On the Value of Thinking for Businesses (Strategy Series Part 2)
[This post was first published on my blog, Ice Cream for Everyone]
This is the second post in a series about (independent) strategy consulting, you can go to the introduction here for context (or here on Medium), or the first post, in which I share thoughts defining businesses and brands, including basic diagrams of the structure of a traditional local business, and a modern global one, illustrating that the latter is more complex (here on Medium).
We’re going to begin this second post by going back to basics on another essential aspect of this series: What is thinking?
Obviously, this is a huge rabbit hole — one of the biggest ones there is. More like a Godzilla sized hole. Technically I wouldn’t have thought of a giant radioactive reptilian Kaiju as a burrowing animal, but then again if I remember the origin story correctly, Godzilla spent like thousands of years chilling underground before emerging in the movies. But I digress.
The study of thought crosses over disciplines to include nearly every science you could imagine: biology, philosophy, linguistics, psychology, neuroscience, sociology, drawing comic strips, etc.
We are going to zoom out and take a super broad view, so to the Dictionary and Wikipedia we go!
The Cambridge Dictionary defines the verb think as:
- (Consider) to believe something or have an opinion or idea; to consider a person’s needs or wishes.
- (Decide) to use the brain to decide to do something.
- (Reason) to use the brain to plan something, solve a problem, understand a situation, etc.
- (Remember) to remember or imagine.
The Wikipedia page about Thought opens with the following:
“Although thinking is an activity of an existential value for humans, there is still no consensus as to how it is adequately defined or understood. […]
Thinking allows humans to make sense of, interpret, represent or model the world they experience, and to make predictions about that world. It is therefore helpful to an organism with needs, objectives, and desires as it makes plans or otherwise attempts to accomplish those goals.”
Given there is no human consensus as to how thought is adequately defined or understood, it’s probably a good thing I didn’t expect to solve it now.
I will still mention a few elements I believe can be useful before moving on to more specific thoughts on the value of thinking for a business (or any kind of venture, really).
First, it is well established that our brains use more energy than any other organ in our bodies — while the brain represents about 2% of a human body weight, it uses 20% of the total energy we need to keep every part of our bodies functioning, day and night.
Second, the prior fact corroborates the psychology idea that the human mind is a “cognitive miser,” meaning that we tend to avoid efforts and take shortcuts in thinking, going for whatever the first, easiest, or perhaps most obvious solution is.
Third, the previous idea is linked and was further developed by Daniel Kahnemann and Amos Tversky in their research, which won a Nobel Prize, and is summed up in the book Thinking Fast and Slow.
In case you aren’t familiar, in the book, Daniel Kahneman describes two main ways the brain forms thoughts:
- System 1 thinking is all the fast, automatic, emotional, immediate, unconscious or barely conscious stuff our brain does.
- System 2 thinking is slow, effortful, calculating, reasoning, conscious.
Our brains like System 1 because as mentioned, the mind is a cognitive miser and it already spends a lot of energy just functioning, so it doesn’t want to use more resources with System 2 thinking (unless necessary, and keeps the energy for moments when it might be).
This always reminds me of a Donald Duck comic I read as a kid, in which Donald has a sign on his house wall saying something like: “Work better to work less (the phrase has a nice ring to it in French: “Mieux travailler pour moins travailler.” It was either from Mickey Parade or Picsou Magazine)”
It’s a nice sunny day, and as in many other of his stories, Donald really wants a drink and a nap in his hammock. He proceeds to build an intricate contraption that will automatically bring over a cocktail on demand when he’s napping in his hammock. System 2 is the effort of building the machine, so that for ever after, System 1 can lounge and press a button to be served cocktails with no further effortful thinking.
Our brains like to automate thinking into System 1. It takes a lot of effort to learn how to ride a bike, which like anything new is System 2, but once you got it, your brain doesn’t need to take much more time and energy when you hop on a bike — it becomes a system 1 thing.
For an experienced surgeon, a lot of stuff becomes automatic System 1 thinking. But to acquire every single aspect that can possibly be automated by the brain, it took years and years of study and practice — way more than to ride a bike, is my point. The more complex the endeavour, the more complex System 2 thinking is required — perhaps by more than one person.
I could go easily on and even dip a toe into concepts from Zen and meditation, but perhaps another time. For now let’s get back to business, as it were.
When it comes to the value of thinking for a business, System 1 is obvious, and as we’ve stated, where our brains, and thus people making up businesses, spend most of their time. Everyone is already doing that all the time.
Here, I mean to inquire into when System 2 thinking is valuable (or even necessary) for a business. I came up with three broad and correlated areas:
1. Troubleshooting
This one is obvious: problems occur, at some point or another, and that goes for a business too. If the business owner and employees don’t know how to solve the problem or challenge at hand, then System 2 thinking is required. Also, if you knew how to solve the problem, then maybe it wouldn’t seem to be one, would it? You’d keep breezing through in System 1 thinking.
The tricky part here can be to figure out there is a problem or challenge in the first place. If the roof is leaking water all over the office it’s difficult to ignore, but it’s easier to, say keep pouring time and money into an initiative that isn’t yielding the originally expected sales results, rather than stop and acknowledge that maybe something isn’t working the way you want it to (check out the psychology ideas of optimism bias and sunk cost effect, that Daniel Kahneman also writes about).
Once the problem identified, and assuming you go past ignoring it, then I see three main System 2 approaches to this area:
- Learn how to fix the problem yourself.
- Find someone or something that can solve it.
- Pray, or practice similar forms of magical thinking (This is only half a joke. Whatever your opinions or beliefs may be, It can be effortful System 2 thinking. Still, I highly recommend combining it with another approach).
2. Development (or improvement)
While some challenges and problems have to be fixed, or a business just can’t operate at all, development or improvement may occur as optional — though also correlated to the next area too. This area concerns everything to do with the ways in which a business can get become a better version of itself.
With traditional businesses as mentioned in the first post, like a local baker, or pretty much any kind of craft, it is pretty clear. For the baker it can mean baking tastier bread, using higher quality ingredients, maybe learning to use different kinds of ingredients, all in all everything that could possibly go into becoming a better baker.
This reminds me of Shokunin, the Japanese word for artisan or craftsman, the meaning of which includes this idea of improvement in Japanese:
“Shokunin means not only having technical skill, but also implies an attitude and social consciousness… a social obligation to work his best for the general welfare of the people, [an] obligation both material and spiritual.”
For a couple of good examples, check out this short film about a Japanese sword-smith (sponsored by Etsy.com — branded content!), or the celebrated Jiro Dreams of Sushi documentary.
For perhaps more modern examples; professors, doctors, lawyers, and many other professionals keep learning about their field throughout their lives and careers.
In addition to the Shokunin sense of social good, there is satisfaction, fulfilment, and even pleasure to be found in developing a business to be the best it can be, or perhaps more pragmatically, at least staying in line with the general development and standards of your field or industry.
The reason I set this area as distinct from the next and that I used the Japanese craftspeople examples, is that one can keep developing a business and actively, effortfully, System 2 think about it; without necessarily growing it. The business could roughly have the same number of employees and generate the same revenue — perhaps enough growth to account for inflation or stay ahead of the competition.
3. Growth
The big daddy of our modern society, as I quoted from Pr. Harari’s book Sapiens in the first post. Here is the following sentence from that previous quote:
“For better or worse, in sickness and in health, the modern economy has been growing like a hormone-soused teenager. It eats up everything it can find and puts on inches faster than you can count.” ~Yuval Noah Harari
The quest for growth seeks new development opportunities and comes across new kinds of challenges, most of which require effortful thinking at one point or another.
In truth, it requires such an overwhelming amount of System 2 thinking that entire new bodies of businesses, professions, and industries emerged, and are emerging, to serve growth and make it possible altogether: venture capitalists, investment bankers, traders, asset managers, wealth advisors, management consultants, business analysts, strategy hot shots, marketing professionals, human resources specialists, political lobbyists, tax code ninjas, vast arrays of specialized lawyers, insurance and risk experts, spiritual counsellors, coaching connoisseurs, engineering artists, design gurus, programming buffs, science wizards, sociology majors, writing lexicons, logistics & infrastructure masters, project management virtuosos, and more.
You get the point, even if this is just to give a sense of the bewildering amount of jobs out there like that of Chandler’s in the sitcom Friends.
What is Chandler Bing’s Job?
Chandler’s actual job (before he changes career, obviously):
To finish, I hope you will agree there is a lot of valuable System 2 thinking out there, thanks to which businesses are able to successfully troubleshoot, develop, and grow — including through data reconfiguration & statistical factoring.
Full disclosure: Years ago my siblings decided that I basically did the same job as Chandler’s, because they didn’t understand it — and/or I didn’t explain it simply enough. In the next post, we’ll take a closer look into strategy, the kind of System 2 thinking it encompasses, the ways it is valuable to a business, and we’ll see if I explain it any better than I used to.
In the meantime, I leave you with an expert perspective on the complexity and wonder of the growing modern world, and our universe over all, the Monty Python:
