In management models, it’s all mental

Framing the situation well leads to a more proactive approach


By Stephen C. Harper

Students often approach their college professors with worries about their grades on exams or case write-ups. Managers do the same thing when attending seminars or querying consultants: Why can’t I figure out why this process or project did not achieve optimum results?

For students, it’s often that their inability to write well inhibits their ability to think well. Writing is a reflection of thinking, and if the thinking is not clear or is not even appropriate to the situation, there’s little possibility that the students will find the right information or be able to articulate their thoughts in a manner to communicate effectively.

The issue is similar for managers. Often they approach their situation or problems with a mental framework that does not reflect the actual situation. Their decisions and resulting performance are a reflection of their mental models. They don’t get the desired results because they might not have incorporated the right information or have not developed a representative mental model of the situation. This, of course, leads to decisions that result in suboptimal performance.

Performance does not meet expectations for various reasons – inadequate resources, a lack of skills and poor communication, among others. But in many cases the manager did not frame the situation well. How a manager frames a situation affects how the manager approaches it. This includes the decisions the manager makes and how the decisions are implemented, all of which affect performance.

Instead of blaming others, managers who have met with less than desired results might spend their time by stepping back and looking closer at how they framed the situation that led to their decisions. Their mental framework may have left out key factors or the relationships between the factors. Examining your mental models may put you in a better position to increase the frequency and magnitude of successes while decreasing setbacks.

The contextual change model

The contextual change model profiled in Figure 1 can help managers make better decisions that lead to better results. The model reflects how a manager’s mental model should be developed to capture the key factors associated with a decision, along with the relationships between those factors when making decisions.

It might help to distinguish between mental frameworks and mental models. A manager’s mental framework involves how a manager looks at a situation – like identifying the pieces to a puzzle. The manager’s mental model depicts how the factors associated with that situation fit together – the puzzle. Let’s examine the steps in the contextual change model.

Results (step one and step seven). Every aspect of a manager’s job is centered on achieving certain results. Step one in developing one’s mental framework involves identifying the desired results. Stephen Covey stressed the need to identify the desired results in his best-selling book The 7 Habits of Highly Effective People. One of the seven principles is, “Begin with the end in mind.” If the desired results are too general (improve quality, reduce cycle time), then the mental model will lack the specificity needed to be framed well.

More specific results (reduce rejects by 5 percent in the next 40 days, reduce cycle time by 10 percent in the next 60 days, both without increasing the budget) will create a solid foundation for building a mental model. Results represent step seven as well. By stating the desired results as a specific destination with a specific date of arrival, they can be seen as the “X” that marks the spot managers can use to determine if they achieved the desired results.

Analysis (step two). This step involves identifying the relevant factors. Do a 360-degree sweep of the situation to avoid missing key factors. This step requires considerable discipline. Many managers in their zeal to achieve results fail to take the time to sense the lay of the land before starting their journey. The old saying “garbage in, garbage out” can be rephrased as “incomplete data in, bad decisions out.”

Understanding (step three). This can be the most challenging part in developing an effective mental model of the situation. It involves identifying the relationships between the various factors identified in the awareness step.

Before moving on, it may be worthwhile to look closer at the challenges involved in steps two and three. These days, few things are simple. David J. Snowden and Mary E. Boone’s article “A Leader’s Framework for Decision Making” in Harvard Business Review reinforced the need for managers to identify the factors that are relevant to the situation and understand how the factors are interrelated. They note four types of situations: simple, complicated, complex and chaotic.

To highlight a few of their points, some situations are relatively simple. The data needed is available and the cause-and-effect relationships among the factors can be identified. Simple situations often lend themselves to autopilot types of decisions. The best course of action is usually known, so there is little risk of making the wrong decision. Complicated situations have more factors and forces, but their cause-and-effect relationships can be identified and incorporated into decision processes.

Complex situations are far more challenging because it is not possible to identify all the factors, and it may be impossible to identify their relationships. This is why no one has ever developed an econometric model that captures all the factors and their almost infinite number of relationships. This explains their lack of predictive accuracy.

Chaotic situations are by far the most challenging. Chaotic situations are extremely overwhelming because of the ambiguity, turbulence and discontinuity associated with them. Too much is unknown to even frame the situation. The inability to frame the situation makes it impossible to develop a model of the situation.

Snowden and Boone used Rudolph Giuliani’s handling of the Sept. 11 attacks as an example of what needs to be done when facing chaotic situations. They noted that by “issuing directives and taking action” he created some order in the chaos. This requires courage because it involves what is called “stepping into the darkness.” Management’s main job is to position the company so that it avoids chaotic situations. Better yet, position the firm so it creates chaos for its competitors.

In complex situations, there are no experts, and in many cases there are no sure answers. There are also likely to be even more chaotic situations in the future – some on a small scale and others that are overwhelming.

Hope for dealing with complicated and complex situations is on the horizon. Sophisticated supercomputers like IBM’s Watson have the ability to collect and interpret an incredible amount of data in less than a millisecond. The Watson supercomputer may also be able to see patterns in complicated and complex situations that no person or group of people could sense.

The confluence of big data, analytics, the cloud and supercomputers now produce incredible insights into the factors at play as well as their relationships. Further improvements will help managers identify the various factors and their relationships so mental models can be constructed that will help them make better decisions.

Management (step four). This step is the “deciding” part of the process. It involves determining what needs to be done, who needs to do it, when things need to be done, what resources are required and questions to ask and get answered.

Steps one, two and three raised numerous questions. Now it is time to identify alternate ways for approaching the situation to evaluate the relative merit, costs, risks, time frames and resource requirements for alternatives. The alternatives can be rated and ranked. Step four then determines the various factors (timeline with key milestones and metrics, budget and human resource requirements and so forth) associated with implementing the course of action.

The various decisions will reflect the manager’s mental model. Managers then run various scenarios in this step, a process that helps them choose the best course of action.

Implementation (step five). This is the “doing” part of the thinking, deciding, doing, results process. The implementation process represents a different type of risk than the risk of failing to identify a key factor or failing to recognize key relationships among factors. The implementation stage commits and risks tangible resources.

Adjustment (step six). The more complicated or complex the situation, the greater the likelihood things will not go as planned. This is why you should develop contingency plans for the various scenarios in step four. The contingency plans can be triggered with minimal delay if key performance indicators established in step four or step five indicate the original plan is trending away from desired results.

Step six involves considerable vigilance, resources in reserve that can be deployed quickly and a management information system that identifies variances in real time. Step six rarely involves just one adjustment. Complicated and complex situations tend to require multiple adjustments.

Results (step one and seven): If all of the preceding steps were handled reasonably well, you might achieve the desired results. Unfortunately, the accelerating rate of change makes achieving the desired results harder than at any time in the past. Being a manager today is like standing in the ocean with bigger and bigger waves hitting you from all directions. Keeping your footing is hard enough; trying to swim to your desired location under these conditions is an even more formidable challenge.

Most managers are drowning in information. What they need is knowledge, not information. Knowledge is value-added, relevant and timely information.

Numerous tools and techniques have been developed to help managers pierce the fog associated with complicated and complex situations. For example, strategists often start step two with a SWOT analysis to identify and analyze the organization’s strengths, weaknesses, opportunities and threats. SLEPT-C is used when trying to capture some of the factors in a situation. It encourages strategists to identify the sociological, legal, environmental, political, technological and competitive factors in the situation being addressed.

Financial specialists use NPV (net present value) to choose between various investments. They also use ROI, P/E ratios and numerous other tools and techniques. Project managers often use PERT (program evaluation and review technique) to model the various steps and resource requirements. Certain military units use AARs (after-action reviews) and BARs (before-action reviews).

Initialisms and alliteration aren’t gimmicks; they work

Helpful initialisms for framing situations

The following list of initialisms can serve as springboards for identifying key factors, framing the situation and developing models that aid decision-making. The list is not presented in priority order because each situation is unique. Managers can use this list when facing a situation to point them in the right directions and even use the list to create their own initialisms.

  • The four C’s of context: Who are the organization’s customers, what are its competencies, who are its competitors and what are the conditions associated with the situation?
  • The six C’s for introducing change: Contempt for the status quo, curiosity, creativity, collaboration, the courage to do what no one may have done and the commitment to follow through
  • The five C’s of customers: Who are your current customers, future customers, competitors’ customers, your customers’ customers and nonconsumers who can be converted to consumers?
  • The two C’s of individual performance: The competence of knowing what needs to be done and the confidence to actually do it
  • The three E’s for being an ever-evolving enterprise: Exploring, experimenting and exploiting
  • The eight “I”s for being innovative: Inquiries, incubation, insights, imagination, illumination, innovation, initiatives and implementation
  • The two L’s of opportunities: Looking for lucrative and lasting opportunities
  • The four S’s of opportunities: Scanning, sensing, scoping and seizing
  • The five P’s of performance: All products, processes, patents and profits come from people
  • The six P’s of product strategy: Developing prototypes that will lead to having the right products in the pipeline, which will yield a balanced portfolio that will position the corporation to enjoy lasting profits
  • The three U’s for increasing sales: Increasing the number of users and uses as well as increasing the usage rate
  • The 10 W’s of curiosity: Why? Why not? What if? When might it occur? What conditions must exist for something to be possible or occur? And what resources will be needed? What’s next? What are we missing in our analysis? Whoa, are we leaping before looking? The most recent and favorite W is, What the heck, why not take a shot at it even though we are stepping into the darkness?

These abbreviations, initialisms or acronyms are more than just flashcards. They can help identify the factors (step two) that need to be identified and provide useful guidelines.

Just as SWOT is fairly easy to remember, many find initialisms that incorporate alliteration produce a stickiness that makes them easier to remember and use. The power of initialism to stick in people’s minds was recognized in the naming of numerous firms, including Dunkin’ Donuts, PayPal, Best Buy, Coca-Cola, LifeLock and Bed Bath & Beyond. The sidebar on Page 36 presents initialisms developed over the years that incorporate alliteration.

The last W in the sidebar (What the heck, why not take a shot?) reflects the reality of today’s complicated and complex world. Managers will have to make more judgment calls and feel comfortable making them, much like an NFL quarterback who is forced to change the play at the line of scrimmage after surveying the defense. This will happen even though managers have more access to big data and analytics than ever before.

The higher up the organization chart and the longer the mental time horizon, the greater the need for judgment calls. Managers may not be able to predict the future, but they can make a deliberate effort to prepare by identifying the most salient factors and their relationships when making decisions.

This is what proactive management is all about. It involves preparing one’s organization for the future by making the best decisions today. They can do this by (1) trying to convert the unknowns into knowns, (2) realizing there may be situations where there may be “unknowables” and (3) recognizing they need to, when they reach an impasse, make and implement a decision.

Future oriented and opportunity driven

“What happens when preparation meets opportunity,” the definition of luck by the Roman philosopher Seneca, has been used for years.

But in reality, success is what happens when preparation meets opportunity. Preparation requires incorporating numerous factors into the equation as well as using various tools and techniques. It involves identifying the key factors, scanning the external environment, running scenarios, developing contingency plans, having a future-oriented information system that monitors changes that function as early warning systems, and having people with the right skills and resources that can be committed or shifted to make the right things happen the right way at the right time.

Opportunities are the oxygen proactive managers breathe. The initialisms in the sidebar above included the four S’s and two L’s of opportunities. Proactive managers invest a significant part of their time scanning the environment, sensing which opportunities should be considered, scoping them to determine the most lucrative and lasting ones, and then developing the right products using the six P’s of product strategy to seize them.

Proactive managers need to anticipate what may be over the horizon, have the speed to move quickly to seize opportunities and prevent problems, have the agility to adapt and the perceptiveness to know what is happening (otherwise known as the ASAP mindset). The value of speed is captured in the saying, “If time is money, then speed is profit.”

ASAP also increases the enterprise’s vigilance. Listening posts and early warning systems that sense changes earlier than competitors and customers can give managers a significant edge.

The ASAP mindset and the other concepts profiled in this article help differentiate proactive from reactive managers. Reactive managers spend most of their time firefighting – making decisions that focus on today to solve today’s problems. Proactive managers spend a noticeable amount of their time thinking about what tomorrow may bring. This gives them a chance to anticipate and prevent problems.

Exceptionally proactive managers, often called visionary managers, also think about tomorrow’s tomorrow. They go one step further than anticipating and preventing problems. The exceptionally proactive managers also commit their time, attention and resources to creating opportunities and capitalizing on them.

Being first and best

Managers must, as has been stressed, ask the right questions and get the right answers. But exceptionally proactive managers also come up with the answers before their competitors and targeted customers even know or are aware of the questions. This gives them time to invest in innovation that can make their corporations not just the first mover, but to be the best mover.

American business theorist Chris Argyris noted that learning needs to go beyond single-loop learning, where people try to address the situation presented. For example, when a product does not meet expectations, people may suggest increasing the advertising or lowering the price. Instead, Argyris noted, with double-loop learning managers are encouraged to step back and ask, “Should we even be offering this product?”

Managers need to challenge prevailing assumptions, orthodoxies and paradigms that reflect conventional wisdom and current mental models. Most people rarely look at their current situation with fresh eyes and an inquiring mind. The hotel industry didn’t come up with Airbnb. The transportation business did not come up with Uber. NASA did not come up with the approach Elon Musk has used to develop rockets.

The examples of outsiders who have challenged prevailing mental models go on and on. They disrupted industries because they did not have legacy mindsets. They asked probing questions and developed breakthrough innovations that changed the rules of the game and, in some cases, made industry leaders irrelevant.

Managers need to make a deliberate effort to distinguish between assumptions and facts. A serial entrepreneur I know has a practice of calling timeout during discussions and asking, “Is this a fact or just an assumption?” These reality checks force his people to step back, challenge their thought processes and improve their decisions. Harold Geneen as CEO of IT&T noted, “I want bad news to travel faster than good news.” The key here is not to shoot the messengers who raise probing questions and challenge conventional wisdom.

The recent lean startup approach encourages entrepreneurs to get out of the building as soon as possible, even with a raw prototype, to test the assumptions about market acceptance. This approach applies to established corporations. Assumptions need to be tested. If not validated, the company must alter its approach. The lean startup approach is similar to what scientists do when they develop experiments to test hypotheses. Management may not be a science, but managers can learn from scientists.

Managers need to recognize how the accelerating rate of change can create shock waves that can blind-side them. Alvin Toffler’s classic book Future Shock noted how the future can invade the present before people are ready. When you extend the time horizon, what was considered impossible may be possible, the unlikely or improbable may become probable and, with time, the impossible may actually be inevitable.

The time and effort directed at identifying the key factors and developing an understanding of a situation needs to be put into perspective. When managers get too caught up in trying to figure out the situation by gathering more and more data to reduce the risk of making the wrong decision, they can easily fall prey to analysis paralysis. Knowledge may be power, but endlessly seeking it can be debilitating and keep managers from pulling the decision trigger.

Initiate change or be a casualty

Managers are expected to make good things happen and keep bad things from happening. Exceptionally proactive managers know which levers to push, when to push them, how far to push them and when to pull the levers back. They know which things to initiate, improve, maintain, reduce and discontinue.

By having the right mental models, managers change the possibilities, probabilities and states of nature. By knowing what matters and seeing things others don’t see, managers may be able to think thoughts others don’t think. These insights can lead to developing ideas others don’t come up with, which in turn can help position the enterprise so it can launch products and services others could not imagine or think possible.

Stephen C. Harper is the Progress Energy/Betty Cameron Distinguished Professor of Entrepreneurship at the University of North Carolina Wilmington. Harper also has been on the faculty at Arizona State University and Duke University. He has conducted hundreds of seminars on various topics, including anticipatory management, transformational leadership and how to be an ever-evolving enterprise. He is a best-selling author and the recipient of numerous awards. His latest book is Here’s to the Crazy Entrepreneurs: Is Entrepreneurism a Mental Disorder?