The Freedom of I Don't Know

            Every morning I scan through the Wall Street Journal and there is always a simple explanation for why the stock market did what it did the prior day.   Over several years of looking at these explanations I have come to a simple conclusion: they just make this stuff up.   On Wednesday of last week, we learned that the market went down on Tuesday due to “instability in Mr. Trump’s plans for the economy.”  At first blush this seems plausible, but if you think about it, did it really take the collective wisdom of the world’s investment community until the middle of January to come to the shocking conclusion that Mr. Trump and stability are two words that do not go together.  Last year, in one week China’s currency policy was blamed for a market loss and the same policy was credited for a market gain two days later.   You could scour the paper and not find anything that indicated that the policy changed.

            This is not unique to the financial press or the finance world; look at the talking heads on cable during the election.  This is a symptom of a larger social issue that I admit I am far from immune.  We do not want to say or hear those most frightening three words:  "I don’t know."  As a lawyer, I rarely said “I don’t know.”  Rather I would say “this requires more research;” hiding my ignorance behind a billing opportunity.  People do not want to hear “I don’t know” from their doctors, financial advisors, accountants, consultants, CFOs, weathermen, political leaders, scientists, etc.   Saying “I don’t know” is sometimes an admission of pure ignorance, but it also often an acknowledgement of the complexity of the situation we find ourselves in.  There are so many factors that could affect the result that it is impossible to truly isolate a single cause or mechanism.

            No doubt that Mr. Trump’s tweets had some effect on the stock market, but so did a mind boggling number of factors from economic conditions, individual moods, rumors, the weather, or anything else that moves someone or something to engage in a stock trade on that day.  “I don’t know” takes off the veneer that we somehow can reduce a complex situation down to a simple cause and effect equation.  Look at all the unintended consequences that result from decisions that we make, big or small.   In hindsight, it all looks clear and we cannot believe that decision maker could be so foolish.   In my experience, however, decisions are made in complete ignorance of the adverse consequences or with a gross underestimation of the nature of magnitude of these consequences.  We do not see the complexity and uncertainty because we do not want to.   We do not want to say “I don’t know.”

            In reality, the world, our businesses, our families, and our psyches are all complex entities that change, evolve and react to an almost infinite number of factors.  The challenge we face is to accept this reality.   We must start by looking at every situation from the perspective of “I don’t know” (the Buddha called this “beginners mind”).  Burdened by our desire to achieve a specific result and the accompanying assumptions required to make that possible, we see only what we want to see.  Every situation, however, can be viewed as multifaceted diamond which changes shape and color as we shift perspective from side to side.  From the perspective of “I don’t know”, there is no real choice but to look at the situation from as many perspectives as you have the time to, welcoming the complexity and ambiguity as both challenging and beautiful.

            Complexity, in the form of the way one thing effects another and so on, is awe inspiring and humbling.   In the end, we are inevitably left with the conclusion that we must choose what we believe to be the best choice that we can conceive of in the time we have, with the consciousness that there is a significant possibility that we may be have selected another option if we knew more.  Realizing that ultimately we do not know can make us more forgiving of our ourselves and others and, hopefully, more open to changing course if it turns out we realize that there may be another way.   From this perspective searching for understanding of what was missed is more important than assigning blame.

            This leaves a question.  If most decisions are complex and ambiguous and outcomes are unknown, what is the point of planning?  After all, there are sure a lot of people, like me, helping companies and families with planning.   In my opinion, there are two aspects to planning.  The first is to find what is immutable: those core values that define who we or our organizations really are.   Put simply, these are the principles that we would not compromise to achieve a particular result.  These core values vary from individual to individual and organization to organization.  Second, there is our mission and vision, these are our best guess of what we can accomplish based on what we currently know and project for the future.   This is the land of “I don’t know.”  This is a picture of the future that gives us our current bearings, realizing that we will encounter unexpected circumstances that will require improvisation and modification.  In the end, planning must be an ongoing process of acquiring information and experience and recalculating.  The danger of planning is if we become too attached to our vision.  This can cause us to miss new information or to make plans that are too inflexible to accommodate new circumstances. 

            In all we do if we know who we are (i.e., what are our core values), we can approach the future with freedom to not know the how, when, what, or why of everything that comes our way.  We then can move forward with appropriate confidence and humility, knowing that it is much easier to surf on top of the waves than to try and swim against them.

In Praise of Millennials

            One common theme that comes up in almost all strategic planning engagements is “what do we do about Millennials?”   For most organizations that are run by older people, Millennials are often described in words that make them sound like an alien species from a digital planet dropped into our formerly analog world.   The data does support the idea that the Millennial generation (age 18-35) is different: (1) they support causes more than organizations (not good for organized religions with big buildings and budgets); (2) they buy what they want and only what they want rather than package deals; (3) they have a much broader view of what constitutes success; (4) they understand the complexity of the world we live in and as such are both cautious and idealistic.    Notice I did not use the word “entitled” for two reasons.  One, idealism can often look like entitlement when you know what you want but have no idea on how to get it, and, two, as the wealth of society increases every generation will appear more entitled than the one before them.  My grandparents were farmers and merchants in the mountains of Romania with no electricity or indoor plumbing.  To them, I was the most entitled thing they had ever met.

            I submit that the real issue with Millennials is not them but us.  The world has fundamentally changed at all levels and the Baby Boomers and Gen Xers who currently hold much of the power and wealth in our country have been slow to see the effects.   After the fall of the Berlin War and the “end” of the Cold War, the world shifted dramatically.  This was first acknowledged by the U.S. War College, of all places.   They concluded that we were entering a VUCA phase.   VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity.   The term VUCA became very trendy in management and leadership circles at places like Wharton and Harvard.  Notwithstanding its “term of the moment” status, VUCA is real and it describes the world we live in.   Look at the developments of the last several years: Climate Change, ISIS, Market Crashes, Race Relations, Brexit, Syria, Putin, Trump’s election, ObamaCare and the list can go on and on.   These things appeared quickly, are hard to define, are incredibly complex, and seem to evade solution.

            If you are over 40-45 years old, it is as if you grew up in a Newtonian world of cause and effect.  If you went to college you could get a good job and make a decent living.  If you went to medical, law, or business school, you would become a professional and make even more.  You would buy a car and a home, get married, have 2.1 children, vacation in Florida, get divorced, remarry, and get social security at your retirement.  Then the pace of technological change quickened along with the flow and democratization of information, while the political and economic structure that existed since the end of World War II imploded often in spasms of violence that erupted all over an interconnected world.  For us Baby Boomers, we started in Newtonian world and found ourselves in a Quantum world where the rules of cause and effect are replaced by randomness, probability, complexity, and uncertainty:  a VUCA world.  If you want to know why Trump was elected, it was because he offered to the disenfranchised the unrealistic hope that he could eliminate VUCA and put us back in the 1980s.  He even stole the hair style from the band, Flock of Seagulls (Google it).

            Millennials, on the other hand, grew up in this VUCA world.   They do not expect certainty or long predictable periods for planning.  They have watched technology change rapidly and businesses and concept rise rapidly and fall just as fast.  They have watched years of war with ambiguous goals and complex situations that defy solutions that are better than the choice of evils.  They have seen change run ramshackle through the economy making billionaires out of some and devastating the once secure jobs and professions of their parents’ generations.   We are told that the leaders of a VUCA world must be flexible, grounded, open-minded, collaborative, and opportunistic.  From this perspective, it is hard to look at Millennials as behaving in an odd or irrational way.  The move forward with all guns blazing approach that characterized prior generations does not necessarily make sense in VUCA world, whether militarily or in business.   Finding your focus among VUCA is far from easy or intuitive.  Looking at how the Baby Boomers have handled an uncertain, interconnected, complex world over the last 15 years does not leave one with confidence that we have figured this out.   We are still trying to climb out of the shambles of 2008.   It is fair to expect someone in their 20’s to have it all figured out now that the illusions of stability of our generations have been stripped bare?

            So maybe next time a client asks me about what is wrong with the Millennials, I will answer with a question.  Is it possible that we are still living and working in an old paradigm and it is us that need to wake up to reality?   I often hear people of my parent’s generation say that they do not understand the world anymore.  I used to try and explain it as best as I could, but now I have stopped trying.   The universe is an infinitely complex and beautiful and scary place that can never be comprehended by the human brain.  Any belief that we have figured it out or are close to figuring it out is a conceit that we use to feel better about ourselves.  Accepting, and ultimately embracing, uncertainty is critical to living in a VUCA world.   In this respect, I have a lot to learn from my Millennial children and their colleagues.

The Power of Three

            Our business and personal problems are complex and need to be attacked on multiple fronts simultaneously, like the invasion plan for D-Day.   This is what I thought for most of my adult life.  Being an attorney was the ideal profession: seeing the complicated web of issues that needed to be addressed in every situation was what people paid us for.   This approach worked well when the goal was to protect a client from the parade of horribles that could result from a certain plan of action (and for billing hours).   The same thought process does not necessarily work well in business or the rest of our lives.   Complexity is real but can human beings truly function within that reality?

             There has been a lot of talk about multi-tasking over the last couple of decades.  All of us need to be able to work on our computer while talking on the cell phone while ordering a latte while planning the rest of our day.   There is so much to do in a day and we are blessed with multiple technologies to do it.   Unfortunately, we have the same human brain.   Studies show that multi-tasking is a myth; what we call multitasking is just doing one thing at a time really fast, and generally fairly poorly. Complexity and multi-tasking are related.  The need to "multitask" arises because we view our to-do list as a series of unrelated events that form a complex system that we may or may not completely comprehend at any moment in time.  My son the chef refers to those moments where we lose sight of the big picture as "being in the weeds."  Our brains really do not allow us to do multiple intellectual processes at once and we are incapable of completely understanding the vast implications of complex systems.

             By way of example, I do not believe that drug companies start with the intention of creating medicines that will actually harm people nor do I believe that chemical and food companies try and create things that will poison us.  It is simply not good business.   They simply get lost in the weeds and solve one problem while creating several new ones that were not self-evident at the time.  We all do this on a daily basis to some extent.   We start a process to address a legitimate need and only later find out what the implications of our actions were.  How many times have we done something that we thought was generous or cruel only to find out that the results were the far different than we expected?  This is the human condition; we cannot understand all the implications of a single action as it runs through the complex web of interactions.  A simple hello to a stranger on the street could have a profound effect on the world and we would never know.

             To me this is a fascinating subject that is perfect for late night conversations over bourbon when no one is making any sense anyway.  What is important is that we recognize that we cannot fully comprehend all the implications of what we are trying to do.   This recognition can provide us with the freedom to step back from complexity and to stay out of the weeds.  This, in my opinion, is what effective strategic planning is all about.  Planning requires simplicity and clarity in terms of setting goals and flexibility and humility to modify goals when things inevitably do not work out as planned.  It is this latter issue that plaques the corporate world.   The issue is not that the chemical company set out to poison people, the issue is what they do when they realize that there is a problem.   The Flint Michigan water crisis is a tragic example of the phenomenon.

             Professor Donald Haider, a professor of strategy at the Kellogg School of Management at Northwestern University, once told me that an organization should have no more than three major goals in any year.   As a young COO, this seemed impossible to me.   There was so much to do in so many areas of the business.  Over time I saw the deep wisdom in his approach and the power of just three goals.  For a goal to be “major” it should have a profound and lasting impact on the organization in terms of culture, process, reputation, or financial stability.  It should also engage a significant percentage of the resources of the organization.  A major goal will have a large number of steps but one overarching purpose.

               Limiting yourself to a small number of goals is powerful for a number of reasons:

•  Deciding on three goals requires serious reflection and prioritization.

• Three goals focus the entire organization and are easy for everyone to remember.

• With a limited number of goals, the chances of succeeding increases, which creates an atmosphere of confidence and optimism.   An annual strategic planning meeting that starts with a discussion of how we sort of accomplished parts of seven goals is not energizing and does not reinforce a culture that stresses completion.

• While accomplishing the goals may be complex, the limited number of goals is simplifying and provides people with a “sense of control.”  Actual control is not possible, but a sense of taking charge of your destiny is motivating.

• Simplification and clear direction reduce stress in the organization and discourage multi-tasking.

 What if things change?   What if a better goal emerges?   Chances are that unexpected things will happen and that people will and should constantly come up with new additional ideas.   We do not want to be so rigid that we cannot admit that we may have made a mistake and are unable to change direction.   I was taught that there were two principles that one had to follow as a leader; (a) do not fall in love with your ideas or the strategic plan; you need to be able to change course if required, and (b) be disciplined and thoughtful about abandoning your stated goals.   When that new idea presents itself, you must first ask does it help us achieve the existing goals in a better way?  If yes, go for it.   If not, then ask is it more important than our existing goals?  If yes, you must decide if it is achievable this year.  If it is, make the change.  If it is not more important or it is not currently achievable, write the idea up and stick it in a file for next year’s planning meeting.  Do not simply ignore it.  Over time you will build a file of ideas that you should look at annually to see what resonates or inspires.

 Over time, you will find that the focus of limiting your annual goals will result in more rapid success and growth.   I have learned that this concept works in our personal lives as well.   Simplify and clarify and you can harness the Power of Three.