Business Schools Must Focus On Wisdom
This article argues that change is needed in how strategy is being taught at business schools. It also states that The Strategy Script™ model that is taught at The Strategy Academy offers a well-specified solution for two major problems in business teaching: a lack of practical integration and not enough room for critical reflection. At the end, I present my vision for the future strategist.
CHANGE IS INEVITABLE
The most prominent places to learn more about the business world is by attending a business school. Business schools generally promote themselves by stressing their high level of business analysis and case studies and their cutting-edge theoretical knowledge. When looked at more closely, this analysis is mostly financial analysis and the presented theories usually concern the conceptualization of past events, abstract business phenomena, or the listing of different acting options. This content reflects an empirical view of the world, as you would expect from an institution that emerged from a focus on the natural sciences. Business, however, is not an academic discipline and strategists cannot rely on true scientific research. Business does not take place in a laboratory, value creation is not subject to natural laws, and there are very few opportunities for purposeful experimentation, if at all.
Reality is that business schools are attended by people who want to apply what they learn. Ultimately, this means that what is taught is of value only if it improves the quality of the strategist’s thinking in a specific situation, not in a hypothetical situation. In its most practical form, this means students must learn what information to gather in a particular situation and how to assess the value of that information for decision making. Hence, they should not be taught to remember stuff but how to practice intentional thinking and address all information, concepts and theories accordingly. Without such skills they might have an MBA but still lack functional knowledge, as Indra Nooyi says.
What the above means is that business schools are still mainly aimed at providing theoretical knowledge and teaching what to look at, not at how to think in practice to ensure what is taught is used well. Consequently, what students take away are mostly guideposts in decision making and spectrums of possible outcomes of actions. Any attempt to use it in a specific future situation effectively turns decision making into a hit or miss exercise whereas - now more than ever - it should be about making well-founded decisions and not about formulating a strategy and sticking to it.
THE DISNEYFICATION OF MANAGEMENT TEACHING
Managers are usually not shy of taking action and in business schools this inclination becomes apparent in case study analysis. Case studies are always exciting and inspiring. However, we must be wary of the ‘disneyfication’ of management thinking that is often promoted by their use. By this I mean the tendency to present and see the business world as above all colorful, accessible and easy to understand. Clearly, Disneyworld is exciting and inspiring as well, but it does not do a very good job in preparing anyone for the real word.
This is true for much case study teaching as well, especially when it largely entails a search for excessively simple explanations and universal solutions. Such exercises promote the discussing of very selective outcomes in which ‘success’, ‘growth’, ‘business model innovation’ or ‘disruption’ are presented as being of great importance. These messages are usually combined with a strong bias for exciting takeovers and companies that get a lot of media attention. Such teaching is more like management entertainment than management education.
WHAT WE CANNOT LEARN FROM....
In its most direct form, the results from case study analyses use the prefix “what can we learn from….”. The promise is that these selected companies prove something, which is that certain actions will have outcomes that deserve the label ‘success’. Even more concrete: these actions taken by the case study company are so smart, generic and timeless that any manager should take them as well because they will have the same positive results.
More critical thinking would reveal this is clearly flawed thinking. First and foremost because there is no way of telling the identified actions that lead to ‘persistent superior performance’ were not also taken by companies that did not do so well. The fact that iconic companies are used makes it worse. After all, such companies are by definition exceptional, meaning the ‘lessons’ are based on just one - bad - example.
Obviously, rules for conduct in business that are established this way do not qualify as knowledge. In fact, a critical thinker knows that even the case study company itself cannot rely on its past successes, simply because the circumstances in which successful actions were taken will never be the same in the future.
BUSINESS KNOWS ONLY LOSERS
When case studies of ‘winning companies’ are used in this way they fortify the idea that business is a race than can be won or lost by crossing a seemingly objective finish line. This is an outcome focused approach that paints a misleading picture of what business entails. The truth is that there are no winners in business because the race never ends. There is no finish line. This is why business is about racing, not about winning. Outcomes are always interim scores and having a final score can only mean the company ceased to exist. In this sense, the business world knows only losers.
A case study should always be seen for what it is: an analysis of past events that can only provide knowledge of what might happen. It is not an assessment of what is likely to happen for the case study company, let alone for other companies. That assessment would always require the inclusion of a company’s relevant context, not the by definition illustrative context of a case study. Without it, case study information is quite literally useless for strategic decision making. After all, decision making is never for an average company.
If the above makes you think I disapprove of using case studies, you are mistaken. I think they are essential for proper learning, but just not for their content. Case studies are important because they enable the improving of analysis and critical thinking skills using rich real-life content matter.
BETTER DECISION MAKING DEMANDS CRITICAL THINKING & SENSEMAKING
The conclusion here is that business students should not rely on anyone else to tell them what is important. Instead, they must learn to understand for themselves why that is the case. Being able to assess the value and relevance of analysis results in this way is a higher order thinking skill than doing the analysis itself. Mastering it requires the presence of criteria and standards. And for thinking as an activity, many criteria can be set, logic and justification being among the most obvious.
In practice, this means students must embrace the notion that the business world is a world of relatives, and that justification of any belief must be rooted in comparison. This is true not only when it comes to figuring out what is important in any industry, but also when it comes to making statements about what that would mean for decision making. It means moving from a focus on outcome to a focus on the decision making process itself. In short: they need to start thinking about how they prepare for decision making.
It means business schools should let go of the comfort of stopping at learning what ‘might happen’ and focus on teaching students how to weigh arguments and identify missing information, fallacies and misleading analysis tools. The rewards of good critical thinking skills are found in better judgments, seeing more easily through flawed reasoning, making choices from a more informed position and improving one’s ability to convince others. It reflects what is often called ‘sensemaking’, and which is seen as a core skill for the 21st century.
It is not enough to teach students critical thinking skills if they are not inclined to use them. Critical thinking is more than the successful use of the right skill in an appropriate context. It also requires the willingness to exert the mental effort that is needed to apply it constantly, in every decision making process step. This is not easy, and not everyone will be able to be that disciplined.
THE SOLUTION
The Strategy Script™ model that is taught at The Strategy Academy presents the outline for the master narrative through which all information about the business world can be related in one giant cause-and-effect context. It provides a key that enables the thinker to purposefully link all business world information together, and also enables the offsetting of the resulting knowledge against information regarding an actual company.
Current conceptual models are not able to do this because they are either too abstract to be practical, or too specific to be generic. Hence, they are useful for checking boxes, not for obtaining the type of functional knowledge that will improve decision making.
In essence The Strategy Script™ guides the user in the gathering of the right information, in assessing it, in relating it to all other information, and in making reasoned and relevant judgments using statements that qualify as knowledge. They are all essential steps because without them reasoning might still be convincing, but it is essentially educated guesswork that cannot deliver the sorts of valid conclusions that emanate strategic wisdom.
The result is a process of constant assessment of the environment within one framework that aligns and weighs all information based on its relation to essential judgments about a company’s position, outlook and value creating options. This ongoing training of the mind (the HOW to think in practice) gradually increases not only the capacity to take more considerations into account, but it also increases the stockpile of knowledge against which new information can be offset effectively.
The experience that is gained when my model is used is twofold; instrumental and substantial. This means the user becomes both a better and faster thinker, and his or her ability to justify beliefs increases. Whereas ‘knowing more’ is simply the result of doing more work, becoming a faster thinker requires a method and the ability to place everything that is learned in a bigger context. This is facilitated by The Strategy Script™ model.
Last but not least, this model also makes it easier to share insights and knowledge, as they are all constructed using the same system. This will increase the effectiveness of group discussions, knowledge retention in general, and the chance of discovering new patterns, gaining new insights and coming up with new solutions through argument.
There are three different levels of usage of The Strategy Script. The lowest level would simply mean the model’s 49 ‘guiding questions’ are used for an elaborate company or industry analyses. The second level would entail using it on an everyday basis to be prepared for strategic decision making. How this works is described in my PhD thesis and taught at The Strategy Academy.
There is however a third level to distinguish at which it is no longer about how the Model will improve decision making. At that level it is about what it does for the mind if it is used over and over again. The result will be that the strategist is inclined to think about differences between industries and companies all the time, whilst always knowing that these differences have implications. This training of the mind increases one’s capacity to absorb more information and constantly work on reaching a higher level of synthesis; every new industry or company that comes up will provide a new antithesis, which forces the strategist to formulate a new synthesis, and so on and so forth.
A VISION FOR THE FUTURE STRATEGIST
Future strategists know that the key to understanding the business world is found in the intent of that thinking itself. They know that all information should be approached in a way that is aligned with the idea of reducing uncertainty, and that not all information is equally uncertain or equally important for decision making. They also know this thinking should be aimed at generating meaningful statements. They know that the very expressing of these statements equals the passing of judgments and that these judgments, in turn, form the premises for conclusions upon which decisions about a company’s future are based. Most importantly, they know that these statements take on the form of propositions or declarations that must be logically true and that require argumentation for them to be accepted as knowledge. They know this justification requires clarity, precision and a discerning and foundationalistic approach for it to result in such knowledge.
Future strategists know everything that is stated above, but they also know that this thinking is best trained by means of a cooperative dialogue. Hence, every attempt at improving ‘strategic wisdom’ in a classroom should start by inviting students to describe an industry or company in a structured way, thus presenting them with the challenge of telling a clear and coherent story of a company’s past, present and expected future. Such stories will reflect their ability to identify why and how companies are unique and they will be told without the use of jargon. They know this thinking exercise never ends, but that it is nonetheless rewarding because each story adds important detail to one’s images of the existing business world, as well as to the ‘master narrative’ of how it all works.
