AGILE THINKING

'We can't solve problems by using the same kind of thinking we used when we created them.' Albert Einstein

This is the second in a series of short outcome-focused articles on 'High Performance Under High Uncertainty', outlining some tools and approaches for dealing with the challenges of uncertainty, complexity and risk in a world still grappling with Covid-19 and its social, political and economic fallout. The glue joining the articles together is agility; the background context was described in a scene setter here which highlighted 3 main challenges:

In each article, I will describe the context, the current problem, tools and approaches and relevant cultural / leadership implications. This post deals with agile thinking.

CONTEXT

Do you recognise the picture at the top of this post? It was taken in the Situation Room at the White House during the raid against Osama bin Laden (not by me!). Regarded by many as a great success for the Obama Administration, this raid was fraught with risks over and above the operational and political, the main one being whether it was actually bin Laden in the compound. All the other risks were predicated on that one assumption; the situation was characterised by uncertainty, complexity and risk.

To that end, the Director of the CIA formed a 'Red Team'. He recognised the potential for confirmation bias, for analysts to fill the information gaps with what they wanted to see, even for experienced intelligence operatives when they had spent years of their careers hunting for bin Laden. The job of a Red Team is to see an issue from a different perspective, perhaps that of a customer, a competitor or an adversary. This Red Team's task was to come up with, and justify, alternative explanations for who might have been in the compound. Having considered all the hypotheses, the Director and the President decided that, on balance, the intelligence justified the risk.

The important point is that faced with uncertainty, complexity and risk, they didn't just make a plan or a decision; they stress-tested the hidden assumptions and biases underpinning their thinking, in a structured, objective way. A different type of thinking is required for situations with high uncertainty and while most senior teams will think through issues in depth, few engage in thinking about thinking - reflecting on the quality of thinking process by which they reach their decisions.

THE CURRENT PROBLEM

A large corporate organisation might begin its annual planning cycle in July for the following year. By December, goals, targets and bonuses are locked in place for the following 12 months. Of course, all of the above implicitly assumes that we have a reasonable conviction in July what the next 18 months might look like. Without that, how can we forecast or plan with such 'precision'?

However, to quote a British retail CEO, 5 years of digital transformation just occurred in the last 5 months. Recovery will be either V-shaped, or U-shaped, or hockey stick or flat or worse. Covid-19 will either be a major economic event this winter or it won't.

How do you establish strategic priorities, make resourcing decisions and plan for some combination of 'known and unknown unknowns?' It should be self-evident that a linear logical approach (the norm for many) is going to be of limited use with so many information gaps and when so many variables are outside your control.

TOOLS AND APPROACHES

Below, I dive straight into some practical tools and approaches. For those looking for more information, links to additional resources are provided in the comments to this post.

The Wisdom of the Crowd

Extensive research by Philip Tetlow, Mark Burgman and others indicates that while expert judgement has value, in situations of high uncertainty, the so-called expert may be no more accurate in their predictions than a 'novice' who understands the issue and what questions to ask. Burgman et al developed a superficially simple but powerful methodology for leveraging the cognitive diversity of a group, and in experiments in which forecasting accuracy could be quantifiably measured, they demonstrated an improved accuracy of decision-making under uncertainty versus either individual experts or the group without the methodology. The basic technique is:

• Think hard about asking the right question, preferably one that has a quantifiable answer, and with implicit biases removed from it
• Ask the team for individual estimates of the forecast and 90% confidence intervals (NB people are invariably overconfident - in trial questions with a known right answer, the correct result fell outside the 90% confidence interval for some 50% of the audience - beware the illusion of precision)
• Review the responses collectively as a group, in particular asking those who contributed outlying responses to defend their positions
• Complete a second round of individual responses - experiment shows that having had the opportunity to stress test each other's thinking, responses will now group far more closely to the right answer

Red Teaming

Red Teaming is relatively simple in concept - reframe an issue from the perspective of a customer or competitor in order to challenge your own assumptions. Perhaps the best way to explain is a simple example. The end was looming for my client's service delivery contract with its own client; they would have to rebid. There was a risk of complacency having held the contract for 10 years, but there were several reasons to think that the renewal might not be an easy win. We formed 3 teams: blue (the 'home' team), red (a competitor) and white (the client (i.e. my client's client!)). Blue's job was to make the case for why they would win the contract. Red's job was to make the case for why Blue shouldn't win. White's job was to articulate what the client's priorities might be. This is a very simple example to illustrate the concept but it did flush out a number of assumptions in my client's thinking that had a significant impact on planning for the renewal bid (which they won!).

Wargaming

If Red Teaming is broadly about stress testing the assumptions in your decision-making and planning, Wargaming is a variation on the theme that stress tests the assumptions in your execution. While it conjurs up an image of the military, supercomputers and large budgets, an experienced facilitator can extract significant value for a team in just a couple of hours with minimal resources.

In a commercial context, one might form very similar groups to the above, but in this case the aim is to role play a fast forward through an execution process whereby Blue take a turn and describe their actions say in the initial execution phase of a plan, then Red describe their competitive reaction, then White the market reaction. After each round, the Chair takes stock and captures e.g. Tasks, Gaps in Knowledge and Risks - further work to improve the plan.

Wargaming allows an organisation to synchronise actions, visualise alternative execution scenarios and develop the mental agility to deal with them. It dilute the risk of being wedded to our own brilliance and helps to stack the odds of success in our favour.

Nothing is Sacrosanct

The sub-title is a more acceptable version of the journalism slang 'kill your babies' - be prepared to kill the thing you are most attached to if it's simply not the right solution. Very recently, DARPA ran a trial which pitted an AI-powered flight simulator against a fighter pilot flying a simulator in a dogfight. At one level, this was simply an AI technology trial. But at another level, the US Air Force put one of its most valued assets - the pilot - up against something that might make that asset irrelevant. And live streamed it to the rest of the world on YouTube and Zoom (fyi - the AI won!). How many organisations would do that, live, not knowing the outcome, in the public domain?

If next year probably doesn't look anything like last year, then a frame of reference anchored on last year's blockbuster will be of limited use in next year's plan. Be prepared to kill your babies... nothing is sacrosanct.

CULTURAL / LEADERSHIP IMPLICATIONS

All of the above approaches require a 'dealing in reality' culture. And like many things cultural, they are highly predicated on the behaviours of senior executives. What gets role modelled and rewarded by the most senior people pretty much drives 'how we do business around here.'

What are the 'dealing in reality' factors in agile thinking:

• Humility: nobody has a monopoly on good ideas or being right
• Objectivity: evidence-based decision making and explicit testing and acceptance of assumptions and risks
• Reward challenge. Especially upwards. Don't shoot the messenger or the dissenter.

I thought I'd write more here and wax lyrical about leadership behaviours but I think that the above really captures the essence of it. The factors are simple. Staying true to them in a world of short-termism, misaligned incentives and internal politics is less so.

That is all. Next up, agile execution. Feedback very welcome.