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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.

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