Archive for the ‘Readiness & Strategy’ Category

by Richard Martin

“So convenient a thing to be a reasonable creature, since it enables one to find or make a reason for every thing one has a mind to do.”
Benjamin Franklin

“The first principle is that you must not fool yourself–and you are the easiest person to fool.”
Richard Feynman

This week I’d like to discuss the topic of cognitive biases. These are the ways in which our minds trick us, or can be tricked, into thinking in a way that is not fully conducive to realism and success in our undertakings. If there is anything that can undermine readiness, it’s that.

The content in the diagram above was created by Buster Benson of the Better Humans website. He took the ad hoc list of cognitive biases on Wikipedia–incidentally, probably the most complete such archive–and organized them according by similarity. The list was then organized graphically by John Mahoogian.

The important point is that the cognitive biases can be classified or collapsed into four main categories:

  • Too much information
  • What to remember
  • Not enough meaning
  • Need to act fast

Let’s consider how these can impact our readiness for change, uncertainty, risk, and opportunity.

  1. Too much information: The world is a kaleidoscope. How can we know what is important and what isn’t? The only way to make sense of the data and information coming at us constantly from all directions is in light of our goals and plans. I find the concepts of threat and opportunity are most useful, but how do we distinguish them? An opportunity is anything that can advance us toward our goals or enhance the effectiveness of our actions. A threat is anything that can block attainment of our goals or hinder our actions toward them.
  2. What to remember:There is too much information to remember it all. That’s why we need to classify it according to whether it is an opportunity or a threat. However, even this can get tedious. We can become overly focused on the ways (options, plans) and means (inputs, resources) and forget what it was we were trying to achieve in the first place. This is why military commanders and planners follow the dictum to always get back to the mission. What are we trying to achieve? What are our mission and end state? What are the commander’s intent and concept of operations? It is only by asking ourselves these questions regularly throughout our planning and action that we can stay on target, filter out the irrelevant, and put our resources and energy on what will get us the biggest effects for our efforts.
  3. Not enough meaning:Most of what happens and surrounds us is meaningless. In other words, stuff happens; it may be random or not, relevant or not, but we’re just not sure. So what do our brains do? They invent stuff. We see causes and correlations where there are none. We impute intentions to others and to impersonal forces where there are none. We project our thoughts, feelings, and intentions onto others, or we anthropomorphize collective phenomena, such as the “market,” the “competition,” the “environment,” the “government,” “immigrants,” etc., etc. Needless to say, we can get wrapped around the axle for nothing. The only remedy that works against this is to test our assumptions and hypotheses by putting ourselves in the others’ shoes and trying to imagine what they are thinking, feeling, intending, planning from their perspective, not ours.
  4. Need to act fast:This is common in fast-changing, risky or dangerous situations, such as emergencies and crises. My definition of a crisis is any time we’ve lost control of the situation and events are moving faster than you can assimilate and react to them. An emergency is a crisis where the risks to life and limb are imminent or actual. The best way to accommodate the need to act fast is through preparation and planning prior to a crisis occurring. To do this requires anticipation, and for that you need to consider what could go wrong–or right–beforehand. By extension, you need to set in place the tools and procedures to meet that need when the time comes.

There are no surefire ways of eliminating cognitive biases. They are inherent to human nature and the fact that we are constantly trying to assess what is really the case “out there,” in the world, or “in here,” in our minds and bodies. We are also trying to find the optimal means and ways available to achieve our ends. Furthermore, we are constantly assessing–or should be–our ends and values, to ensure that they are still relevant and congruent with our higher goals. This takes constant vigilance, self-cultivation, and self-discipline to carry out, along with a good dose of humility and openness to change, ideas, and criticism.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

By Richard Martin

Copyright: scanrail | 123 Stock Photo

  • Are you preparing to fight the last war, or are you learning by assessing and adapting to current and future realities?
  • Are you set in your ways, or ready to consider alternatives?
  • Do you look for ready-made solutions to your challenges and problems, or do you think things through for yourself?
  • Do you have a specific process for analyzing trends, risks, threats, and opportunities, or do you just wing it and go with the flow?
  • How confident are you in your data, explanations, and knowledge? Could you increase your confidence in these?
  • Do you often claim you’re the victim of bad luck or the beneficiary of good luck, or do you look for explanations and causes that can be traced back to your skills, processes, systems, and inputs?
  • Do you stay as vigilant and aware as possible? Do you know what this means in terms of trends, opportunities, threats, and risks?
  • What are your forecasts and predictions based on? Validated information and causal explanations, or simply assumptions and hopeful wishes about the present and the future?
  • Are you prepared for risks, obstacles, threats, and opportunities? Do you assume your competitors are as smart as you?
  • How robust and resilient are you and your organization? Are your plans flexible and adaptable under changing circumstances?

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Copyright: Borislav Marinic | 123RF Stock Photo

By Richard Martin

The ongoing saga in Catalonia is an excellent illustration of how crucial it is to consider a range of scenarios before implementing a decision that could be heavy with consequences. And the scenarios shouldn’t all be rosy and positive for us. Consideration must be given to the worst-case possibility as well, so we know what we may be up against before acting. This entails a detailed consideration of competiting and opposing positions, as well as those of other stakeholders and bystanders. It also means preparing contingency plans for the most probable and dangerous possibilities so we aren’t caught flatfooted if they come to fruition.

A well-known radio commentator (and former politician) here in Montreal said this week that he had the impression that the Catalonian prime minister and regional authorities hadn’t really thought through the potential consequences of the independance referendum held a few weeks ago. I agree with him; both sides appear guilty of amateurish improvisation. It seems as though both the instigators of Catalonian independance and their opponents inside and outside Catalonia have given little or no thought to the inherent risks in their decisions and actions, as well as the range of possible responses of the Spanish government, population, businesses, and other countries. I also little or no evidence of forethought in securing international recognition for the referendum and subsequent moves. It’s as if it was all being driven by pure emotion, with not a lot of rational consideration of options.

Such conflicts usually build and fester over time until they reach a feverous level. And it takes two to tango. Threat generates counterthreat; action entails counteraction. Not all outcomes can be foreseen ahead of time, but a great many can be characterized to some extent and compared to see which are most probable and consequential. This is the essence of risk management.

Whether we’re talking about a political entity, a business, a non-profit organization or an individual person, prudent forethought should be given to the range of scenarios and options available or possible before deciding and acting. No forecasting or planning process is perfect, but the benefits of a disciplined and rigorous assessment of the situation and its various branches and outcomes will always pay dividends in better decision-making, management, and leadership. And this includes looking at the situation from your opponent’s or competitor’s standpoint. If I were to take this action, what would my opponent do?

It’s how we try to play sports and games, and it’s the essence of strategy, military, diplomatic, political, and commercial.

Copyright 2017 Alcera Consulting Inc.

By Richard Martin

There has been a lot of chest thumping and ink spilled in recent days about the announcement that Airbus and Bombardier Aerospace have agreed to transfer control of the new C Series airliner business from the latter to the former.

There are important implications from this transaction in terms of politics and economic policy. My goal here, however, is to focus on the readiness and strategic implications for the two companies involved. In a nutshell, both Bombardier and Airbus saw a window of opportunity open and jumped through it at the right time.

© Sergey Ilin|123RF Stock Photo

For Bombardier, Airbus brings financial, commercial, and industrial know how and credibility. If you want to be a global player in the market for commercial airliners, then you have to have a global network with a strong backbone, including the robustness and resilience to batten down the hatches during storms, absorb shocks, and bounce back when the weather turns. Bombardier, while technically able in terms of innovation and development, didn’t have the wherewithal to compete against the big boys: Airbus and Boeing. As a business decision, this opportunity makes eminent sense and I’m sure will be a long-term success.

For Airbus, the opportunity was just too good to pass up. Airbus acquires a brand-new design with huge commercial potential, especially in Asia and the Far East. Talks between Airbus and Bombardier had apparently been ongoing for two years or so, but had broken down more than once for undisclosed reasons. The biggest advantage for Airbus, though, is that the tie-up with Bombardier’s C-Series deals a blow to Boeing. Airbus no longer has to continue developing an aircraft in the same size-class as the C-Series, while acquiring new capabilities and geographical reach.

The big loser in this manoeuvre is, however, Boeing. The latter was evidently trying to destroy the C-Series by lobbying for punitive tariffs on the planes if sold in the US. However, Airbus already has facilities in the US to assemble the aircraft. Delta Airlines, Bombardier’s lead customer for the C-Series in the US, has already declared that they will wait for the planes that are assembled in Airbus’s Alabama factory.

The biggest difference between Boeing and Airbus when faced with Bombardier’s competition is the fact that Boeing chose to view the C-Series antagonistically, as a threat, whereas Airbus viewed it positively, as an opportunity. The same goes for Bombardier. Claims and counter-claims of “illegal” government support are overblown. No one is blameless in that regard, and Boeing is probably the most hypocritical of all.

Regardless, from the standpoint of business strategy and business readiness, Airbus and Bombardier have shown that exploiting opportunities are just as important, if not more so, than trying to prevent or mitigate threats, as important as these may be.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Strategic Readiness Bulletin Number 3 – 16 October 2017

Are We Entering a Post-NAFTA World? (Download as PDF)

By Richard Martin, founder and president, Alcera Consulting Inc.

Richard Martin issues Strategic Readiness Bulletins on an as needed basis to clients, key decision-makers, and other influencers, to highlight recent or evolving risks, threats, and opportunities for companies and organizations resulting from chaotic change as well as international and national situations of a political, economic, technological, or social nature.

The Strategic Readiness Issue

© Michał Barański | 123RF Stock Photo

With the current NAFTA negotiations underway it’s hard to tell yet whether they will be a net positive or a net negative for companies doing business across the Canada-US and Mexico-US borders.

My aim isn’t to assess the probabilities either way at this stage, but rather to highlight the need for prudent risk management and contingency planning to address various post-NAFTA—or “new” NAFTA—trade arrangements between Canada and its most important trading partner, specifically the US.

The diagram on the right below summarizes the strategies for risk and threat management. When we work to lower or eliminate the probability of occurrence of a risk/threat, then we’re in the realm of PREVENTION. However, if prevention fails, we still must have measures and plans in place to contain its most damaging consequences. This is where MITIGATION comes into play.

© Alcera Consulting Inc.

Businesses with NAFTA exposure must be aware of the risks and threats arising from potential changes to the trade agreement. This is prudent and may even lead to the identification of unique opportunities whether Canada-US trade relations continue much as before or change in a significant way.

Who Can Be Affected?

  • Manufacturers and other businesses that depend on imports and exports
  • Transportation and logistics companies with cross-border operations
  • Federal, provincial, and local government agencies and departments
  • Ports and border-crossing facilities
  • Tourist and travel related businesses
  • Sectors that are highly sensitive to changes in tariffs or trade restrictions

Assessing Your Situation

If you haven’t already done so, it’s time to consider the probabilities and potential impacts of the risks and threats your company faces if there is a change in the trading regime under NAFTA, or even just between Canada and US. This isn’t alarmist, it’s common sense and prudent leadership.

I can help you, but you can get a head start by considering the following questions.

  • What is your current dependence on imports and/or exports to the US (in terms of total revenue, volume, profits)?
  • What business lines or activities are in areas of HIGH POLITICAL SENSITIVITY (soft wood lumber, auto manufacturing, aerospace, etc.)?
  • Can you “immunize” to a certain extent against disruptive changes by diversifying your clientele or supplier relationships?
  • How sensitive are your prices and costs to small changes in trade restrictions and decisions?
  • Have you developed contingency plans for supply, transport, or logistics?

About Richard Martin

Feel free to contact me to discuss this and related strategic issues.

Richard Martin is an expert in identifying, assessing, and preparing for strategic risks, threats, … AND opportunities, so companies and organizations can exploit change, instead of passively reacting or succumbing to it.

Richard.Martin@alcera.ca

www.alcera.ca

www.exploitingchange.com

www.facebook.com/exploitingchange

(514) 453-3993

Previous Strategic Readiness Bulletins

The North Korean Nuclear Threat

Is Canada Facing an Incipient Refugee Crisis?

by Richard Martin

I facilitated a business continuity planning meeting last week with one of my clients, a mid-sized life insurance company. One of our objectives was to examine scenarios with business continuity impacts.

Upon consideration, it was apparent that several departments in the company had already encountered similar situations and developed informal processes and procedures to deal with them. However, it was also apparent that much of this valuable experience was dormant within these groups, and there was no ready way to extract the knowledge and share it throughout the company.

© faithie | 123RF Stock Photo

Such information is typical of what I call “unknown knowns.” This is knowledge that exists somewhere in the organization, usually informally and in the experiences of individuals or small teams, but that remains unknown by senior management and the wider organization. I developed this idea as a result of extending former US Defense Secretary Donald Rumsfeld’s musing about known knowns, known unknowns, and unknown unknowns.

If you build a two-by-two matrix you end up with a fourth quadrant, the unknown knowns. This is potentially highly valuable knowledge that is partially dormant and inaccessible to the whole organization. It can be useful for readiness, risk management, and business continuity preparation. But even more, there can be a treasure trove of client information, competitive intelligence, and operational know how that goes unexploited and unimproved, simply because there are no active means of accessing it and sharing it, much less improving it and exploiting it in a systematic manner.

As a military leader commanding peacekeeping forces, I found that the best information was often resident right within my unit. I had only to ask my troops what they had seen in their patrols and by talking with the local populace and I could generate enormous quantities of grassroots intelligence. That’s why military commanders prize ground truth so much.

There is a lot of knowledge and information resident in the minds of employees and managers in a company. There are salespeople visiting customers and prospects. Others are constantly interacting with suppliers, distributors, retailers, and even competitors. There is a lot of knowledge that goes unexploited simply because company leaders are unaware of everything that is known within their respective organizations.

Are there things you or your organization/team may know, but that you are not already aware of? What can you do to find out, or to promote this kind of sharing and awareness?

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

 

by Richard Martin

Copyright: faithie | 123RF Stock Photo

There are an infinite number of ways to be wrong, but only one way to be right. Trial and error is the process of evolution, science, business and innovation. We produce many more “errors” than “successes,” so we must continually experiment with new ways of doing things.

Readiness is the product of this trial and error process. If we continually are working to improve our understanding of our surroundings and what will work to get us to our goals, then we can’t help but adapt to the constantly changing conditions by mitigating threats, and exploiting gaps and opportunities.

I like to think I’m in illustrious company, as shown by this sampling of aphorisms and quotes. I’m particularly fond of the approach of the great philosopher Karl Popper.

“Experience is the name everyone gives to their mistakes.” Oscar Wilde

“What is today called ‘negative feed back’ is only an application of the general method of learning from our mistakes-the method of trial and error.” Karl Popper

“The first principle is that you must not fool yourself-and you are the easiest person to fool.” Richard Feynman

“Reality is that which, when you stop believing in it, doesn’t go away.” Philip K. Dick

“Our whole problem is to make the mistakes as fast as possible…” John A. Wheeler

“Criticism of our conjectures is of decisive importance: by bringing out our mistakes it makes us understand the difficulties of the problem which we are trying to solve.” Karl Popper

“All our knowledge grows only through the correcting of our mistakes.” Karl Popper

“The more we learn about the world, and the deeper our learning, the more conscious, specific, and articulate will be our knowledge of what we do not know, our knowledge of our ignorance. For this, indeed, is the main source of our ignorance – the fact that our knowledge can be only finite, while our ignorance must necessarily be infinite.” Karl Popper

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.