3 Lessons businesses can learn from the Schr?dinger's Cat dilemma.

Austrian physicist Erwin Schr?dinger is one of the founders of Quantum Mechanics, but he is most famous for something he never actually did: a thought experiment involving a cat. He imagined taking a cat and placing it in a sealed box, with a device that had a 50% chance of killing the cat in the next hour. At the end of that hour, he asked, "What's the state of the cat?"

Common sense suggests that the cat is either alive or dead. But Schr?dinger pointed out that according to quantum physics, at the instant before the box is opened, the cat is equal parts alive and dead at the same time.?It's only when the box is opened that we see a single definite state.?Until then, the cat is blur of probability, half one thing and half the other[1] .

This seems absurd, which was Schr?dinger's point. If it weren't possible for quantum objects to be in two states at once, the computer you are using to read my article wouldn't exist.?

After hearing this theory, I felt that it belonged to the business world, not to physics. It did feel like a business native theory that describes situations we saw, lived, and heard. In this regard, allow me to share with you three reflections which I had driven from the Schr?dinger cat dilemma.

The business can be both failing and doing well, at the same time.

The Schr?dinger cat theory describes this moment when the P&L relatively looks okay; the brand remains solid. However, despite all of that, the company faces the risk of failing in the long term. But, then what's the issue? Several issues can lead to this dilemma, out of which the top reason is: When the Future solely depends on selling what's on the wagon.?

Cross-selling, upselling, and increasing product penetration is both a science and an art. On a personal note, many of my career successes were driven by my capability to deploy those tactics. However, customer value management tactics are business fundamentals, not differentiators.?

RIM was the innovation frontier in the B2B World with their Blackberry devices and solutions. I have to say, I personally liked the product, and I was happily using and selling it. Blackberry lived the Schr?dinger Cat challenge all the way. For those who lived that era, Blackberry didn't witness the conventional deterioration phases. It felt that they were here yesterday and vanished today. Blackberry mastered the art of milking what's on the wagon and completely missed the necessity to answer: What’s next?

I recall reading an excellent article back then (unfortunately, I couldn't find it now); in that article, the writer argued that a merge between Blackberry and Microsoft could be the savior for both companies, setting the scene for the creation of an end-to-end B2B solution.

This article was written when Apple launched its iconic iPhone, and Sony Ericsson also launched several high-end touch screen smartphones. So I understood his concerns on Blackberry, but Microsoft?! The single software player behind all of the PCs around us is at risk? How is that even possible?

That was right; Microsoft's innovation machine was slowing down. Each Windows version had mellow face-lift compared to the previous one. Overall, its products were stable, reliable and their P&L was a dream to many companies. However, the company needed a fresh vision, and thus, the hiring of Satya Nadella as the new CEO couldn't be more timely. The way we are using Microsoft products nowadays is by far different when we compare it to 2014 (when Nadella became the CEO), and we can take a separate article to talk about their products and the improvement in their market capitalization.

Those were two examples showing us how big players dealt with the fact that they could be both doing well and failing at the same time; both reacted differently, and well, the results say it all.?

Deep Analytics is not a luxury. It's only when the box is opened that we see a single definite state.?

The Schr?dinger cat remains to be a mind-boggling dilemma till we open the box. Only at that point will we know the reality. Likewise, we won't know how the business is performing until we open the “data” box through deep analytics that covers each aspect of the customer life cycle. ??

Sounds obvious, right?!?

Unfortunately, the reality is entirely different. Corporations usually fall into the below mistakes:??

• Focus the reporting tools on Financial KPIs?primarily (ex. Revenues) and forgetting behavioral KPIs (ex. Stagnancy, Online/self-help tools usage pattern, Inactivity, Demographics, Waiting Time, SLAs, Segmentation...etc.) This challenge usually exists in SMEs.??
• Systems operate in silos:?as some companies grow, they use several (maybe 100s) systems. In many cases, less focus is given to integrating those systems to empower the company to have one single view of the customer journey.
• Decentralizing the Customer Insight & Analytics Function:?Customer Insight and Analytics is one of the functions where "economics of scale" works at its best. Large companies need two layers of analytics: a central analytics team that does the analytics for the entire company and a second layer which is analytics teams in each department. One focuses on aggregating, linking, and connecting all insights from all touch points, and the other links those insights with the department-related KPIs/OKRs.?
• Focusing on "Elevator KPIs" only in management reviews:?Like other executives, my calendar was always booked for at least 10 hours a day, all urgent topics, and well, and finding room to breathe is a challenge on its own. I understand how time can be a scarce resource. Nevertheless, one of the most prominent mistakes executives do, is confining their performance reviews to the "Elevator KPIs" such as Total Revenues, Total Subscribers, Performance vs. Budget, Monthly EBTIDA…etc. Indeed knowing those KPIs by heart is a must, but as an executive, you won't be capable of driving your business away from the "Schr?dinger cat" confusion unless you are willing to dive further and connect more dots.
• The absence of fresh eyes:?"Leaders usually focus on what they are better at. That’s what they keep talking about, working on it, and reviewing it" That was Tony Robbins talking about one of the key challenges companies face: the absence of fresh eyes[2] . Up to date, the best analytics is still a centaur between machines and human intelligence. After some time, the eye gets used to the way the data is set, and thus, companies need to ensure that fresh eyes review their data; this can be done by including more employees or by using consultants, whatever works better. But we always need to challenge our understanding and our way of reviewing figures.???

Finally, Budgeting is not about being bullish or bearish; it's about estimating the?likability?of events to happen.

Let us go back to our famous Schr?dinger cat; let us assume that the cat has a 70% survival chance, and then we ask you at the instant before the box is open, do you think the cat is alive? What would be your answer??

Confusing, right??

Now let me help you, if you want to be precise and articulate, the answer will be a solid YES only if the survival chance is 100%, if it's anything less than that, the answer will always have to start with: the cat is "more likely" to be alive. But you can never confirm with YES/NO, simply because a lower probability doesn't deny the possibility.?

This is the exact thinking process needed when designing the plan/budget for your company. It's a probability.??

Putting philosophy and theories aside, what does this mean in our day-to-day? There are two notions that I want to bring to your attention in this regard:?

• Never plan on the 100%; plan on the nearest probability:?ex. For projects with IT, Regulatory, and Partners Dependency, it's recommended to have a budget buffer that caters to possible deviations.?
• Budgeting is not about being bullish or bearish; it's about estimating the likability of events to happen:?In the course of my career, I find that people tend to be on both sides of the bell curve when they set their budget, either bullish or bearish.?The reasons for this polarity are apparent. Bullish people are usually driven by their optimism, belief in themselves and their products, and the desire to please management and secure resources! On the other side, Bearish people are driven by their conservative views on the opportunity in the market, the company's capability to support their plans, and the desire to "lower" expectations to be capable of "overachieve later."?A successful budgeting process revolves around the company's ability to estimate events' likability appropriately. Otherwise,?the company will be hassling after non-realistic bullish estimates or settling for a pessimistic view that doesn't reflect its true potential.?

To recap,

When we look around, we will see that Social Media companies are performing amazingly, yet they face unprecedented challenges that have to do with privacy and regulating content. Big Consultancy firms are not struggling from a performance perspective, but the Covid-19 era changed their playfield 180 degrees. Several World-class executives are available, and working for startup consultancies. AI and machine learning are playing active roles in empowering businesses. The regulatory pressure to decouple auditing from consulting is making life completely different for consultancy firms. Other examples are around us.

Like Schr?dinger's Cat, companies can be both failing and doing well at the same time. Longevity and Sustainability are the direct outcomes for understanding this fact.

[1] Schr?dinger's cat: A thought experiment in quantum mechanics - Chad Orzel. Ted Ed. https://www.youtube.com/watch?v=UjaAxUO6-Uw

[2] Tony Robbins on the Psychology and Skills of Exceptional Leaders, https://www.youtube.com/watch?v=mBNoUhHtmVc&t=1669s