Is your strategic thinking influenced by obsolete beliefs? This is probably not the first question that comes to mind in the context of strategic planning. However – that may be a mistake: Each strategic analysis makes some assumptions about elements involved – market structures, customer expectations, competitors’ moves, technological trends, and many more. These assumptions are implicitly based on our beliefs about their nature. It is not a new discovery that we live in an ever faster changing world. What if the world had changed and the beliefs on which we ground our strategy have just become obsolete?
How can you remain an expert in a changing world?
I just read an inspiring article that provides further insights. Paul Graham writes in How to be an expert in a changing world? about obsolete beliefs in the context of startup investing. Paul explains that most of us implicitly believe things are more or less static and don’t change much. However, you can’t trust your opinions in a world of accelerating change. That would lead to serious mistakes. Paul states: When experts are wrong, it’s often because they’re experts on an earlier version of the world.
To avoid that, Paul gives some advice on how to protect oneself against obsolete beliefs (summarized from his article):
- Have an explicit belief in change
Don’t try to predict, just be open-minded
- Don’t try to come up with new ideas, but try to solve problems –
and simply not discount weird hunches
- Get incentives for correcting obsolete beliefs by turning your comments into bets
- Focus on people rather than ideas –
and surround yourself with the sort of people new ideas come from
Lessons for strategic thinking and strategic planning
Paul Graham has developed these insights in the context of startup investment. Investments in early stage startups require a decent sense of strategic thinking. Hence, these ideas are easily transferrable to strategic planning. Here are my takeaways:
- Expect change to influence every aspect of your strategic analysis and planning process.
- Test your results and hypotheses. On which assumptions are they based? Will they still be valid if these assumptions change? How likely is that?
- Keep in mind that every assumption may become obsolete quickly. Think about potential corrections and how they might influence your strategic decisions.
- Don’t rely on particular predictions.
- Embrace wired ideas and include some outside thinking in your strategic planning process.
How much belief in change is too much?
This approach sounds logical. Everybody is talking about the impact of change. Hence, it would increase your strategy’s credibility to incorporate change wherever possible, wouldn’t it?
This approach is not without risk. The one thing it will definitely do is to increase your strategy’s complexity.
Paul Graham is absolutely right – we must never forget that our assumptions may be outdated the moment we present our smart strategy. But does that mean that we call into question everything? Well thought out, that means that there won’t be much left to base your strategy on. It is virtually impossible to develop a strategy without some underlying assumptions. If you take each and every assumption as potentially changing, you end up with an almost infinite set of possible futures that all require different strategies.
At this point, I am a great fan of scenario planning. I recommend reducing complexity by developing some plausible scenarios. This is the point where your belief in change fits in. It is a good idea to have some scenarios that go for the weird hunches. In addition to that, you will come up with other scenarios that are much more probable. Hence, you develop your strategy for one of the probable scenarios. Than you think about ways to adapt your initial strategy in case some of the more ‘wired’ scenarios should come true.
The assumptions a strategy is based upon may become obsolete faster than one would think. Hence, strategists should develop an explicit belief in change.
It is not necessary (and probably not possible) to develop a strategy that takes into consideration every thinkable change of the underlying assumptions. It is, however, recommendable to prepare some alternate moves that allow to quickly adapt a chosen strategy in case some underlying assumptions should change.