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14
Choosing to Choose

And here we are — the crux of it all. The space in which we decide what to progress, and what to kill off. Ignorance may have once been bliss — but now, thanks to an ongoing quest, our strategic decision-making is augmented with the presence of viable alternative options.

Strategy has just got a whole heap trickier. And more effective.

Where we used to be able to simply proceed with default thinking — where we didn't even need to be conscious of our choice (it just happened automatically) — now we must deliberately choose which option to proceed with.

Deliberation is liberation.

And choosing to not choose is still a choice.

Whatever choice we make will have implications for the future relevance of our enterprise. So, let's get into it — no excuses, and no stalling.

MAP YOUR OPTIONS

The first thing we need to do — after re-acquainting ourselves with our current business model and identity (and the emerging incoherence of a future context) — is map out the options available to us.

Note that our focus at this stage is no longer exploration. Rather, it is the gathering of the viable strategic options available for us to choose from (including the ‘do nothing' option), so that we can make the best strategic decision.

This is important.

When confronted with complexity, it's easy to feel overwhelmed. This overwhelm is often lessened if we get the complexity out of our heads and into a manageable format. In strategic development, this could take the form of index cards or sticky notes — things that can easily be moved, categorised and grouped.

What it does not look like is 300 PowerPoint slides, or an equally long document. That stuff is reference material — it cannot easily be moved, categorised or grouped and so should have been communicated and discussed in the lead-up to the strategic immersion. If we're viewing slides or pages on a computer (or projected on a screen) we are forced to work with one slide or page at a time, and we must move through the document sequentially. We don't get context. And besides — our attention should be on strategic discussion and debate, not fixated on a screen.

Also, we must strive to minimise decision fatigue. This is the phenomenon in which the quality and rationality of our decisions deteriorates in proportion to the number of decisions we have to make. ‘Decision fatigue' can also lead to decision avoidance. A paradox exists here, of course: we think we want choice — and Quest-Augmented Strategy provides it — but too much choice can be disempowering.

This is where default thinking comes to the rescue.

Anything that does not require thorough, considered and pioneering thinking ought to be left to default thinking. President Barack Obama deliberately automates what he wears (the same suit, every day) and delegates other routine decisions (like what to eat) to his staff. He takes this approach in a deliberate attempt to minimise decision fatigue.

So, when the time comes for strategic decision-making — keep it simple and focused. By all means, have reference material on hand, in case it is needed. But do not let it get in the way of good thinking. Streamline. Use visual tools like the Business Model Canvas (mentioned in chapter 7; see www.businessmodelgeneration.com/canvas/bmc), and limit yourself to the range of viable options you have gathered.

An abridged conversation might look like this:

Here's where we are now [business model] and here's what's on the horizon [possible future contexts]. As you all well know by now, here's where our current business model and identity might be rendered incoherent or unviable [specific elements of the business model at strategic risk] and here are the opportunities for new value, if we play our cards right. We have several viable options to consider …

And then, the discussions commence — or, rather, continue. But now we have space and time to dedicate to thorough thinking — an approach that just may see us overcome our individual and collective cognitive biases, if we have the acuity for it.

A BIAS TOWARDS BIAS

The work of psychologist and Nobel Prize Laureate Daniel Kahneman highlights, in his words, ‘our almost unlimited ability to ignore our ignorance'.

Typically, this manifests as cognitive biases — patterns of deviation in our judgement which see us make illogical or irrational decisions.^[1]

Our own cognitive bias can be hard to catch in ourselves, because it is with us all the time. Much like default thinking, these are cognitive shortcuts we take without conscious or deliberate thought.

Only through thorough questioning and reflection, and shared group acuity, are we able to challenge the possibility of cognitive bias when it emerges. And it takes a mature leadership team to be able to do this — particularly in the midst of strategic decision-making.

Whether you like it or not, cognitive bias is going to happen. The question is, how severely will it influence the strategic decision-making of your team?

BEMUSING BIASES

Well over a hundred different cognitive biases affect the way we think and decide — you can easily search for them online. But here's a list of the main ones to watch out for in the context of strategic decision-making:

Ambiguity effect — in which our decision-making is affected by a lack of certainty. We tend to select the options for which the probability of a desired outcome is known, over options in which the probability is unknown. This can result in people avoiding strategic options where information is missing. Gathering evidence through experiments can mitigate the effect of missing information — but never completely.
Anchoring bias — in which we become overly reliant on the first piece of information we hear. This is particularly important in relation to the sequence of options presented.
Availability heuristic — in which we overestimate the likelihood of events that are more ‘available' (recent, unusual or emotionally charged) in our memories. For example, if someone on the team once lost a heap of data using a cloud-based service, they may warn heavily against using cloud-based services (perceiving that the risk of a similar event occurring again is quite high).
The bandwagon effect — in which we adopt beliefs, ideas and fads the more they are adopted by others. I suspect this is where ‘Let's build an app!' came from — people saw other businesses building apps and thought they ought to build one too. And so they proceed to build crappy apps of no strategic merit. Beware the bandwagon!
Base rate fallacy — in which we jump to conclusions, ignoring available statistical data in favour of specific data to make a probability judgment. Repeated experiments should serve to mitigate this, but being mindful of this bias may help you avoid poor judgements.
Bias blind spot — in which we easily recognise biases in the judgements of others, but fail to see the impact of biases on our own judgement. I frequently fall into this trap, and this is partly related to the introspection illusion — a cognitive bias in which we wrongly think we have clear and direct insight into the origins of our thoughts and our mental state (whereas others do not). The heartening thing to always remember is that we are frequently just as flawed in our thinking as everyone else.^[2]
Confirmation bias — in which we look for, interpret and recall information in a way that confirms our own hypotheses and beliefs. We need to watch for confirmation bias throughout our experimentation and strategic decision-making — you may favour a particular option to an unreasonable extent, for example.
Conservatism bias — in which we believe prior evidence more than new evidence that has emerged. This can be a good element of the scientific method, in which we are sceptical of new discoveries and seek to disprove them with more rigorous analysis. But we can get carried away. People were slow to accept the fact that the Earth was round because they maintained their earlier understanding that it was flat.
The curse of knowledge — in which we find it extremely difficult to think about problems from the perspective of folks who are less informed. Sometimes, because we are so close to our knowledge, we tend to undervalue it. We think, everyone knows this, surely — but they don't. Just because you've been monitoring feeds and watching the drivers of change for months in relation to a specific option, it doesn't mean that others share your knowledge. The ability to overcome this curse is an important trait of pioneering leadership. Doing so re-opens the gates to cognitive empathy.
False-consensus bias — in which we overestimate the extent to which our opinions are typical of those around us. We assume that our opinions, beliefs, preferences, values and habits are normal and that others also think the same way. This bias calls to attention the need to actively seek diversity.
The framing effect — in which we react to a particular choice in different ways, depending on how it is presented. Loss is perceived as more significant than gain. For example, in research published in the Journal of Economic Behaviour & Organisation it was found that 93 per cent of PhD students registered early when a penalty fee for late registration was emphasised — but only 67 per cent did so when the same choice was presented as a discount for earlier registration. I've been using the framing effect extensively in this book to emphasise the mitigation of strategic risk within the threat of future incoherence. I also present the opportunity for positive outcomes — but focusing on this is unlikely to get cut-through. You'll also notice we use this framing effect (to good effect) when presenting viable alternative options.
Hindsight bias — in which we see certain phenomena as predictable, despite having had little evidence or any objective basis for predicting it. This is where ‘creeping determinism' sees people declare that they ‘knew it all along'.^[3] It's a complicated phenomenon that has even been found to cause memory distortion (possibly our own subconscious attempts to reconcile cognitive dissonance). You'll see this occur in your team.
The highly sceptical person will — after critiquing every step of the processes — declare that they always knew a particular strategic option was the best way to go.
Hyperbolic discounting — in which we opt for immediate pay-offs rather than larger gains later on. This bias is further enhanced where short-term goals are incentivised and reported on in regular intervals. In this environment, people will choose pathways that result in quicker pay-offs — rather than explore less-certain pathways that may reap bigger rewards in the mid to long term.
Illusionary truth bias — in which we believe information to be correct because we are exposed to it frequently. This is something to be mindful of when monitoring information feeds and the drivers of change. Chances are you'll be exposed more frequently to a particular phenomenon, and so may attribute more ‘truth' to it than it actually warrants. At the same time, this is a bias you can exploit — by sharing information about emerging phenomena more frequently, others are more likely to believe it to be true.
Information bias — in which we believe that the more information we can acquire to make a decision, the better. Even if that extra information is irrelevant to the decision. This is a good bias to check if anyone seems to be stalling in strategic decision-making — choosing to not choose until we have more information is still a choice. And it may be influenced by a distorted evaluation of the importance of more information.
Normality bias — in which we underestimate the possibility of a disaster (and the effect it would bring). This can result in situations where we fail to adequately prepare for major disruption because, ‘Well, since it hasn't happened before, it never will.' We tend to interpret warnings in the most optimistic way possible — seizing upon ambiguities in order to infer that the situation is less dire.^[4] This can result in being unable to cope once such a thing does occur.
Omission bias — in which we tend to prefer inaction to action. We judge harmful actions (like cannibalising our own business) as worse than equally or potentially more harmful omissions/inactions (like doing nothing, and therefore allowing a competitor to eat into our business) because actions are more obvious than inactions. In the zombie apocalypse, this is a tough one — do we chop off a bitten limb to potentially save a victim, or do we do nothing? Omission bias would have us choose the latter.
Optimism bias — in which we believe that we are less at risk of experiencing a negative event compared to others. Lovely as this is, this thinking is not prudent. An abundance of optimism untempered by scepticism can leave us more vulnerable to legitimate threats.^[5]We need to be mindful of this bias — particularly when working with conservative peers.
The ostrich effect — in which we choose to ignore dangerous or negative information by ‘burying' our head in the sand, like an ostrich.^[6] Thankfully, the effort we invest in Quest-Augmented Strategy serves to directly counter this effect. It's hard to ignore the uncomfortable nature of emerging incoherencies when you have invested considerable time exploring and monitoring them.
Outcome bias — in which we erroneously judge decisions based upon their outcome, rather than exploring how the judgement was made in the moment. This is a very important bias to be mindful of — particularly in the context of embedding pioneering leadership into workplace culture. Berating people for ‘poor decisions' based upon unfavourable outcomes is very easy. But we must remember: decisions made in a past context did not benefit from the information we have now. The outcome, at that point, was unknown. So, rather than fixate upon the outcome, instead seek to understand the reasoning that influenced their decision. You might find it to be quite sound and, therefore, something to be applauded.
Pessimism bias — in which we believe that we are more at risk of experiencing a negative event compared to others. This is the less-desirable flip side to optimism bias and, again, sceptical optimism is the saviour.
Planning fallacy — in which we underestimate how much time it will take to complete a task. In my experience, everything takes about 1.2 times longer than your worst-case estimation (but I may be exaggerating). The planning fallacy may set you up for relentless disappointment (where you always feel behind, or that you are not achieving enough). It can also lead to more time-crowding, which diminishes the quality of our thinking (as we seek out defaults and cognitive shortcuts in order to stay on track).
Social comparison bias — in which we tend to have feelings of dislike and competitiveness with someone seen physically or mentally better than ourselves. Microsoft once stack-ranked employees, but this only served to amplify social comparison bias and created a Game of Thrones-like culture — whereby the highest ranked employees would avoid or undermine their fellow highly ranked peers, lest they lose their own rank and status. In any leadership team (and, indeed, in any workshop, conference, meeting or event), levelling is a much healthier approach.^[7] This is where all people become equal within any given context.
Sunk-cost fallacy — in which we justify increased investment in a decision or an existing option based on the cumulative prior investment. This is in spite of new evidence that suggests that the cost of continuing outweighs any expected benefits. The thing to listen out for is when someone says something like, ‘But we've already invested all of this money in x — we can't just pull out now!' Actually, you can. And it may very well be the most prudent thing to do. This fallacy relates to loss aversion, which in turn relates to the framing effect. We would much rather avoid loss than acquire gains — and this is perhaps why default thinking and operationally driven leadership can be so hard to budge. Where pioneering leaders are more concerned about new value, future relevance and meaningful progress, others are more concerned about the preservation of existing value.
Worst-case thinking bias — in which small deviations from normality are interpreted as signalling impending catastrophe and doom. This bias can see us making rash, unbalanced and abrupt strategic decisions — latching on to any quick fix or magic wand to ward off a potential threat before it manifests.

So, there we have it. And that's just a few of the many biases that influence our ability to make good decisions.^[8] If your leadership team have the discipline and acuity to monitor and question potential areas of cognitive bias, you should be set to make sound strategic decisions about which options to progress.

STOP, START, SAVVY-UP

Having arrayed the viable options available, strategy can be as simple as choosing which activities we must stop, start and savvy-up, if we are to mitigate the inherent threats of an emerging future while unlocking new value and enduring relevance.

What to stop?

Nature abhors a vacuum. In order to create space for new opportunities and ways of working, starting with the things we wish to stop is useful. These can be identified as the elements within your business model that will no longer be relevant or useful in an emerging future context. They may be small, tactical initiatives (‘Let's not waste any more money advertising in these channels') to bigger strategical decisions (‘Let's exit gracefully from this market — it's no longer relevant to our future direction'). In fact, if you recall the elements of the Business Model Canvas we reviewed in chapter 7, you'll find that any one of the elements can contain things which you can stop. You can axe relationships with key partners, key activities or the use of certain external resources, should they no longer serve your enterprise or business unit in the future.

By starting with the things you wish to stop, you create more space to focus on the thing you wish to start.

What to start?

This is where we review the viable alternative options available, considering them in light of the information we have about emerging future contexts, our potential incoherencies and the opportunities for strategic advantage. This is further weighed against our capacity and capability to execute the steps required to pursue these new pathways.

In many ways, this is not the ‘flicking of a switch' but, rather, a ‘dialling up of the knob'. Because experimentation has already begun, and because these experiments have been increasingly scaled up, the decision to proceed is actually less about starting, and more about choosing where to shift our emphasis. Experimentation, therefore, continues — just at a larger scale and with much more support (in terms of leadership and funding).

What to savvy-up?

If some things are stopped and some experiments are ‘started' (in the sense that they become a part of the main enterprise strategy), we are left with things that are neither stopped nor started. Rather than simply persist with these activities with a business-as-usual approach, strategic development allows us a chance to review and renew the way we do things.

To be savvy means to show shrewd and practical knowledge, and to be aware of the realities of life. To savvy-up, in this context, means using the knowledge we have to ensure that these activities and strategies are being executed in the best way possible. Because these activities aren't ‘new', they are easily overlooked in the strategic decision-making process.

Savvying-up these activities might include looking at how we service existing customer segments. Are we doing anything new to add value and nurture key relationships here? Are we surprising and delighting our best customers? Or are we slipping into efficient defaults?

PICK A PATH

Strategic development can easily conclude with one whopping big list of things to do. This list can be intimidating — and, if left unchecked, may see people avoid the anxiety of the challenge inherent in new strategy by instead investing effort in default activities and the Delusion of Progress. Also, we want to ensure that strategic development is enriching and empowering — leaders ought to be excited and empowered in the aftermath.

This can be achieved by creating a shared sense of sequence. Rather than a vertical list of priorities, we instead spread our focus horizontally across a relevant time spectrum. This might include:

Actions to be completed within the next 24 hours. You know, those small things you said you'd get right onto. Map them out. These could include sourcing or providing supplementary information, securing new domain names and organising important meetings. It's prudent for everyone to schedule an additional half-day or full day after strategic development concludes to action these items (while they are timely and motivation is high). This will help ensure collective momentum is generated after strategic development.
Tasks to be performed within the next week. These include things that require a bit more effort — such as creating a summary report of key decisions and accountabilities, and working up a Gantt chart of key projects and initiatives over the coming year. Scheduling a teleconference one week after the conclusion of any strategic development session is also worthwhile. This is primarily to create shared visibility of progress for pioneering work, but will also ensure that all leaders are supported in executing the strategy. A week later, new and unforeseen challenges may become apparent, and having the team support each other through this early on is better than finding out about it later.
Milestones to be achieved within the next month. Checking in together in a month's time will further ensure that new strategic initiatives have translated into action. More support can be offered, and various initiatives can be tested for alignment against the bigger strategy. Are things working as intended? Do any adjustments need to be made?
Projects to be completed within the next quarter. Now, we switch our focus to the projects that matter. In chapters 16 and 21 we discuss this notion in greater detail, but suffice to say projects are the manifestation of strategy. They differ from goals and good intentions in that they have a deliverable and can be clearly assessed as on-track or not. At this point — approximately 90 days after your strategic immersion — you'll want to rally the team back to review progress made. Here another important leadership challenge also emerges — how do you deal with failed projects and setbacks? And how do you support your peers in the pursuit of pioneering growth?
Initiatives to be implemented within the next year. The final things to map out at the end of strategic development are the bigger initiatives that will — by this time next year — be well and truly implemented and underway. At this point, you may wish to create a tentative placeholder for the next strategic immersion — an activity that clearly communicates that this is an ongoing, continuous and infinite process (while at the same time creating a container for strategic activities).

Freedom follows focus, and this sequence gives you the freedom to focus. By taking this approach, we don't need to focus on everything all at once — we can focus on the right things at the right time in the right sequence. At the end of any strategic immersion, we don't just have a list of additional tasks and projects to complete on top of our existing work — we have a game plan for making pioneering strategy happen.

Notes

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