual decision makers to figure out when we should abandon course and look for alternatives? And if so, then will it be too late by the time such a discovery is made?