Innovative decision-making:

Driving triple loop thinking

Presented by Professor Boon-Sing Neo, Founder Director, Asia Competitiveness Institute, National University of Singapore at the CIMA Technical Symposium 2010

In a world of uncertainty and change, past achievements and current success are no guarantee for future survival. Organizations need to innovate, rejuvenate and renew their strategies and business models: to create and tap new ideas, develop fresh perceptions; undertake quick action and continual upgrading to achieve flexible adaptation for sustainable advantage. However, no amount of careful planning and strategising can assure an organization of continual success if there is no internal capacity for learning, innovation and change in the face of ever new challenges in a volatile and unpredictable global environment.

Innovative decision-making is critical for creating the kind of adaptive and responsive strategies that are essential for survival and success. A good set of products, markets, policies and practices, past and present business achievements are no guarantee of future effectiveness. As environments change, effective strategy demands the ability to rejuvenate and renew products, policies and practices to serve current customers and reach new markets. Careful strategic planning must be integrated with the on-going capabilities to learn, innovate and adapt when the environment becomes volatile and unpredictable. In short, they need to develop innovative decision-making capabilities.

Innovation happens when organizations take new and fresh approaches to creating and delivering value to customers. It involves discovering new customer requirements and developing new products and services to meet these new needs ahead of the competition. It also involves new and different ways to satisfying current demand that enhanced customer experience and thus increase market share. Innovation is thus critical for competitiveness and sustainable advantage in a world of rapid, increasing globalization and unrelenting technological advancements.

From my research and consulting work with many leading business and public sector organizations, I found that innovative decision-making involved developing and driving triple loop thinking capabilities: thinking ahead, thinking again and thinking across. Thinking ahead is the ability to perceive early signals of developments that might significantly affect the mission and goals of an organization. The ability to think ahead would enable an organisation to conceive strategies and policies to adapt to the changing environment. Thinking again is the review and reinvention of currently functioning policies and processes when the environment changes in order to achieve better results. Thinking across is the ability to cross traditional boundaries to learn from the experience of others, recognizing that others' ideas, systems and experiences may hold lessons which may be adapted to achieve new and better outcomes. It is also the ability to cross organizational boundaries to collaborate to develop and deliver strategies and solutions to complex issues and challenges.

Capabilities are embodied by people, embedded in process, and are manifested in strategies, products, policies, programs and projects. Whether or not an organization is dynamic and innovative starts first and foremost with its people, especially its leaders.

Leaders must initiate change for innovation to become a reality. But for these changes to be sustained, leaders must also design organizational processes to spur, stimulate and support such continuous adaptations.

Thinking ahead

Thinking ahead is the capability to identify future developments in the environment, and understand how these developments could affect the achievement of an organization's desired business outcomes. Developing the thinking ahead capability involves sensitizing people to recognize early signals of change. Organizations that are able to think ahead are able to discern how uncertainties in the external environment could affect the achievement of desired strategies. It involves engaging decision-makers and encouraging them to articulate their views about how the environment may change. While no organization and its leaders develop perspectives about a range of plausible futures, recognize the limitations of the current strategies in light of these plausible futures, and devise new options and policies. More importantly, thinking ahead creates a culture in which people continually ask questions about what the future could look like, and what the organization needs to do now to put itself in a good position for those future. Thinking through uncertainties ahead of their occurrence creates mental preparedness and flexibility, and instills greater confidence to innovate and respond as events unfold. This is why thinking ahead is a critical innovation capability for organizations facing rapid environmental change.

Developing the capability to think ahead in the business or public sector requires business and public sector leaders who are themselves alert to signals regarding emerging issues and developments in the social, economic, business, technological and political environments. They need to understand how these trends may evolve into scenarios of plausible futures, and be able to articulate how and why these scenarios would require different sets of strategies and policies.

In turn, they need to have the credibility to convince important stakeholders and decision-makers to re-examine their own assumptions about the future and to reconsider goals and objectives to prepare for a range of plausible futures.

Thinking again

Thinking again is the capability to look beyond the legacy of a particular strategy, product, project, policy or program to question its relevance when circumstances change. In contrast to thinking ahead which is based on judgment about plausible futures, thinking again is fact-based - it uses actual data, measurements and other feedback to ask questions about the underlying causes of observed results.

An organization that regularly thinks again will be one where people are constantly asking why they are observing the results that they do, and what they can do differently to obtain better or different outcomes. Thinking again prompts leaders and organizations to regularly challenge the performance of existing policies and programs, and question the appropriateness of existing goals and strategies.

Thinking again may be triggered by success or failure - the key is how the results are perceived, interpreted and communicated to stimulate a rethink of the previous policy. The unintended consequences of success may also trigger a rethink of policies. The capacity to think again requires leaders who are willing to confront current realities and challenge the status quo.

They need analytical and problem-solving abilities to drill into the details of a policy or program, why results turned out the way they did, and the skills to redesign the policy to achieve better results.

While any change is never say, it is much harder for a leader to 'think again' what he had previously initiated or earlier changed, and to change again. A strong and successful leader tends to staff the organization with people who share his or her vision and values, and the organization develops the competencies to support the current vision.

But, competencies can be double-edged-skill in doing something well can become the only way to do something. Groupthink sets in. Although, the team itself may view this as cohesion and teamwork, it could just as well mean that they have lost the capacity to re-look and question existing policies and programs with objectivity.

Leadership renewal - bringing in new people with backgrounds, skills and views different from existing leaders - is thus critical to the development of the capability of thinking again.

Thinking again is a core capability for the successful re-invention and renewal of strategies, business models and policies, and is thus fundamental to innovative decision-making. Without the capability to think again, things will deteriorate until it reached a crisis before they are given any attention, which is why many organizations are constantly in such a fire-fighting mode.

Thinking across

Thinking across is the capability to cross boundaries to learn from the experience of others so that we could garner new ideas and develop better solutions.

The cpability to think across arises from an acceptance that good ideas, knowledge and interesting perspectives do not always come from within, that the experiences of other organizations, industries or countries can hold lessons. Thinking across recognizes that breakthrough innovations often happen as a result of exposure to interesting experiments in other communities, taking apart these ideas and re-assembling them in new combinations. This capability is underpinned by the belief that the uniqueness of one's context is not an acceptable reason for not learning about other perspectives and approaches.

Instead, uniqueness of context should focus the mind even more deeply on learning, so that the main principles and cause-and-effect logics of particular practice may be distilled and then judiciously applied to the local circumstances.

Thinking across helps people to identify and overcome their own blind spots, enabling them to see their own policies in a new light, question their own practices, and encourages them to see how new connections can be made and how different ideas may be recombined to create innovative approaches and solutions. The intent is not simply to imitate best practices. Effective thinking across entails developing a deep understanding of why others adopted different approaches to similar issues, and how their history and circumstances influenced the selection of policies and the design of programs. Thinking across is not just knowing the 'what's'; it involves also understanding the 'whys' - why certain options worked and why others did not. Thinking across is a dynamic capability that introduces fresh ideas and innovations into an organization, enabling the organization to change and adapt to the environment.

Our professional training and functional experience give us deep skills and expertise in an important business area, but at the same time can also blind us to other effective ways of understanding and resolving issues.

At the extreme we may unconsciously dismiss other possibilities because simply because they are not how we perceive these issues or they are not our preferred approaches. It is our mindset that prevents us from learning and collaborating with different groups. When we recognize and value the differences in perspectives, approaches and expertise that are possessed by other departments, organizations and cultures, we will then take the time and effort to listen, observe and learn from their experiences. Such cross-learning underlies the real potential for inter-organizational partnerships and collaboration.

The combination and integration of difference ideas, knowledge and experiences from various people in different organizations into new and interesting business models, policies, products and practices is the great untapped potential of innovation today. That is why thinking across is an important capability for innovative decision-making, but also why it is so rarely practiced.

For effective thinking across, leaders need to take on new innovation roles, such as an anthropologist, an experimenter, a cross-pollinator, a set designer, and a storyteller. They should be confident and comfortable enough to go beyond familiar domains to look for different ideas, recognize patterns and build the intellectual and social linkages so that these new ideas are not rejected too early and too easily. Leaders with thinking across capabilities become knowledge brokers who can span boundaries, build linkages to distant communities and grow social networks for learning and interactions. In Short, they become a conduit for the flow of new knowledge to their institutions. The sharing of information and experiences in the leaders' social networks gives them knowledge of tried and tested approaches, albeit in a different country, domain or culture.

Driving triple-loop thinking

Innovative decision-making requirs the embedding of the capabilities of thinking ahead, thinking again and thinking across into the strategies and policies of business organizations and public sector institutions so that there is continuous learning, execution, innovation and change. The three thinking capabilities have to be embedded into the approach for policy and strategic choice, execution and evaluation for effective change to become a reality.

Only then can chosen paths go beyond the imprint of the founders to create innovations in strategies and policies to meet the new requirements for success. Business leaders and managers have to make deliberate investments in innovative decision-making by developing their people with the triple thinking knowledge, skills and attitudes.

Only people can adapt and change within a context, and also consciously decide to reframe the context that may lead to the reconfiguration of assets and capabilities in an organization. Making good decisions and choices require that the organizations' leaders and managers possess the necessary motivation, attitude, values, intellect, knowledge and skills to envision the future, develop strategic options and select paths that give the organization the greatest scope for survival and success. Unless the leaders and managers model and practice the triple thinking skills, innovative decision-making will not become a reality in their organizations. Processes are needed for getting things done in a coordinated and consistent manner, whether regular routine transactions, formulating and implementing policies, or inducing strategic renewal. Where there is no defined process, however broad or narrow, an organization would not be able to perform a required task even if the individuals in the organization have the knowledge and skills to do so.

Thus, organizations need to review their business process and deliberately build the triple capabilities of thinking ahead, thinking again and thinking across into the business operations of the enterprise. Do the strategic planning and budgeting exercises require and support thinking ahead? Does the quarterly business review encourage and stimulate thinking again? Do business missions and benchmarking inculcate thinking across in our people and products? Do we encourage cross-functional collaboration to achieve innovative and breaking thinking across in designing new products and customer experience?

Even when there are defined processes, they need to be made agile through continual review and redesign to ensure that they are able to achieve their intended outcomes and not become outdated because of changing circumstances and changing technologies. Innovative decision-making happens when leaders develop their people with the skills to think ahead, think again and think across, and drive triple loop thinking into their business processes.