Slow Deciders Make Better Strategists - Deepstash

deepstash

Beta

deepstash

Beta

Deepstash brings you key ideas from the most inspiring articles like this one:

Read more efficiently

Save what inspires you

Remember anything

Slow Deciders Make Better Strategists

https://hbr.org/2016/07/slow-deciders-make-better-strategists

hbr.org

Slow Deciders Make Better Strategists

There are many ways to split people into two groups. Young and old. Rich and poor. Us and them. The 98% who can do arithmetic and the 3% who cannot. Those who split people into two groups and those who don’t.

Then there’s the people who make good competitive-strategy decisions, and those who don’t.

It’s not easy to split people into the good/bad strategy decision-makers. Track records are useful but they’re not unambiguous, and those getting started have no track records at all. General intelligence and business degrees seem to be good signs, but smart people with business degrees don’t agree on what works in strategy. Veterans with specific industry expertise look promising, but so do outsiders with new ideas.

What about mindset? We know

people put credence
in confidence. However, it seems to me there’s a difference between someone who’s confident after laboring over a thoughtful decision and someone who’s confident with a snap judgment. It seems to me there’s a difference between someone who’s unsure after serious contemplation and someone who’s unsure about a quick pick.

Imagine that we can record decision-makers’ solutions to a competitive-strategy problem. We also ask how confident they feel that they’ve found a good answer and how long it took them to find it. We can categorize them, then, like this:

I’ve got such a database of people, those who have entered the

Top Pricer Tournament
. The database includes business executives, consultants, professors, and students. I gave all of them the same unfamiliar but straightforward pricing-strategy problem.

Dozens of Tournament entrants said they were very confident in their strategies after making a fast decision, dozens said they were very confident after a slow decision, and so on. The phrases in the boxes are how I interpret the mindsets of the people in those boxes. In the analysis below I’ll leave out the respondents in the “I guessed” box because they seem unrepresentative of what happens in real life, where strategists work at strategy decisions until they’re confident in their answers or they’ve worked long enough to conclude they’re not going to make further progress.

In general, the I-already-knows, confident in their snap judgments, and the Now-I-knows, confident after pondering, tend to be older males. Male business students are also represented in the I-already-knows. The I-don’t-knows, unsure of their thoughtful decisions, tend to be somewhat younger. And females make up well over half of the I-don’t-knows, a much higher percentage than in the other mindsets.

Make your prediction: which of the three styles selected the best-performing Tournament strategies?

The best-performing group: the I-don’t-knows.

Perhaps it’s about age: we gain confidence over time, but maybe not skill. Perhaps it’s about gender: rather than the conventional wisdom that females don’t have enough confidence, maybe males have too much. I don’t have enough data yet to assess those hypotheses. And perhaps the results will change as the sample sizes grow.

Still, the I-don’t-knows’ success fits my business war-gaming experience.

In one case, the new vice president of a troubled business brought together about thirty managers, each with decades in the business. The managers considered the war game an amusing waste of time. They all knew the answer already, they said, and no other options were possible. Then, role-playing their business and its competitors, they discovered that their already-known answer simply would not work. The manag­ers suddenly found new options. We war-gamed one, and it worked, and they rolled it out in real life, and it worked. The new VP got promoted.

It’s not that the managers didn’t care or were incompetent; it’s that they were overconfident. When you think you know the answer, you sincerely believe it’s a waste of time to keep looking for it. It feels like continuing to search for your keys after you’ve found them.

I think the essential lesson for competitive-strategy decision-makers is not so fast, in both senses of the phrase: take your time and don’t be so sure. That’s the mindset used by the new VP and the I-don’t-knows.

The willingness to apply that mindset is what separates the good decision-makers from the bad.

Author note: I’d like to expand the Tournament database. I offer use of the Tournament in confidence and at no charge to faculty in business schools and executive-education programs, and to facilitators at corporate universi­ties and management-development programs. Please contact me at

TopPricer@DecisionTournaments.com
.

Mark Chussil
is the Founder and CEO of Advanced Competitive Strategies, Inc. He has conducted business war games, taught strategic thinking, and written strategy simulators for Fortune 500 companies around the world.

4

Key Ideas

Save all ideas

Good/bad strategy decision-makers

Good/bad strategy decision-makers

It's not easy to split people into the good/bad strategy decision-makers.

  • Track records are useful to some extend. Those with business degrees seem to be good signs, but they may differ on what works. Veterans look promising, but so do outsiders with new ideas.
  • There's a difference between someone confident after laboring over a thoughtful decision and one who's convinced after a quick judgment. There's a difference between someone unsure after serious thought and someone who's uncertain after a quick view.

223 SAVES

502 READS


VIEW

Strategy Decision Making

Strategy Decision Making

Imagine recording decision-makers' solutions to a competitive-strategy problem using four categories:

  1. Now-I-know
  2. I-already-know
  3. I-don't-know
  4. I-guessed

The Now-I-know and the I-already-know are very confident while I-do don't-know and the I-guessed are unsure. The Now-I-know and the I-don't-know are slow in making a strategy-decision while the I-already-know and the I-guessed are fast at making a decision.

244 SAVES

492 READS


Experiments with strategic decision making

A database of business executives, consultants, professors, and students was given the same unfamiliar pricing-strategy problem.

  • Generally, the I-already-knows and the Now-I-Knows tend to be older males.
  • The I-don't-knows tend to be somewhat younger.
  • Females make up over half of the I-don't-knows.
  • The best performing group was the I-don't-knows.
  • The overconfident I-already-knows had strategies that would not work. Not because they were incompetent, but because they were overconfident.

215 SAVES

350 READS


A lesson about overconfidence

When the overconfident think they already know the answer, they may believe it's a waste of time to keep looking for answers. But in deciding on a strategy, overconfidence may not lead to a workable option.

An essential lesson for competitive-strategy decision-makers is not to be so fast. Take your time and don't be so sure.

246 SAVES

378 READS


SIMILAR ARTICLES & IDEAS:

Real and self-appointed experts

Real and self-appointed experts

The rise of social media means that experts willing to share their knowledge are more accessible to the public. One might think that communication between experts and decision-make...

How experts compete

Real experts are often confident in their claims, but in the private market, the opposite can be more common.

  • Self-appointed experts want airtime and overstate their conclusions.
  • Actual experts want to draw attention to their work. They may not have all the answers and may admit it.
  • Consultants want future business. They have to try to pretend they have complete certainty about uncertain things.

Mixing the information of the pundit, scholar, and consultant creates information noise that makes it difficult for decision-makers to know what to do.

Three kinds of questions for scientific knowledge

When communicating scientific knowledge to policymakers and the public, there are three levels of questions:

  • Level-one questions: Anyone with even modest expertise or access to a search engine can answer these questions. For example, 'Will price controls cause shortages?'
  • Level-two questions: Only the most qualified experts, within existing paradigms of scholarly knowledge, have something to say. For example, 'Can we design algorithms to assign medical residents to programmes in an effective way?'
  • Level-three questions: Even the experts don't know the answers, such as what interest rates will be in two years.

4 more ideas

Two strategies

When it comes to setting strategy, there are benefits to both popular and loner strategies.

  • Popular strategies are those that are identified by the crowds. The more people that ch...

Outperforming the crowd

If you want to outperform the crowd, learn the following two essential skills.

  • Generate ideas by broadening your decision frame.
  • You must be able to distinguish between good and bad loner strategies. It is best done by embracing critical thinking.

Broadening the Frame

When we need to make a decision, we tend to ask "What should we do?" However, it narrows our thinking to one right decision.

If we ask the question: "What could we do?"  it broadens our decision-making frame, because we can consider multiple futures. Could ask what if, what else, and why not.

For example: Ask what would be the equivalent in your industry of something that’s working well in another.

Confidence

Confidence

Confidence is hardwired into us from birth. The environment of where we grew up in and how we were raised affects our confidence.

Academic self-confidence is 50% nature and 50% nurt...

The difference in confidence between men and women

Men and women have differences in biological makeups and it also involves their difference in confidence. Women have a biological tendency to seek acceptance and avoid conflict, while men tend to take more risks under pressure. This shows that women might appear to lack inner confidence.

However, despite being perceived as such, studies show that if both given a scientific quiz, men and women provide the exact same results whether they underestimate themselves or not.

The correlation between social classes and self-confidence

Confidence has much to do with space - with how much room you feel able and allowed to take up.

A child that grows up with an affluent family has a different perception of himself than of the child who grows up in a one bedroom home with a single parent that could hardly provide sustenance for the two of them.