If you’ve ever been involved in a strategic planning process, you may recall endless meetings, debates, and plan iterations. Although the process is fairly standardized, it often consumes hundreds of valuable leadership hours. Despite that investment and good intent, most leaders would admit that, more often than not, the resulting strategy fails to deliver an impact even close to that expected.
Behavioral science draws insights from various social sciences — including psychology, sociology, and economics — to study why humans think and behave in certain ways. It is possible to dramatically improve the progress and results of the strategic planning process if we can understand what commonly goes wrong. Fortunately, this has been extensively studied by researchers.
Using the insights from these fields can help us understand the human motivations, dynamics and behaviors that are in play during those endless planning meetings and debates. When we understand how teams and the individuals within them really think and interact, we can improve the process, sidestep common pitfalls, and more quickly reach consensus on effective action plans.
As humans, we are all subject to bias. The word simply refers to how our judgement is affected by the way information is presented to us and the context in which it’s presented. While context and bias can help us make decisions, they also can lead to poor decisions, if we aren’t aware of how we are being influenced.
Firms must be intentional about steps taken to reduce the impact of harmful biases, particularly because they are not the biases of “others,” but the biases of the leaders themselves. It is always harder to recognize and counteract your own biases. Three known biases can have a significant impact on the strategic planning process.
Overconfidence bias is the tendency to overestimate the capabilities and talent within your own firm. It may result in leadership ignoring bad or negative outcomes and neglecting capability gaps within the firm.
In Axiom’s approach to strategy development, we believe in building a deep understanding of your firm’s core capabilities — one that is rooted in data and perspectives gathered across all levels and areas of the firm. Leaders see one view of the total picture, managers and individual contributors see other views, and data provides an unbiased framework against which to pin all perspectives.
Once you have a realistic understanding of your core capabilities, the next step is to identify how you can apply those capabilities to accelerate the firm’s strategy implementation and growth.
Conformity bias is the tendency to do or believe things because many other people do or believe the same. Based on this bias, views that are exchanged in “the meeting before the meeting” or during backchannel messaging during meetings can have a significant impact on meeting outcomes. If the views being circulated are inconsistent or uninformed, the effect can be very harmful. Conformity bias can undermine efforts to present a clear picture of your competitive position and determine the steps needed to improve it.
The solution is to bring together three critical elements — client perspectives, partner perspectives, and external data — to build a deep factual foundation for strategic change. Such a foundation should be convincing enough to counteract conformity-based assumptions and arguments.
Probability neglect is the tendency to disregard probability when making a decision under conditions of uncertainty. If you follow the equity markets, this bias should be familiar to you. As humans, even when we know the odds, we tend to ignore them when the results are emotionally weighted. We overemphasize unlikely events when they are very bad or very good. Overemphasizing these unlikely scenarios is a key driver of contentious leadership team debates and producing a strategy that wildly over promises what truly can be delivered.
As with other forms of bias, a basis in hard facts is the solution to probability neglect. We advocate using scenario modeling and data analytics to understand the impact of multiple possible/probable future scenarios, both short-term and long-term.
While addressing specific biases is important, there are also other tactics that can help the strategic planning process move forward quickly and effectively.
We now know, through behavioral science, that the specific makeup of teams affects their productivity and ability to reach effective consensus. Selecting the right team is not just about the traditional approach of choosing a balance of members across practices, industries and geographies. Personalities, their interactions and the roles of authority also influence outcomes in very real ways.
Network analysis is a set of graphing techniques used to investigate and describe social structures. It can aid in understanding team dynamics by identifying influencers, points of disconnect, and relationships between team members. This type of analysis can help you identify team members with the best perspectives and behavioral tendencies to work together productively.
Choose design principles that will serve as a grounding reference point throughout the process to continually test ideas and decisions.
No one enjoys long, drawn-out, unproductive meetings. Short, intense working sessions organized around a planned outcome can ensure progress. Dividing these sessions into small groups also provides opportunities for increased participation, allowing different team dynamics to play out and all voices to be heard.
Perhaps the most important action in addressing biases is educating leadership. It’s important for leaders to understand what biases look like and how they operate in a real-world corporate setting versus the traditional psychology experiments most are familiar with. They should know the simple signals to look for and have language at their fingertips to respectfully call out biases in action while creating a safe environment to debate.
If you are preparing for or struggling with a strategic planning process, our professionals have considerable experience in helping firms like yours. For more information and help, reach out to one of the members specializing in professional service firm growth strategies and business transformation and tell us your story.