Conventional approaches to strategic planning are no longer relevant in the complex and uncertain environment we live and work in today.
Dr. Norman Chorn, a consultant, researcher and visiting academic with a background in both economics and behavioural science told a recent Gordon Institute of Business Science (GIBS) forum event that as the world moves towards a complex system, the relationship between cause and effect has deteriorated.
“Conventional economic theory and policy don’t work anymore because we often produce unintended consequences as a result of a particular policy move. In reality, as we stand in the present, we don’t only face one future but multiple futures.”
Strategy amid uncertainty
Advances in the understanding of cognitive functioning have the ability to enhance individual and organisational strategic thinking and decision-making in today’s uncertain world.
“Our environment today is both complex and uncertain. These conditions demand the very best strategic thinking in order to navigate the way ahead. In complex systems, one cause can create multiple effects. It is no longer possible to simply use lessons learnt in one system and apply it to another as complex systems behave in unexpected ways. Benchmarking is therefore of limited use in such a system.”
The challenge when setting strategy in an uncertain environment is the need to understand that the future isn’t a direct projection of the present, but rather that we are faced with multiple futures due to the sheer amount of variables, Chorn explained.
“Creating strategy by setting objectives and then milestones to achieve these is problematic, as you have already made assumptions,” he added.
The human brain is a complex system, he continued, and by appreciating how the brain works we can use this insight to understand our complex environment and greatly enhance strategic thinking.
Enhancing strategic decision making
The prefrontal cortex and limbic systems are the two major decision making centres in the brain. The prefrontal cortex is responsible for considered, careful analysis is more deliberate and has a purposeful focus on understanding multiple perspectives. It is more strategic and systems orientated.
The limbic system is more reactive, binary and risk-averse. “This system takes over when you are highly stressed, overwhelmed, tired and hungry. We sometimes use the limbic pathway too much as it is faster and uses less energy, and it is often our default mode,” Chorn said. “Humans alone have the ability to pause between stimulus and response and decide whether to follow a reflective or reflexive course of action.”
The strategic thinking process consists of three elements:
• Initial analysis, which asks ‘What is going on?’’
• The insight phase, asking ‘What does this mean?’
• The second analysis phase, which determines the future course of action.
“Reactive systems use previously learnt behavior and miss out on insight.
Complex situations with multiple stakeholders and multiple outcomes require strategic insight and an innovative approach,” Chorn said. “This requires the need to recombine information until you have a deep and sudden ‘knowing.’ This sudden insight creates a new neural pathway.”
Achieving insight requires individuals to distance themselves from the noise and ‘go inwards.’
Chorn said that while a lot of organisations pride themselves in describing their culture as responsive, action orientated and fast-moving, this was actually driving the chance of strategic thought out of the organisation. “Back to back meetings, strategy sessions at 5 ‘o clock on a Friday afternoon, those things just don’t work. You have to slow down and reduce the operating tempo in the business if you want to encourage more strategic thought and action,” he explained.
Creating the right conditions for effective strategic decision-making means removing yourself from the situation, taking time to reflect and meditate in order to achieve a state of mindfulness.
“Multitasking is a myth as cognitive capacity is reduced when we try and focus on more than one thing at a time. Maximise your cognitive capacity – the brain is not a computer and cannot work continuously. You need a break to refresh your perspective.” Chorn recommends reducing the sense of overwhelm the brain experiences from multiple sources of distraction and focusing on one task at a time.
Effective strategic decision-making requires focus on the process, not the outcome, and to stay in the present. “Use all available resources for analysis and insight and optimise your vantage point by considering the same situation from various viewpoints: What you see on the mountain depends on where you stand.”
In the case of complex, overwhelming challenges, Chorn said it is necessary to have absolute faith that the non-conscious part of the brain is working to find a solution. “Your brain is continuously working, but you have to step away to allow it to do its work.”
To facilitate this process, he advised sleeping a minimum of seven hours a night. Sufficient sleep consolidates learning and facilitates better communication between neurons. “The power of positive self-talk can break the cycle of stress. Even altering your posture sends positive messages to the brain. Sleep, stress and negativity are all very closely related.”