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Slow Deciders Make Better Strategists

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.

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IDEA EXTRACTED FROM:

Slow Deciders Make Better Strategists

Slow Deciders Make Better Strategists

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

hbr.org

4

Key Ideas

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.

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.

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.

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.

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The key is to know what you're actually working towards. Ask yourself what your strategy is.

Working aimlessly

Few people take the time to find out what is possible or have the courage to probe themselves. It's unpleasant, and they'd instead figure it out as they go.

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  • They want to write a book, but don't want to take the time to ask what purpose it serves.
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Instead of moving closer to the answer, they are stuck in endless reacting and reaction.

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  • 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.

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The hidden risk of not understanding the details of our reality

Focusing on specific details in a complex system while ignoring the amount of detail contained within the system may at first show a benefit. However, it can create a massive collapse in the long-run.

In the late 18th century, the German government wanted to grow "scientific forests" to track and harvest timber. Underbrush was cleared, and tree species reduced. The first planting did well because of nutrients that were still left in the soil. But the clearing of underbrush reduced insect, mammal, and bird populations essential to soil building. Pests had few enemies left and infected the entire forest, resulting in massive forest death across the country.

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Two strategies

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Outperforming the crowd

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  • 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.
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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.

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Humor and status have always been tightly linked: good leaders seem to often use humor in order to motivate their team members' actions. As individuals, we tend to prefer, researchers claim, jokes that make us laugh while feeling slightly uncomfortable.

Furthermore, we perceive the joke teller as a self-confident person, who could easily become a leader due to his or her courage to make such a joke. The key point here is that the joke should be appropriate and match the context.

Inside jokes

Making inside jokes usually shows how bounded a team or a group is: their jokes can understood the best by themselves.

However, the moment an outsider integrates the group, it is better to avoid the inside jokes, as this will most probably make him or her feel out of place.

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