Friends,
I hope that all is well with you and yours.
Before we jump into today’s main topic, I thought that I would briefly provide an update on the Strategy in Praxis book club. As of this past weekend, we have officially started Life After New Media by Sarah Kember and Joanna Zylinska. It comes highly recommended and enthusiastically reviewed, so should make for an excellent summer read.
If you want to join but have yet to, now is the time. Just send me an email and I will provide further details.
For those who already have, expect an update (including reading cadence) shortly.
I also want to inform that the talk that I gave with James in Cannes a couple of weeks back will become available for all for free on July 13 (and only then). If you are interested, fill in your details on this page, click “The Gravity of eCommerce” and pay attention to your inbox on the day in question.
Now.
Over last month and a bit, we have been looking at various methods with which to diagnose a situation. Implicit in all of them, as is also the case with the vast majority of those we have yet to discuss, has been an assumption of causality. Long-time subscribers will be familiar with the reasons why; traditional strategic management – which greatly influences strategic discourse in general – is rooted in the belief that relationships between cause and effect can be unearthed if only enough time and money is allocated to the endeavor. Provided enough data, the 18th century argument goes, we can track every rational decision, detail every linkage, model all of yesterday and predict the entirety of tomorrow.
It is the modern strategic dogma.
And yet, thus far, nobody has been able to do it in practice.
Of course, people love to make grand declarations that they have; many consultants are, as Diego Espinosa once put it, merchants of certainty. But the extraordinary claims are never accompanied by extraordinary evidence. In fact, the only thing that is extraordinary is how many claims do not even have ordinary evidence.
Correlation, as most know yet seem to conveniently forget when it behooves them to, is not causation – and complex adaptive systems such as firms and markets are not causal but dispositional.
In reality, people collecting flawless data, analyzing it objectively and making optimal decisions is little more than a fairytale. That is not to say that everything would be complex simply because complexity exists, but strategic management is not engineering regardless of how many managers love to think that strategy is about bridging the past with the future in almost literal terms.
Rather, what employees do is attempt, as best they can, to make sense of their context so as to be able to act in it.
Sense-Making in Summary
Although any attempt to summarize sense-making into a single general theory is to walk on very thin ice indeed (there are, at least five schools of thought, each coming out of its own context), I will attempt to do precisely that given the introductory nature of this newsletter.
With the appropriate length of rope, one might therefore say that sense-making is an interdisciplinary field founded upon insights from philosophy, sociology and cognitive science. It concerns itself with the cognitive gap that people experience when they try to make sense of uncertain or ambiguous situations. To quote Klein et. al. directly:
Sensemaking is the ability or attempt to make sense of an ambiguous situation. More exactly, sensemaking is the process of creating situational awareness and understanding in situations of high complexity or uncertainty in order to make decisions. It is a motivated, continuous effort to understand connections (which can be among people, places, and events) in order to anticipate their trajectories and act effectively.
For strategists, it is easy to interpret this as a matter of data collection; we look at case studies and apply deductive (from the general to the specific) or inductive (from the specific to the general) logic to plan a path forward. Yet such theoretical approaches are, Klein found, more or less useless under uncertainty.
For one, they take us back to the original assumption of linear causality. And in complexity, as we have discussed previously, that is a recipe for failure.
Two examples provided by Snowden (to whom I shall find reason to return on numerous occasions) and Kurtz illustrate the point:
Tom Stewart references the case of a group of marines taken to the New York Mercantile Exchange in 1995 to be taught and to play with simulators of the trading environment. Naturally the traders won each time. But when the traders visited the Marine Corp’s base in Quantico and played war games against the marines, they won yet again. What they realized is that the traders were skilled at spotting patterns and intervening to structure those patterns in their favor. The Marines, on the other hand, like most business school graduates, had been trained to collect and analyze data and then make rational decisions. In a dynamic and constantly changing environment, it is possible to pattern unorder but not to assume order.
In another case, a group of West Point graduates were asked to manage the playtime of a kindergarten as a final year assignment. The cruel thing is that they were given time to prepare. They planned; they rationally identified objectives; they determined backup and response plans. They then tried to “order” children’s play based on rational design principles, and, in consequence, achieved chaos. They then observed what teachers do. Experienced teachers allow a degree of freedom at the start of the session, then intervene to stabilize desirable patterns and destabilize undesirable ones; and, when they are very clever, they seed the space so that the patterns they want are more likely to emerge.
While one could argue that analytics and emergent pattern recognition are both based on data, sense-making is, as Klein once wrote, an “active two-way process of fitting data into a frame (mental model) and fitting a frame around the data”. Neither the data nor the frame can be said to come first; data evoke frames and frames select and connect data.
If you are getting slightly cross-eyed, do not worry. It is enough, at least for the time being, to think of sense-making as trying to make sense of an ambiguous world and create some form of situational awareness so that one can decide what to do next. A rather more interesting question is the logical implication that follows – that of sufficiency. To steal a line from Snowden, you can never know all you need to know, so how do you know when you know enough?
All About Context
The answer to the question, many will be all but surprised to find out, largely depends on the kind of system with which one is dealing – chaotic, ordered, or complex. Each comes with its own threshold of sorts; some situations will be obvious; others will be unknowable.
Strategy, in other words, has to begin with an understanding of – sense made of – the present.
At this point, some of you may counter that we have ended up in a circular logic argument. We diagnose to make sense of the present, but that is often done under a false assumption of causality. Instead, we need to make sense of the present. Through… …diagnosis?
Well, no. Sense-making is not the same thing as diagnosis. While the latter is about attempting to establish what caused a challenge or examine a situation in order to articulate it, the former is about contextualizing the present and explore a situation in order to understand it. One might see it as trying to grasp where the marines will be useful and where the traders will be, or where to employ some of the forms of diagnosis we have discussed in previous newsletters and where they will be of little worth.
Put differently, sense-making is about looking at the whole equation before trying to solve the problem, so as to ascertain whether it actually can be solved or merely at best managed. If diagnosis is built on a hypothesis, sense-making is built on a null hypothesis.
Next week, we are going to begin our look at the Cynefin framework to provide an example of how to do it in practice – and all of the pieces will start to fall into place.
Until then, have the loveliest of weekends.
Onwards and upwards,
JP
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