Red and YelLow Strategies

From Safe to Strategic: Breaking Free from Team Thinking Traps

Common-Knowledge Effect at work

You take your team on a strategic retreat. The team members are all highly engaged and motivated. You enjoy the sounds of heated debates.

The walls are covered with colorful stickers. You’re eagerly anticipating the birth of breakthrough insights.

But then the team presents you with their ideas, and you hear nothing groundbreaking — only old platitudes and dusty, rusty ideas you’ve already discussed many times.

You’re not the first leader to experience this kind of disappointment. To solve the problem, you need to alter how your team thinks.

Image is generated by Dall-E 3

Two Heads Aren’t Better Than One

“Politeness is the poison of collaboration.” Edwin Land

My LinkedIn followers know how many strategic cognitive biases can hinder us from thinking clearly. I make posts on the topic every Sunday.

However, when a group of people debates a strategy, the Common-Knowledge Effect reinforces these biases.

The definition: Common-knowledge effect is a decision-making bias where teams overemphasize the information most team members understand instead of pursuing and incorporating the unique knowledge of team members.

Scientists have conducted a series of experiments that showed that when a group of people work on a decision, this decision isn’t based on the sum of their knowledge.

It stems from the intersection of their knowledge.

Image by the author

Imagine three people trying to make a decision. Let’s denote the first person’s knowledge as A, B, and C, the second person’s knowledge as X, B, and Z, and the third person’s knowledge as H, R, and B.

Unfortunately, the basis for the collective decision will only be B.

This happens for various reasons:

• We are natural conformists, so we subconsciously seek consensus with others and avoid conflicts. One for all and all for one.
• Commonly held information has more opportunities to be shared with the team since several team members possess it.
• We are more likely to discuss information that aligns with our initial preferences.

When people are singing in chorus, it’s beautiful. But they’re all singing the same tune. For strategic decisions, you don’t need a choir — you need some dissonance.

So, if you just take a CEO, CFO, CMO, CIO, HR director, Chief of Sales, and Head of logistics to a remote hotel and make them think about strategy, they are unlikely to come up with something radically new.

They all work in different domains, and their shared knowledge is just a tiny patch where their expertise overlaps.

You need another approach.

You reap what you sow

Some psychologists favor the ‘Draw a Non-Existent Animal’ psychological test. They ask people to draw a creature that doesn’t exist.

Patients picture various beasts, but they all have one thing in common: they all consist of parts — claws, wings, paws, or fins — of existing animals, birds, or fish.

We can’t imagine what we haven’t seen.

But we can come up with new ways of using the things we’ve seen. We call it ‘progress.’

Each new solution is a new combination of the old ones.

Your executives won’t craft a breakthrough strategy out of thin air. But if they regularly add new facts, ideas, concepts, and knowledge to their mental library, they can transform them into a winning strategy.

You can’t reap new strategies if you haven’t sown them. Ideas, just like flowers, need soil to grow.

Do the following:

1. Encourage your executives to read more books on strategy and business models. Discuss what they’ve read.

2. Nudge them to research various business models in your industry and similar markets.

3. Prompt them to attend to industrial events, such as exhibitions, conferences, workshops, etc.

4. Make sure that they (even a CFO or an HRD) meet your customers regularly and read their feedback.

5. Never start strategic discussions with brainstorming. Let everyone first consider their ideas in silence, and then give everyone a word to say.

You won’t be able to switch off the Common-Knowledge Effect. But you will broaden and deepen their shared knowledge.

6. Invite outsiders to strategic discussions — industry experts, strategy consultants, customers, and business partners. If you need my help with your strategy, just let me know.

Check out my book Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism here.

Read also: The Focusing Illusion: Don’t Fall into the Trap Set by Business Books and Academics

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