Monday, March 29, 2010

For The Left Side of Your Brain: Thinking of Consultative Thinking

As a guru of critical thinking, Bill Welter is a big fan of Louis Pasteur's quote, "Chance favors the prepared mind." Welter is a consulting educator and managing director of Adaptive Strategies, Inc., which helps professionals and executives to think like consultants. That is, he helps them think critically and analytically in order to more successfully solve complex business challenges. He is also a Fellow in Executive Education at the Carlson School of Management, University of Minnesota and the co-author of The Prepared Mind of a Leader: Eight Skills Leaders Use to Innovate, Make Decisions, and Solve Problems and he's also the author of Mindlab: A Place to Think. Welter's latest book, Rethink, Reinvent, Reposition: 12 Strategies to Move Over Your Business, is due out in June 2010. We recently had breakfast with Bill in a Chicago business club with a 67th floor view of the sweeping Midwest landscape and expansive Lake Michigan. The location and the company certainly got us thinking about thinking. Here’s what Bill taught us.

Can we really think our way out of challenging situations? Even though critical thinking may be of benefit in solving client problems, how might it help professionals and their firms to solve the problem of attracting those clients in the first place?

Let’s put this into a medical metaphor and consider professionals as the “doctors of business.” Clay Christensen’s recent book about healthcare innovation (The Innovator’s Prescription) has a wonderful model that addresses the question you have posed.

Medical services move along a continuum from “intuitive medicine” to “empirical medicine,” to “precision medicine.”
• Intuitive medicine works to solve complex, messy, non-routine maladies. Doctors embark on a “differential diagnosis” process to first discover the underlying causes and then address those causes.
• Empirical medicine works to apply “generally accepted” treatments to fairly common problems. There is a large enough body of knowledge allowing the doctor to be “pretty sure” of a straightforward diagnosis and treatment.
• Finally, precision medicine is the application of best practices to clearly understood problems. Here a common test will tell you the exact problem and a doctor is not even needed for resolution.

The need for critical thinking in a business context falls to the intuitive side of this spectrum – and so do profit margins. Clients with simple problems can often solve them by buying a good book and following the advice found in the book. As the problems become more complex they need people who have “been there before” and they can hire experienced managers or bring on junior people from their service providers. However, professional service growth (and good billing rates) comes with finding the emerging issues and being among the earliest to have figured them out for clients and prospective clients. No books – no software – just plain good thinking.

Professional services firms are expected to be “thought leaders” who anticipate future conditions for their clients. Doesn't such divination rely on raw intuition rather than critical thinking competence?

Raw intuition is valuable to the degree that the future is a reasonable extension of the past. The military consistently worries about “generals fighting the last war” and so should business. I’m old enough to recall the problems of bringing “just-in-time” inventory control and Total Quality Management to groups of managers whose intuition was that both of these developments were not only not needed, but not the “right way” to run a business.
Thought leadership is found in seeing how the future is different from the past and how this difference will impact our clients’ businesses as they engage an emerging reality.

What’s the Sense-Response Cycle and how is it a breakthrough framework?

The Sense-Response Cycle is a simple depiction of the work needed to address the phenomenon of Creative Destruction. (Side note: Creative Destruction was the term the economist Joseph Schumpeter used to describe industry evolution. Basically, industries evolve in an amoral sense and provide opportunities for some companies and destroy opportunities for others. Not good – not bad – it just happens).

Now, there is nothing special about the four phases of the cycle (Sense – Make Sense – Decide – Act) but the brutal reality is that it is a CYCLE and it has to run at the speed of industry evolution. And, unfortunately for many of our clients, their industry is evolving faster than ever before. If you run the cycle too slowly, your business becomes irrelevant. And here is the tough part – some businesses are great at one or more of the phases of the cycle, but unless they operate all of the phases well, the cycle slows down. Many mature, hierarchical businesses are great at the Act phase but they almost ignore the Make Sense phase. The result is that the cycle is running slower than it should. Want an example? Look at some of the “old line” retail businesses in the US and you see companies that have not kept up with the evolution of the industry.

Thinking is great – it’s nice to be differentiated from lower life forms, of course – but it is only useful if we act on our best thoughts. What is your advice in terms of closing the thinking-doing gap?

There are four factors of strategic success and they have to be considered as an interrelated whole. Success depends on combining strategic intention with great execution. Strategic intention, in turn, is a combination of proper goals and an aligned strategy; and great execution comes from considering the capabilities you need and having enough capacity in each of the capabilities.

So, my advice is to consider all four components from the very beginning. The gap tends to worsen when leaders take them sequentially. Strategy without the ability to execute in a timely manner is just wasted words and we have weakened our ability to execute over the past fifteen years with an overemphasis on becoming “lean and mean.”

When is it that we need to rethink? What’s the difference between rethinking and second-guessing?

Here’s a glib answer to the first part of the question: we need to rethink sooner than most of us actually do rethink. Now here’s a more serious answer: consider the amount of time you have to respond to significant change. If change is upon you, you have very little time and you are most certainly in reaction mode. Considering change that is further out gives you time to adapt. Finally, searching for clues on the horizon and “connecting the dots” gives you plenty of time to anticipate potential changes and rethink the position you have taken so far. I always try to get clients to spend time with items in the “adapt and anticipate” category. Very little real thinking takes place when you are in reaction mode.
The major difference between rethinking and second-guessing is the depth of thinking that takes place. Rethinking requires an active search for “what’s changing,” a reexamination of the assumptions underpinning your strategy, and, finally, an objective analysis of the existing set of goals and strategies. Rethinking requires deliberate reflection; second-guessing tends to be triggered by “feelings without facts.”

What can professional advisors do to practice and strengthen their critical thinking muscles?

I have good news and bad news for professional advisors who want to improve their critical thinking. The Good news is that all of us can improve. Here are a few exercises:
• Document strategic assumptions and test those assumptions for reasonableness on a go-forward basis. (“Gosh, do you think housing prices will always go up?”)
• Examine potential actions from multiple points of view. Remember, your point of view is only one point of view. (“What might the union rep think about this?")
• Look for and evaluate alternatives. One alternative may be favored, but there are always alternatives. (“What else could we do?”)
• Spend time looking for the unintended consequences of potential actions. They are always there, but may happen further out in time and place. (“How would cutting fees affect our reputation in the coming years?”)

The bad news is that building this skill takes time and focused effort. In our multi-tasking world we all-too-often allow these muscles to atrophy.

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