Red and Yellow Strategies
The Focusing Illusion: Don’t Fall into the Trap Set by Business Books and Academics
The “single shot” strategic bias
“Thinking about thinking is the most important kind of thinking.” Category Pirates
In the mid-1980s, Harvard professor John Kotter studied about 100 businesses, evaluated their performance, and interviewed their executives to find out what they did right and wrong.
This led to Kotter’s 8-step change process described in his famous book The Heart of Change.
Later, he joined forces with Deloitte and interviewed 200 more executives. The research confirmed that successful companies employed those 8 steps.
So, the secret of business success was out.
Nevertheless, around 595,000 businesses fail or close each year in the USA alone.
Apparently, their CEOs didn’t read that book carefully enough.
One-size-fits-all theories are cooked up by shallow outsiders for those hunting for magic pills.
Such books and concepts pop up every year. I’ve made a far from comprehensive list of management fads that skyrocketed at their time only to vanish a few years later:
- Six Sigma
- Lean Manufacturing
- Total Quality Management (TQM)
- Management by Objectives (MBO)
- Balanced Scorecard
- Core Competencies
- Disruptive Innovation
- Knowledge Management
- Emotional Intelligence (EI)
- Agile
- Flattened Hierarchies
- Holacracy
Today, we can see something similar happening with Gen AI.
Our desire to attribute complex phenomena to simple factors is deeply ingrained in our minds.
Paraplegics and lottery winners
Are all wealthy people happy? Are all people with disabilities unhappy? A firm ‘no’ to both questions.
In 1978, a group of scientists conducted a study, “Lottery Winners and Accident Victims: Is Happiness Relative?”
It was logical to assume that people who had recently won a lottery would be happy. Their financial status had changed for the better.
It was also logical to presume that people who had recently become paraplegics due to tragic accidents would be unhappy.
Both assumptions were proved wrong.
The scientists discovered the so-called hedonic treadmill or hedonic adaptation effect. This is an exciting effect, but it is beyond the goals of the article.
The side effect of the study was that human happiness is a very complex phenomenon. It depends on many factors, and even fundamental shifts change less than it may seem.
The same applies to business.
Attributing business success to only one factor is like believing that winning the lottery hinges on the lucky number on a coffee mug.
But why do we read such books and believe them? Daniel Kahneman, the Nobel Prize laureate, researched the issue and called it the focusing illusion.
The Focusing Illusion
Kahneman said: “Nothing in life is as important as you think it is while you are thinking about it.”
Quote: “Paraplegics are often unhappy, but they are not unhappy all the time because they spend most of the time experiencing and thinking about other things than their disability. When we think of what it is like to be a paraplegic, or blind, or a lottery winner, or a resident of California we focus on the distinctive aspects of each of these conditions. The mismatch in the allocation of attention between thinking about a life condition and actually living it is the cause of the focusing illusion.”
When we think of the lives of others or of companies we don’t work for, we tend to oversimplify the situation.
Our lives feel as complicated as Greek tragedies, while everyone else’s seem as simple as internet memes.
We believe that Steve Jobs was successful because he wore black turtlenecks.
We think that Kodak or Blockbuster failed because their leadership was short-sighted.
We assume that our competitor outpaces us just by having a better CRM, ERP, brand, or AI-backed solution.
Life is complex and complicated, and so is business. In my book Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism, I don’t even try to reveal the secrets of business success. I just help my readers sharpen their strategic thinking tools.
Pro Tips
Your business success depends on your ability to fulfill the needs of the six stakeholder groups: customers, employees, shareholders, business partners, regulators, and society.
Running a business implies identifying and satisfying their conflicting interests.
Business leaders do it by thoroughly managing the Value Waves, or core business processes that deliver value to the stakeholders.
Strategy is a set of agreed actions that maximize the value delivered to stakeholders.
It is simple but not easy.
But reading books about ‘six key success factors,’ ‘seven steps to outcompete your rivals,’ or ‘8-step change processes’ is a complete waste of your time.
You’d be better off spending that time talking to your customers.
Need a strategic advisor for your business? Visit my website.
Read also: How To Spin the Flywheel: Three Steps to Skyrocket Your Business
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