Models help Behavioural Strategy (BS)

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BS says complex data, mental biases and emotions make good strategy choices hard to achieve, but these are not ‘givens’ or independent. An interesting debate at EURAM among academics who have studied these issues for decades rather implied

  • … that our ability to make sense of complex information is fundamentally limited (especially in Strategy with its multiplicity of elements and interconnectedness) … but it can be radically improved by better representation – even simplistic Balanced Scorecards help a lot.
  • … that biases are simply ‘there’ … but baby managers are not born with a bias, for example, that cost control is how to deliver sustained good profits – they are taught this by the controls and reward systems they operate under. In the latest of many articles on this, HBR writers essentially say what has long been said before – beware that you have biases and take steps to deal with them.
  • … that emotions are inevitably high because the stakes and the egos involved in strategy issues are also high … but emotions are raised by circumstances and events.

Working models can make a huge contribution to solving all 3 problems. A good model is entirely transparent, easy to follow and radically raises understanding of complex strategy systems. Good information makes it ever harder to sustain biases. And anxiety and conflict melt away [or at least soften!] when everyone is looking at the same picture, that is recognisably portraying their real-world situation.

I am actually a rather poor facilitator, so was anxious when asked to help a high-tech start-up where the sales, delivery and support teams were at each others’ throats about why the business was not making progress. All 3 issues were present – no-one understood the information about the business performance, all three team leaders were biased about where problems were originating and what solutions would work, and anger and defensiveness were off the scale (not helped by a CEO who swung from one view to another, minute by minute!). So I expected a blood-bath. But after building a working model over about 4 hours with best estimates of the relevant data, an integrated program of steps to develop the business successfully became obvious – and no-one lost face.

 

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