Sense Making and Decision Making

Strategy is often conceived as decision making, but it’s more instructive to think of strategy as sense making followed by decision making.

An insightful re-framing of your situation can create whole new patterns of advantages and weaknesses. The most powerful strategies arise from subtle shifts in viewpoints. Rather than look for orthogonal viewpoints, most management teams rely on the established view of industry structure, dynamics and sources of success.

If you accept that strategy is an informed judgment call about an uncertain future, you will want to make sense of your operating environment and strategic options before you make decisions about your company’s strategy for winning in this.

Sense making draws on analogies, anomalies and first principles thinking. Instead of asking “what should we do?” heading straight into solution mode, we can asks “what’s really going on?” probing different perspectives and interpretations. Why are our key competitors succeeding or failing? Are there any anomalies in our operating environment that signal potential change? How are startups in our space, or adjacent to it, building value propositions and business models to dislodge incumbents? Are there some customer segments that are migrating away from our industry, finding new ways of getting the job done?

Unfortunately, most strategy processes are not designed to make sense, but to make decisions: linear, milestone driven, and highly compressed. Sense making is the polar opposite: iterative, ambiguous, and often slow; a process that cannot be crammed into a couple of management workshops spaced a few weeks apart.

A complement to the traditional, once-every-3-year strategy process is to conduct regular strategy conversations in the management team. Topical, open, investigative conversations driven by one or two key questions or observations per session. The purpose is not to find solutions and not to make decisions. It is to explore and expand your thinking. As evidence accumulates, decisions may result.

Make strategy conversations a good habit in the management team’s routine, and you’ll find yourself better prepared to table the right discussions, drive the right process and make better decisions when the next strategy cycle comes around.