JP Hanson wrote a blog post on strategic decision making titled The Road Home. This piece is full of wisdom.
« CHOICE MEANS RISK… Of course, the reality of business is inherently complex and, as a result, strategic choice is risky… Not only are we bound by the realities of ever-changing contexts, strategic decisions are made with the intention of outdoing an adversary – while understanding that the adversary is simultaneously attempting the very same maneuver. Above all else, this means that the outcome that matters is relative, not absolute… One must, in other words, grasp not merely the marketplace (customers, rivals, technologies etc.) in which one acts, but also the means and internal capabilities (e.g. causal ambiguity) with which one can act, not least because it limits assumptions. »
« The more assumptions made, the more potential points of failure and opportunities to be wrong. There is a significant difference between being 90% correct 90% of the time, and being 100% correct 10% of the time. »
« AN INFORMED DECISION. Consequently, the first step in any strategy is one of information gathering… Defensive decision-making regularly leads to information-gathering not for enlightenment but enablement of post hoc inferences to escape blame… The aim should instead be to gain enough of an understanding to weigh risk, identify uncertainty and judge capabilities. »
« Different decisions carry different feedback loops. The consequences of certain choices will be almost immediate, while the outcome of others invariably will require time to materialize, similar to how activation evaluation is relatively fast, while brand-building evaluation is relatively slow. In a modern business world of intense pressure, this often means that decision-makers are attracted by the siren song of the short-term, but be wary. In a corporate setting, one can overdose on placebos. The value of a path lies not in the ease with which one can travel down it, but in the destination to which it takes us. »
« In order to counteract our inclinations, we must come to terms with the fact that we all view the world subjectively through lenses that have evolved across millennia, and because of it are susceptible to narrative fallacies, confirmation biases, illusory superiority, clustering illusions and halo effects… the false sense of security that consensus provides. Biases, such as pluralistic ignorance, are equally plentiful in groups… The only way to keep afloat is by valuing data over anecdotes, quantifiable experience over generic advice and critical thinking over alluring promises. »
« Businesses do not run with the precise predictability of Swiss clockwork. Rather, due to their complexity, they are much more like clouds, as Karl Popper once wrote. We speak of the vagaries of the weather. Perhaps we should also speak of the vagaries of companies. »
« We are all psychologically primed to gravitate towards easy-to-understand answers with the speed at which they fit our personal narratives. Unfortunately, this inherent desire to provide a seemingly coherent direction to events may lead us to see patterns that do not exist, infer causes incorrectly and ignore facts that do not fit the story. »
« A strategy must factor all this in and allow space for testing that makes contextual sense. Trial-and-error carries risk and uncertainty, but risk can be managed and uncertainty accounted for. It is a matter of finding ways to improve the odds of success, never imagining that success is certain, despite promises to the contrary made in best-selling books. The key to business is not doing things well, but doing things better that one’s competitors. That requires going outside of the comfort zone and trying the angle that others have not. »
« Strategy is choosing what to do, and thereby what not to do, its essence one of sacrifice. »
« Life is the sum of all our choices, as Albert Camus once wrote. »
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