By: Allison Spies, Partner at McChrystal Group
We all make big decisions in business. We draw up the master plan, steel our gaze and take the plunge. We buy, sell, fire, hire, divest, short and engage. Sometimes the chips fall sweetly, but many times we’re left picking up the pieces of our golden plans. As only Mike Tyson could so eloquently put it, “Everyone has a plan until they get punched in the mouth”.
But what if we could be more confident in our ability to pivot your action when the unlikely and unexpected become reality? What if you could pivot to avoid the Mike Tyson punch? When organizations struggle to adapt to unexpected results, a lack of planning is rarely the culprit, rather it’s our failure to ask the questions that would have prepared us to engage with the alternate outcomes.
We have all heard many excuses as to why leaders don’t engage alternative analysis, the process to identify and manage unplanned outcomes, to inform their decisions — I don’t have the time, I don’t have the resources, my gut or precedent tells me I’m right, and the list goes on. While these reasons may have merit, the barrier is more likely a combination of an ego vulnerable to introspection and a lack of awareness of the analytical tools available. In leadership positions, we tend to protect hard-won ground. Our ego often prevents us from laying bare our decision-making rationale, and we reject introspection because any found weaknesses may be perceived as a leadership failure. But adaptable decision makers realize alternative analysis will ready them for success, and the time and effort required to engage in the process will position them to succeed in an increasingly complex environment.
Create a culture of constant learning
A commitment to alternative analysis forms an important part of a constant learning culture, whereby an organization welcomes the acquisition and synthesis of new perspectives and ideas, preparing leaders to confront the risks facing their best laid plans. As General Stanley McChrystal stated in Team of Teams, “Efficiency remains important, but the ability to adapt to complexity and continual change has become an imperative”. Leaders make better decisions when their analysis incorporates external perspectives. An organization with a culture that welcomes difficult questions and challenging ideas links and strengthens all components of the organization for shared success. This type of behavior enables organizations to reconfigure and adjust when well-intentioned decisions produce unexpected results.
Employ the techniques that will best test your decision logic
Depending on the scale of the decision and the resources available, leaders can employ a number of techniques to evaluate their decisions and plans. Diagnostic tools, such as the Key Assumptions Check, allow decision makers to be confident in the factors supporting the decision. Contrarian techniques such as High-Impact/Low-Probability Analysis allow decision makers to consider and disengage their biases and blind spots. Innovative techniques, such as Alternative Futures Analysis allow leaders to engage with the unknown and challenge their perceived causality.
These techniques have been developed and utilized throughout business, government and academia communities. Consider then, the next time you are faced with a critical decision, trying one of these techniques to help your organization adapt to the complexity of the modern business environment.
1. Key Assumptions Check — a good way to start
We all have confirmation biases that motivate us to focus on the information that supports the decision we want to make, while ignoring the information that doesn’t. A key assumption is a hypothesis that you use to inform their judgement. Checking key assumptions helps you to identify faulty logic, understand the critical factors that shape the issue and clarify areas of potential strategic surprise. To employ this technique, write down the underlying key assumptions that have influenced your decision. Once completed, challenge each assumption, asking what evidence supports it and whether it would remain valid if the conditions changed. Finally, using only the assumptions that are supported by evidence, reconsider your initial decision. This process will also provide you with a better understanding of decision strengths, weaknesses and potential outcomes.
2. High-Impact/Low-Probability: Unmask the more disruptive effects of uncertainty.
This contrarian approach considers how unlikely developments would drastically alter your decision-making approach. First, consider a disruptive development that would force you to alter your core decision-making assumptions, no matter how unlikely it may seem. Second, work backwards to determine if there is a path for this event to occur and what warning signs may hint at its arrival. Craft contingency plans for the developments likely to have the highest impact. Beyond the clear utility of the contingency plans themselves, the process of identifying triggers and requisite actions builds environmental awareness and a healthy focus on constant learning in your organization.
3. Alternative Futures Analysis: Engage with complexity
Alternative Futures Analysis is best used when the situation is so complex there is not one clear future outcome. Examine the key issue affecting the decision outcome and identify the two most complex factors — those events which are both critical to the outcome and most uncertain in their development. With these two factors in place, develop contingency plans for the combination of these issues. This analysis will uncover numerous possible outcomes, preparing you for the scenarios of greatest risk and opportunity.
Capitalize on the outcome to prepare for the unexpected
More than two thirds of CEOs believe the development of cross-industry ecosystems will provide avenues for increasing competition from unexpected quarters, according to the IBM’s 2016 Global C-Suite study. Your industry may just find itself besieged from new competitors or unexpected developments in the proverbial blink of an eye. History has scant regard for excuses, and in an environment characterized by complexity and unpredictability leaders must use all the tools at their disposal to make decisions to ensure organizational longevity.
Investing in these tools can be uncomfortable, it requires acknowledging biases and blind spots and sharing organizational vulnerabilities with your teams. But the reward is informed decision-making processes that engage the complexity of the environment, build organizational resilience, and give you and your organization the chance to survive a Mike Tyson punch.