The Fair Witness in business strategy

Robert A. Heinlein introduced the concept of the "Fair Witness" in his 1961 science fiction novel "Stranger in a Strange Land".

In the novel, a Fair Witness is a person who is trained to observe and report facts without adding any interpretation, beliefs, opinions, assumptions or personal bias.

The idea is neatly summed up in this short exchange:

Jubal to Jill: "Even Cavendish did not--at least he won't say so. You know how Fair Witnesses behave."

Jill: "Well...no, I don't. I've never met one."

Jubal to Jill: "So? ANNE!"

Anne was on the springboard; she turned her head. Jubal called out, "That house on the hilltop--can you see what color they've painted it?"

Anne looked, then answered, "It's white on this side."

Jubal went on to Jill: "You see? It doesn't occur to Anne to infer that the other side is white, too. All the King's horses couldn't force her to commit herself...unless she went there and looked--and even then she wouldn't assume that it stayed white after she left."

Source: Urban Dictionary

While Heinlein's concept of the Fair Witness is obviously fictional, it provides an interesting yardstick to use when thinking about how we approach business strategy.

It is easy to fall into the trap of personal bias and opinion, especially when it comes to making strategic decisions. Sometimes, we tell ourselves and each other stories so often that we start to believe them to be true. By embracing the concept of the Fair Witness, we can gain a more objective and accurate understanding of markets, customers, and competitors, as well as of the business itself in terms of process performance, etc. We can ask ourselves, "do I have objective evidence that this is true, or am I relying on assumptions or opinion?"

That doesn't mean that personal opinions, beliefs, assumptions and extrapolations have no place in business. At the end of the day, business strategy often requires making subjective judgments based on incomplete information. There is always some risk involved. But, by embracing the concept of the Fair Witness, we can become more conscious of where we're relying on verifiable evidence and where we're relying on subjective judgment.

So next time you're making a strategic business decision, stop and ask yourself if you're acting as a Fair Witness or relying on opinion and assumption. If you're comfortable with the answer, go ahead. If you're not, perhaps you should stop and explore the evidence in more detail.

A conversation with Peter Compo

I had the privilege of talking* to Peter Compo this week about his first book: "The Emergent Approach to Strategy".

Peter has an interesting way of describing a strategy as a central rule for "busting" a bottleneck to achieve an aspiration.

The aspiration could be anything that might normally get described as mission, vision, purpose or strategic goal.

The bottleneck could be any internal issue or environmental factor which stops you from achieving it. He likened this to Richard Rumelt's crux The Crux, which in turn reminds me of Napoleon's Glance.

And the strategy, or central rule, dictates what you will (or won't do) to overcome the bottleneck to achieve the aspiration. Strategies emerge from the elimination of choices to overcome the bottleneck.

Peter then adds to his strategy scorecard measures of adherence to this central rule, along side the usual input, output and outcome measures.

"The Emergent Approach to Strategy" draws on Peter's experience growing up in a musical family (with a self-evident enthusiasm for Jazz improvisation) before getting a PhD in chemical engineering and then spending 25 years at Du Pont. At Du Pont, Peter was struck by how different the conventional  (very deliberate) approach to strategy was from the emergent approach he more intuitively understood from his study of complex adaptive systems.

He describes, for example, how Jazz musicians are very well versed and skilled in the rules of music, but that the actual music performed emerges from an improvisation in accordance with those rules. In a similar way, organisations can set and adhere to strategy, but that the outcomes achieved emerge from doing so. The rules are rigid - the outcomes not.

In business we are inclined to do the opposite. We are rigid and set rules around outcomes (casting budgets and financial targets in stone) and then allow greater degrees of low-level freedom to those who must pursue them.

In strategy, perhaps less so than in music, we recognise that the rules - the strategy - must be changed once the bottleneck is "bust" (and a new bottleneck is revealed) or it becomes apparent that they are no longer the right rules to bust it.

The Emergent Approach to Strategy is a dense and carefully thought through approach which is well worth reading. Peter told me he is already planning his second book. I can't wait to see what he comes up with next.

* This conversation was part of the #StratChat series - you can find out more and sign up to participate here.

See also:

• Trust in the process

Honest people may differ - listening for strategic insight

I did my MBA in South Africa shortly after the transition from apartheid to full democracy in 1994.

It was a time of unparalleled transformation - political, economic and social - which has served as a model for other countries ever since. It produced world leaders of the gravitas of Nelson Mandela and Bishop Desmond Tutu, and ground-breaking civic processes like the Truth and Reconciliation Commission. And, in many senses, that transformation continues to this day.

And it was by no means a simple nor an easy process!

The lecturer on our Politics and Business model had his work cut out for him. Trying to help us students make sense of the implications of a transformation that was still raw and in progress. Where opinions had been tempered by years of bitter struggle. And where the world in which we lived was suddenly very different to anything any of us had ever experienced before.

I remembered he peppered his presentation with the phrase "Honest men may differ".

(These days, one might prefer "Honest people may differ". But all those years ago, and given everything else that was going on at the time, we might perhaps forgive this lapse.)

It was a recognition that, whilst he could tell us what he though, he recognised that others might disagree. More than that, it was a recognition that those who did disagree weren't necessarily either wrong or disingenuous in their views.

And for me, it opened up the possibility that behind the differing opinions of honest people there might lie some deeper truth which bound those contradictory understandings together.

That's an understanding I've taken into my strategy consulting practice.

Often, when an organisation invites me to help them, it is because they've reached some sort of impasse. Where the executive decision makers can't agree on a way forward.

Part of my role is to listen and understand without taking sides. To ask questions. To get behind their assumptions and to find the hidden insights which lead everyone to a greater understanding of the strategic challenges and opportunities the organisation faces.

I remember working with a mid-sized asset manager. There was one faction within the leadership team who believed it was absolutely essential for the organisation to scale. And to do so very significantly. By orders of magnitude. They presented evidence that the very largest asset managers were able to produce the highest returns.

But a second faction believed that their advantage lay in remaining smaller. This would allow them to pick and choose the best opportunities without having to play "the whole market" as the larger plays had, by necessity, to do.

How could both hold such diametrically opposite views? After all, these were seasoned investment professionals! They certainly weren't anybody's fools!

After some digging, we were able to determine that the answer lay in expense ratios. The largest asset managers were not, in fact producing higher absolute returns. But higher economies of scale meant they were able to reduce their expense ratios. This, in turn, drove up their net returns. Similarly, some smaller asset managers were able to produce higher absolute returns, by being more selective in their investments. But they lacked the economies of scale. This meant that their net returns were relatively lower.

This simple insight transformed the conversation. No longer were the two factions diametrically opposed. They now had a common understanding and were able to work together to solve a common challenge.

The specifics of the case are unimportant. But perhaps you've encountered similar situations?

The lesson for me is always to listen to people as if they are right. As soon as you think they are wrong, you start listening with a view to disproving them. But if you listen to them as if they are right - no matter how strongly you disagree with them - then you have a chance of uncovering fresh insight.

And the way to do that is to remember that honest people may differ.

When you encounter differing views, ask each to explain their position to you as if you genuinely don't understand but want to learn. Draw out their logic, the assumptions, and the evidence on which they are based. Keep going until you genuinely understand how, given that evidence and those assumptions, their position is logically correct.

Then examine the evidence and assumptions. Compare it to the evidence and assumptions that lead to the competing conclusion. What's missing? What other conclusions could you draw from the same evidence and assumptions?

Of course, all of this takes time and practice. Often, it needs objectives outsiders without any personal stake in either of the differing opinions being either right or wrong. That's why organisations turn to experienced outsiders.

Build your wings on the ground

I recently saw this quote:

“We have to continually be jumping off cliffs and developing our wings on the way down.”

- Kurt Vonnegut

This is one of a category of quotes about failure, risk taking and entrepreneurship which I think are misleading and dangerous.

I wonder if they are propagated by venture capitalists?

You see, if you're a venture capitalist, then this is sensible advice to give. If you invest in 100 jumpers, you don't care if the first 99 plunge to their deaths, as long as the 100th jumper succeeds and you can make all your losses back.

But if you're the first jumper in the queue, it's terrible advice. When you're dead, it doesn't matter how many others succeeded or failed after you.

In this example, we would say that the venture capitalist is involved, but the entrepreneur is committed; the venture capitalist has skin in the game, but the entrepreneur is betting the farm.

Quotes like this are meant to encourage entrepreneurs to take bigger risks. "Entrepreneurship is about taking risks", it tells us, leaving out the all important "Entrepreneurship is about mitigating risks".

Now, I appreciate that the quote is not mean to be taken literally. It's not advocating that people actually jump off cliffs. (And I am not suggesting that venture capitalists don't actually care about people plunging to their deaths.)

But it is proposing that people take extreme and, I will argue, unnecessary risks in order to make progress.

And even if you're not plunging to your death off a cliff, you may be losing your home, sacrificing your marriage, friendships and other family relationships, and ultimately your happiness. So I think it is worth thinking about this a little more deeply.

The person who posted this quote told me that:

• taking that such risks would 'focus the mind', 
• we need to take risks to learn, and
• the advice is not meant to be taken literally.

Fear focuses the mind

It is undoubtedly true that risk and fear focuses the mind. I am sure that finding yourself plunging off the edge of a cliff would get your attention!

But is it the best way to focus the mind?

I doubt it. Fear invokes our lizard brain. This controls our fight, flight or freeze reflex. It is great in circumstances of imminent peril. But, at the same time, our higher order decision-making is impaired. This is not great for problem solving or learning.

Instead, in his book "Flow", Mihaly Csikszentmihalyi describes "a state of concentration so focused that it amounts to complete absorption in an activity".

According to the author, Flow is achieved where we have:

• clear objectives,
• a good balance between the requirements of the activity and our own abilities,
• a clear feedback loop.

Jumping off a cliff and developing wings on the way down, ticks only one of these boxes. The objective is clear: build wings so you don't die. But our ability to build wings in a matter of seconds is probably not up to the job.

And feedback really only works we we have multiple iterations. That is, where we can try once, get some feedback and then try again. It does really work well when we can only afford to try something once. That is when we're betting the farm.

We need to take risks to learn

I've debunked this argument before, in It's time we stopped idolising failure in innovation.

Sure, some risk is inevitable. But it's like the carbon dioxide emitted by internal combustion engines - an unpleasant by product which we take great pains to minimise.

We are fortunate that the Wright Brothers did not receive and take this advice. They built their wings on the ground. And they tested them as safely as they could. They conducted extensive research before, during and between numerous tests. They did everything they reasonable could to minimise their risks.

Had they simply flung  themselves off the nearest cliff we might have had to wait many more years before someone else achieved powered flight in a heavier-than-air craft!

It's not meant to be taken literally

This was the final defence of the quote which was offered to me.

But advice that is only good to the extent that you don't actually take it is bad advice.

If the opening quote is not advocating that we take extreme and potentially catastrophic risks, then what is it advocating? What good point is it making that a different example, without all the potential for misinterpretation of this one, could not have made more effectively.

I suspect that quote was originally made, and has subsequently circulated, because it is attention getting. Much like a tabloid headline. It's a cheap trick to draw us in. But like a sugary snack, it offers no nourishment.

We have millions of ways of mitigating risks. We have parachutes and wind-tunnels, we have startup incubators, we have countless ways of researching and testing ideas, and we can break big risky ideas down into smaller more manageable and testable chunks.

We should use them. We should not simply throw caution to the wind and leap off a cliff.

In short, we need a better-quality discourse about entrepreneurship, risk-taking, innovation and learning.

Risk is relative

If you're a wealthy billionaire, then betting a few million here and there is relatively low risk. After all, Elon Musk could lose $250bn overnight, and still be wealthier than most people on the planet.

The small entrepreneur who takes a second mortgage on their home to buy a neighbourhood restaurant is taking more risk than Elon Musk was when he tried to buy Twitter for $41.39bn. Their downside is greater and their ability to recover from failure is lower.

So perhaps Elon Musk can afford to be a little cavalier. The rest of us should be suspicious of those who advise us to act in the same manner.

My advice

My advice: "Build your wings on the ground, but start working right away."

Perhaps it won't sell as many tabloid newspapers. But it might just help you achieve more success in life and business.

Business strategy development and execution is about finding a balance between thought and action. It's about thinking and acting strategically.

It's about seizing the opportunities, whilst avoiding the threats. It's about being realistic about our strengths and weaknesses as they impact our ability to do so. It's about optimising the chances of success whilst mitigating the risks of  failure.

It doesn't always lend itself to pithy little sayings. It requires a little work. But its better than throwing yourself off a cliff.

Footnotes

1. According to Wikipedia, Kurt Vonnegut was "an American writer known for his satirical and darkly humorous novels". There is nothing about his profile to suggest that he had any experience of or insight into business or entrepreneurship, or that the quote was meant to be taken in that context.
2. According to quote investigator,
1. the  quote actually originated from Ray Bradbury in 1986 in a keynote address about following your heart. He used the quote again in an interview in 1990 in the context of love affairs and friendship. According to Wikipedia, Bradbury was also a fiction author and screen writer. Again, there is no suggestion of any experience of or insight into business or entrepreneurship.
2. the quote was adopted by airline executive Franco Mancassola, in an interview in 1998. He said: "I tell managers: 'I have absolute faith in your abilities, and should you fail, I'll have absolute faith in your replacement. I live by the rule, 'jump out of the plan and build your wings on the way'." It seems Mancassola believed that people were expendable in the manner in which I cautioned against above. According to Wikipedia and Jet Back In Time, the airline he founded survived for only 3 and a half years before ceasing operations due to financial problems.

6 key questions every business strategy should answer

My previous blog post was the last in a series of 6. This post ties them together and provides links back to the original posts.

The series was prompted by the ideas that:

1. Many people struggle to define "strategy" or to agree with each other on the definition. (I've written about my own definitions here.)
2. This confusion hampers the process of developing and executing business strategies unnecessarily.

One solution is to keep going until we all agree on the definitions. But that could take a long time. In fact, we might never get there.

So a more expedient approach is instead to look at the questions that good business strategy tries to answer. If we can answer those questions, then we're in good shape. Whether or not we then choose to label that as "strategy" becomes less important.

I boiled the problem down into 6 questions. For convenience, I gave each a label. These are:

1. Future-oriented: What will you need to do to succeed in the future, and how is that different from what you needed to do to succeed in the past? 
2. Evidence-based: What evidence to you have to support your decisions, and what processes do you have in place for reconfirming or adjusting that on an ongoing basis?
3. Focused: What will you choose to do, and equally importantly, what will you choose not to do or to stop doing?
4. Differentiated: How will you differentiate yourself in the market?
5. Aligned: How will you align all of your people and resources to the achievement of your goals?
6. Results-oriented: How will you know if your strategy is working?

I then wrote 6 blog posts. Each blog post outlines my thoughts on that question and why it is important. These are:

1. Future-oriented: Skate to where the puck is going to be, not where it has been
2. Evidence-based: Everyone is entitled to an opinion, but...
3. Focused: Don't chase two rabbits
4. Differentiated: Choice, trade-offs and differentiation
5. Alignment: What is strategic alignment, and why does it matter?
6. Results-oriented: Focus on the results

Finally, I summed up of the 6 areas with a (mostly) well-known quote to help them land, and created this image of them.

You can also find this post in presentation format.

Please do let me know what you think in the comments.

Focus on the results

"However beautiful the strategy, you should occasionally look at the results."

- Winston Churchill

You've developed an evidence-based future-oriented business strategy. It differentiates you in the market. You've got plans in place, focused and aligned all your resources to achieve it. Job done! Right?

Not quite!

Your job is not over yet.

You see, the real world does not play along. Competitors fight back. Suppliers fail to deliver or change their strategies. Customers change their minds. Unexpected technological breakthroughs disrupt your market. All manner of things can, and probably will, disrupt your strategy.

"No plan survives contact with the enemy."

- Moltke the Elder

Mike Tyson makes the same point - perhaps more colourfully:

"Everybody has a plan until they get punched in the mouth."

- Mike Tyson

As you're executing your strategy, you need to continually be asking yourself two things:

1. Has the evidence on which I based my strategy changed? Is it still true? Has new evidence come to light?
2. Is my strategy producing the results I thought it would?

This post focuses on the second of those two questions.

If your strategy is not producing the desired results, don't just keep going!

"Insanity is doing the same thing over and over and expecting different results."

- Albert Einstein

Instead, take a step back and ask:

• Why isn't it producing the results?
• What can I do about it?

This may take you right back to the analysis phase of your strategy development. And that may lead you to a revised strategy. But that's not what we're here to talk about now.

We're here to talk about the results themselves.

Specifically about two problems I frequently see:

1. Focusing on the effort, not the outcome
2. Measuring the data you have

Problem 1: Focusing on the effort, not the outcome

I remember talking through a strategy scorecard with a CEO. He stopped me and asked: "Are you suggesting I measure success in terms of the outcomes achieved rather than the effort my team put in?"

And, of course, that is exactly what I am suggesting.

You may want to consider effort when determining remuneration and promotion. (Probably alongside other factors like demonstration of corporate values, etc.)

But when it comes to strategy execution, the focus should be clearly on outcomes - results.

Results are what attract your customers and keep them coming back. Results are what your shareholders/owners and other stakeholders are after.

Strategy is about achieving results. In the most efficient and effective way.

Here is a hypothetical example I am sure you will all recognise. A business decides it wants to increase customer satisfaction or customer retention or some such outcome. Then it decides that, to do so, it needs to install a new CRM or some such initiative. Six months later, success is declared. The new CRM has been installed on schedule and within budget. (It's a hypothetical example!)

In the midst of the celebration which follows no-one remembers to check whether the outcomes were achieved. Did the new CRM result in increase customer satisfaction or retention? Or did it not?

This is such a pervasive problem that some organisations have established a whole new discipline to counter it. This is often known as Benefits Realisation.

Initiatives may start off with the best intentions. But benefits realisation often falls by the wayside before the initiative completes. Overruns clash with tight schedules and budgets to squeeze it out. New priorities are set. Resources are redeployed. The business moves on.

Problem 2: Measuring the data you have

One of the reasons for this is that collecting the data you need can be expensive.

Data must be collected, validated and analysed.

The effort to do so is often not fully understood or valued.

It is somehow easier to justify the effort and expense of installing a new CRM than it is to justify the expense and effort of measuring the outcomes. And if it is justified initially, it is often one of the first things to get descoped or simply forgotten about as the project schedule and budget tightens.

Investing in measuring the outcomes should be given at least as much priority as investing in the steps you take to improve them. If you don't, you will never know if your strategy is really working or not.

Faced with the expense of collecting, validating and analysis new data, many organisations make the mistake of trying to rely on data they already have. After all, most organisations are already awash with data. (Even if it is poorly managed.)

The problem is that most of this data exists for other purposes. Much or it exists for accounting or regulatory purposes. These are important sources of data. But they're probably not going to help you to track the progress of your strategy.

Strategy is about making choices and differentiating your organisation. Your strategy should be unique to your organisation.

Accounting and regulatory standards are not unique to your organisation. The data and measures they require are not unique to your organisation. So they are unlikely to be relevant to your strategy.

If, when setting out a new strategy, you are told you can track its progress using data the organisation already has available, you should smell a rat.

Your strategy determines what the organisation needs to focus on. Why would your organisation have invested in tracking and outcome before it was deemed to be strategically important?

So a new strategy always requires an investment in new metrics. You should consider the cost of developing those metrics to be an integral part of the cost of executing that strategy.

Furthermore, you should define the metrics to be gathered as part of the development of the strategy.

The scientific method requires us to determine the criteria for success before the experiment is run. This prevents people from post-rationalising their choices. The same is true for strategy.

Conclusion

It is my personal opinion that insufficient focus on results is one of the main reasons so few strategies get successfully executed.

(That's why results tracking, using a strategic scorecard, is built into StratNavApp.com.)

Our current bias towards action ("Just do it") mitigates against our investment in the disciplines which underpin success.

If the desired results are not clearly and unambiguously outlined from the start, alignment suffers. Efforts quickly diverge because it is impossible to know which directions are/aren't producing the better results.

Decision makers kid themselves that they're successfully executing the strategy and that it is working. Without any evidence to confirm or disconfirm it, there is little pressure:

• to try harder, 
• to make the tough decisions and trade-offs,
  or, perhaps most importantly,
• to know and accept when they make a mistake and then correct course.

Good luck!

As always, I would welcome your thoughts and questions in the comments below. And if you need any help of a more specific nature, you can contact me here.

The importance of articulation in business strategy development and execution

The question of articulation doesn't get nearly enough attention in business strategy.

Articulation is the ability to express every aspect of your business strategy in a way which is:

1. crystal clear,
2. engaging and
3. encourages aligned action.

It applies to:

• Your strategic analysis: Is it insightful? Does it create those aha! moments for your audience?
• Your strategic goals and initiatives: Are they clear and unambiguous?
• Your results tracking: Can everyone clearly see your strategy succeeding?
• Each step in the process of gathering inputs and developing the strategy, as well as communicating the output.

There are four critical success factors for strategy articulation.

• Communicating clearly and precisely.
• Telling a story.
• Leaving everything else out.
• Being consistent.

Communicating clearly and precisely

This should go without saying. But we've all been on the receiving end of communications which are jam-packed with jargon and waffle, repetitive redundancies, which go on for ever without ever seeming to reach a conclusion or make a point and leave you wondering what the communicator meant or what you are supposed to do about it. (Yes, that sentence is deliberately poorly written.)

Make sure your strategy is not guilty of this.

Articulation starts with grammar and spelling. It proceeds to sentence, paragraph and document structure.

I often use a tool called hemingwayapp.com to help me ensure my writing is up to standard. If you've not yet tried it, I suggest you give it a go.

Of course, there are other tools you can use. And I am sure they're just as good. If you have a favourite, why not share it with the rest of us in the comments?

It's not just about words and sentences. You can also use charts, tables and graphics. And its just as important that these are clear and well constructed.

"If you can't explain it to a six year old, you don't understand it yourself."

- Albert Einstein

Telling a story

People have been telling each other stories since the discovery of fire. It's baked into the way we communicate. It's part of how we make sense of the world.

You strategy should tell a story. It should have a beginning, middle and end. It should lead your audience on a journey from where you are now to where you want to be.

It should engage them on a personal level. It should tap into their fears and aspirations. Articulation should take the logic of your strategy and connect it to the emotions of your audience.

People are sense-making beings. We're programmed to make sense of the world. And we do it with stories. So if the story of your strategy doesn't make sense or contains gaps, people will simply fill in the blanks. They will make up the story in a way that makes sense to them. It won't always be what was intended. But it will become their understanding of the strategy.

Leaving everything else out

Why does James Bond never eat, sleep or brush his teeth? Of course, he does. But that gets left out of the film. It's not relevant. And it would bore the audience instead of engaging them.

Is your strategy packed with irrelevant detail? It may make you look clever. But is it detracting from your strategy?

Or have you refined it down to its essence? Just enough to tell the story and achieve the effect you're after. And no more.

At the end of many assignments I end up with a deck or document I call "the cutting room floor". It contains all the analysis and ideas that, whilst valid, didn't make it into the final strategy. They're not wrong, or bad. They may even have been important at during the process of developing the strategy. They're just not essential to the current articulation.

Being consistent

You've probably invested a lot of time and effort in coming up with your strategy.

So don't expect your audience to fully understand what you're saying in the first telling. They also need time to get to grips with it.

That takes repetition over time. And repetition requires consistency.

At school we may have been taught to vary what we say so that we don't bore our audience. We're taught to use similes and synonyms and flowery language. To mix things up.

But in business we need to be more concise and consistent.

I you say the same thing in two different ways, your audience will spend all their time trying to understand if you mean the same thing. Sometimes, they'll get it wrong and think the meaning is different when that wasn't intended. Either way it is distracting their attention away from your core message.

I know many people who think function is more important than form. That if your strategy is sound, it shouldn't matter how you articulate it. But the truth is, it does. So you might was well get good at articulating strategy.