FUTUREVIEWS, March 2009
Remaining Agile in Uncertain Times
How cognitive science can help you remain ahead of the curve.
You are in charge of major account sales for a software solutions firm. You have been after a particular client for several months, building a relationship of trust and meeting with key influencers. The client is considering committing $1 million up front and has the potential to be a long-term repeat customer. If the deal goes through, your division will be in the black for the year. If not, it goes in the red. All of a sudden, you discover that the union has a long-term relationship with a competitor. In fact, you discover that the union receives a kickback from your competitor every time they close a deal, yet, you can’t afford that kind of kickback yourself. In addition, you are informed the client is facing impending budget cuts. Your product will require overtime for training, and the union is demanding that trainees get overtime pay while management is having their budgets slashed. How do you make your numbers for the next quarter?
We have all had experiences like this, stuck between high-pressure demands on one side and seemingly impossible constraints on another. These experiences are becoming more and more common even now, as we face perhaps the most volatile business environment in the last several decades. In this environment, enterprise level decision makers need to continually evaluate their organization’s value and competitive future. The average tenure for CEO’s is currently only 23 months, a trend indicative of the increasing challenges and the requirement for rapid results. The “knowledge economy” requires new forms of innovative thinking in which enterprise level problems are often best solved by seeking new opportunities and approaches rather than simply finding ways to make existing business practices more efficient. Furthermore, the credit crisis has brought unprecedented uncertainty to a host of standard business practices for large organizations.
Yet, there are individuals who, time and again demonstrate a special talent for making innovative decisions in the face of rapidly changing environments. This special talent is called cognitive agility.
Cognitive agility is a particular ability to rapidly revise behaviors, intuitions, and basic beliefs systems as a situation unfolds, continually meeting the demands of the larger goal while keeping in touch with the nuances of a changing environment. In this sense, the cognitively agile individual is able to focus on what beliefs are required to satisfy the outcome. They can quickly perceive the significance of events or situations and filter out what is irrelevant or distracting. The cognitively agile individual is able mentally rehearse a wide variety of outcomes and strategies within a particular domain. They can almost “feel” how a situation will play out and anticipate the critical outcomes that are most effective in meeting a goal. From their point of view, they are acting from “the gut”, but in fact, a complex framework is guiding their behavior.
Developing cognitive agility
The good news is, cognitive agility is not simply an innate talent, it can be developed through practice. Below are three steps to helping you become a more cognitively agile person and for creating a cognitively agile workforce.
Admit to Your Blind Spots
Every company has blind spots, areas of weakness that have developed over time as a result of organization routines that become embedded in everyday practice. Often, in fact, blind spots in organizations arise as a direct result of successful expert decision making, which is what makes it so hard to recognize them. Admitting to and recognizing blind spots is key to cognitive agility.
Learn Through Failure
Once these blind spots have been recognized, they need to become learned behaviors. Learning new skills involves failure, which can be frightening to executives at the helm of a large organization. You have to comfortable with failure in new domains, and you have to allow for failure early and often so that when it really counts, you can adjust to novel situations more easily.
Strategic Rehearsal
Strategic rehearsal is at the heart of learning through failure. Strategic rehearsal involves allowing yourself or your employees to encounter real problems and work out solutions before trying them out in the real world. Most effective for strategic rehearsal are simulations that utilize “high fidelity” environments, that is, environments that mimic the strategic reality of your business. Environments that have a high fidelity to decision making processes in your everyday work practice allow for hands-on retooling, rethinking, and relearning that is transferable back to your job.
Foundries in America no longer make small castings, because they can be done for a lower cost overseas. The only competitive space left for foundries in America is large, multi-ton, specialized casting services. Multi-ton casting is a relatively straightforward commodity business. In other words, no new major innovations have taken place in the basic processes of mold making and pouring the iron in the last few decades. The accepted belief was that casting involved an unavoidable scrap rate of 6%. The only way to beat the competition was to be faster or cheaper, and ways to do this were running out.
In 2001, WTRI was hired to develop an OpSim™ for a foundry specializing in multi-ton castings in the Midwest, like locomotives chasses, engine blocks for large equipment, industrial food processing parts. Many of the workers had decades of experience. Just as no one believed a 4 minute mile was possible 40 years ago, no one in the foundry business believed you could do better than 6%. During the OpSim™, we helped challenge that assumption, and uncover the root causes of controllable scrap. As a result, the foundry workers were able to see the scrap rate opportunity and revise their belief around what was possible. They were able to reduce their scrap rate from 6% to 2% in 12 months. After breaking the 6% barrier, they realized that if they had been wrong about the scrap rate, maybe they had other blind spots they were not aware of. When we returned two year later, in 2003, they had continued to implement cutting edge changes to their business based on continuous experimentation that challenged long held assumptions about limitations in their business. The net result is that the workers bought the business and were making acquisitions by 2004.
Further Resources
Gladwell, Malcolm. Blink: The Power of Thinking Without Thinking. New York: Little Brown and Company. 2005.
Marcus, Gary. Kluge: The Haphazard Construction of the Human Mind. New York: Houghton Mifflin Company. 2008.
Piore, Adam. "Rethinking the Brain Business." Portfolio. October 2007.
Shors, Tracey J. "How to Save New Brain Cells." Scientific American. February 2009.