First published in Borsen on November 22nd under the title: Gor op med den lineaere taenkning
A few days ago I heard the new director of the Confederation of Danish Industry, Lars Sandahl Sørensen, give a speech to the Danish Management Society. A speech which was refreshingly visionary. One of his key messages was that businesses need to resolve the issues of linear and rational thinking in order to be successful in the future. What Lars Sandahl Sørensen did not give a clear-cut answer to however, was what should replace linear thinking. Here is my take on where we should look for the answer. It is not in a new Excel sheet or an MBA from a fancy business school abroad, or within the Danish Management Society for that sake, but rather, within a completely new perspective.
Let me begin with a concrete history. Earlier this year, a major company came to us with a problem. They had developed and now rolled out a new venture within the smart home technology area. The product performed poorly in the primary markets (Germany and France). They did not understand why and asked us for help. The company had a lot of good ideas as to how to improve the product, as well as hypotheses about the lack of success. Even so, they were brave enough to take a step back and look for new insights within the maturity levels of these two markets, in the context of new technologies. They dared to challenge the very assumption behind the product – that the average houseowner finds smart home devices in this category attractive.
The point is, that for a strategy to be successful, it has to dare to face the assumptions on which it is built. Strategy is largely about how to expand, develop and utilise one’s unique competitive advantages within the market. Where to play and how to win. But in a world, which is rapidly developing at an ever-increasing pace, and which is becoming more and more global, it is no longer possible to create a strategy which can be followed for 3-5 years. Long-lasting competitive advantages belong to a different paradigm. This means that many of the traditional strategy tools are falling short as they build on the assumption that the future, to a great extent, looks like the past and can therefore be extrapolated in a linear fashion. For many of the big companies, their assumption about linear development stands in the way of seizing new opportunities. But where should the growth come from when it doesn't come from selling more of the same?
Two types of navigation
A previously overlooked competency (which I am convinced will become central in future strategy development) is the ability to identify, map-out and challenge one’s own fundamental assumptions about the world which we are part of – as the company with the smart home product did. However, assumptions are difficult to uncover, as we are often not aware of them – it is almost implied in the nature of the assumption. They are such an integrated part of company culture that we seldom, if ever, question them. This is where we can learn from the anthropologist’s explorative method, where one allows oneself to investigate the world with openness, and thereby achieves insights through what might otherwise be hidden.
For the company which we worked for, we had anthropologists on fieldwork in German and French homes, and empathised with them in terms of how life is lived, and what homeliness is in the specific, cultural contexts. We found that the feeling of being in control was a central element for feeling homeliness, which the product had not taken into account.
The difference between the traditional approach to strategy, and the strategy that is designed to continuously revisit its assumptions, can be described as the difference between navigating a landscape by using a map or by looking around in the actual terrain or field. The map provides the necessary overview needed in order communicate and ensure a shared direction, but in an ever-changing world, things change quickly in the field and the map will therefore always be backward-looking. Therefore, there is also a need for a different perspective on the landscape – the perspective you get by being observant when it comes to your actual surroundings, out in the field. The anthropologist’s fieldwork can do exactly that – give you insights into the curves in the landscape, where your next competitive advantage lies, and which your competitors will not see, if they merely follow the map. The companies that are good at both types of navigation create a dynamic foundation for decision-making and thereby get to lead the field.
