The Six Disciplines of Strategic Thinking

THE DISCIPLINE OF PATTERN RECOGNITION

described in Phil Rosenzweig’s book with the same title. 10 This is the tendency for one important aspect of a person (or a com pany) to shape perceptions of the whole in ways not supported by the facts. In his research on the halo effect, Rosenzweig showed that it powerfully distorts our thinking about com pany performance. He explains that it’s common to assume a company with a robust financial performance has a sound strat egy and strong leadership. However, when performance wanes, we’re often quick to conclude that its strategy is unsound and that its CEO has become arrogant. Tangible overall results create a general impression (a halo) that informs our perception of the more granular elements contributing to firm performance. Or, as Rosenzweig put it, we confound outputs with inputs. Wishful thinking – ​known more formally as the sunk cost​ fallacy – is another important cognitive bias. It leads us to invest precious resources into a losing proposition in the vain hope of recouping previous losses. This tendency to “double down” has been at the heart of many financial scandals, such as when rogue financial traders trap themselves in a downward spiral of increas ingly large and risky bets that, in some cases, have contributed to institutional failure and even global crises. Finally, it’s essential to avoid blaming others when things go wrong. It is a natural human tendency to blame outside factors for negative results while also taking personal credit for positive outcomes. Psychologists call this “self-​serving bias.” And while it may contribute to perceptions of personal success and political power, it can cloud judgement, leading to potentially cata strophic errors. Strategic thinkers avoid the natural urge to scapegoat. Instead, they unearth and reform the structures that drive poor performance. They are curious and open to a wide range of potential solutions to their challenges.

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