The quirks of human behaviour and understanding carry over to companies and the decisions that are made.
As human beings we have a propensity to latch on to concepts. We tend to value or assign higher importance to things we do understand at any given point, while devaluing things we don’t understand.
In a sense this is a necessary by-product of our biology and evolution. Every day we are required to make decisions for our survival, and in order to make those decisions we need to believe that we have the whole picture and that the variables we understand are the most important variables. Otherwise life and choices would be like an equation with too many unknowns — an unsolvable conundrum. It’s fascinatingly against our nature to realise that perhaps we don’t have enough information to make a decision, and the corollary, it’s fascinatingly within our nature to make leap-of-faith assumptions about things.
Latch: Grasping a concept tends to blow it up in our minds
A while ago I encountered the statement by Eric Smidt:
“Every two days now we create as much information as we did from the dawn of civilization up until 2003”
Upon first encountering this statement I was blown away! I spent some time thinking about the magnitude of how much that really is. I told my friends, told my university teacher, even proposed a thesis that would use this information.
But then over time the novelty of this new gem of understanding was lost. I’d told several people, heard it quoted by others a time or two, etc. Of course the statistic is still staggering, but the initial impact of my increased understanding in this area has subsided. I’m not pretending that this statistic isn’t exciting or fascinating: of course it is! But in my mind it has now gradually “fallen back” and taken its position among the other interesting and exciting statistics I’ve encountered. It has subsided back into “quiet understanding”.
Perhaps it’s important to be wary of the excitement that accompanies new understanding. That excitement could be described as “latching” — rushing to grasp onto a concept and embellishing that concept beyond its potential worth. It takes us time to digest concepts and place them into perspective. Of course this doesn’t mean they are not exciting afterwards, but our level of excitement towards them afterwards is perhaps more balanced.
Lurch: How businesses can revolve from strategy to strategy as a result
A property of mediocre companies is this propensity to lurch from one strategy to another, this can potentially happen with a “swoop in” mentality that often accompanies the appointment of new leadership — such as a new CEO’s coming in and trying to make their mark. A story of this is told in Jim Collin’s Good to Great (which speaks extensively of this kind of concept):
“Each new Warner-Lambert CEO brought his own new program and halted the momentum of his predecessor. Ward Hagen tried to create a breakthrough with an expensive acquisition in the hospital supply business in 1982. Three years later, his successor, Joe Williams, extracted Warner-Lambert from the hospital supply business and took a $550 million write-off. He tried to focus the company on beating Merck, but his successor threw the company back to diversification and consumer goods. And so it went, back and forth, lurch and thrash, with each CEO trying to make a mark with his own program.
Those who launch revolutions, dramatic change programs, and wrenching restructurings will almost certainly fail to make the leap from good to great. No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough, and beyond.”
The solution: Quiet understanding and deliberate action
Again in Good to Great Jim Collins speaks of Walmart (a company that changed in the right way) he wrote:
“There was no maniac lurching about, no hype, no bravado — just calm, deliberate pursuit of understanding, followed by calm, deliberate steps forward”
Later on he said, in regards to the way companies react to external factors such as technological revolution:
“How a company reacts to technological change is a good indicator of its inner drive for greatness versus mediocrity. Great companies respond with thoughtfulness and creativity, driven by a compulsion to turn unrealized potential into results; mediocre companies react and lurch about, motivated by fear of being left behind.”
These quotes articulate in very clear language the distinction between:
- “Latching and lurching” — which is to understand something (perhaps delayed), get into the hype and excitement of that thing, perhaps make audacious and exaggerated claims about that thing, not put it into perspective with other knowledge, and then lurch forward in a particular “not well thought out” direction, and
- “Quiet understanding and deliberate action” — which is to be constantly in the journey of acquiring new knowledge, constantly weighing up new information and contrasting it with old information, getting into discussions, debates, applying rigorous thought and discipline to new understandings — and then once properly processed and thought through — moving forward with discipline, deliberation and consensus in a company.
These really boil down to disciplined thought and disciplined action. Disciplined thought is rigorous thought — filled with “what ifs”, filled with the challenges of other smart people, filled with questioning, questioning again, and again. Disciplined thought matches the imagery of “quiet understanding” — it’s not about emotion or hype, but fact and logic.