Strategic vision: why different perspectives matter

In this Italian-language video I say that you cannot do strategy without culture, and that to understand where to take a company you first have to understand the world it lives in. Here I bring in an ancient image, the hedgehog and the fox, and a study that really did measure which of the two reads the future better.

Video transcript (translated from Italian)

You cannot do strategy without culture.

To understand where to take a company, you first have to understand the world it lives in.

Strategic choices never come from data alone, but from the way we read society, languages, behaviors.

That is why, when I can, I spend a lot of time in places like libraries and museums: the New York Public Library, MoMA, spaces where thought and form meet.

All this to broaden my view, my outlook.

A business strategist has to know economics, design, sociology, art, communications.

They have to be able to read the connections between different things: a market trend, an exhibition, an algorithm, a social behavior.

Every business decision is also a cultural choice.

It is an expression of culture, because it defines a way of thinking and of being in the world.

And only someone with a broad vision can help companies not to limit themselves to the present, but to imagine the future.

Libraries and museums are part of the work

In the video I mention that in New York I spend a lot of time at the New York Public Library and at MoMA. Put that way it sounds like a personal habit, and in part it is. But there is a professional reason for it: a company’s decisions are made within a context, and you read the context with tools that no balance sheet contains. A change in consumer habits can show up in an exhibition, in a new way of living, in a word that starts to circulate, before it shows up in the quarterly figures.

A company’s choices depend on how the world is read, and the world is read better through many lenses than through a single theory.

The hedgehog and the fox

The image comes from a fragment by Archilochus, a Greek poet of the seventh century BC: “The fox knows many things, but the hedgehog knows one big thing.” In 1953 the philosopher Isaiah Berlin made it the title of an essay on Tolstoy, The Hedgehog and the Fox, which Adelphi published in Italian in 1986 in a translation by Gilberto Forti. Berlin divided writers and thinkers into two families. Hedgehogs relate everything to one central vision, a principle that explains it all. Foxes pursue many ends, even widely different ones, and grasp the world in its variety without confining it to a system.

For Berlin it was a distinction to be taken lightly, almost an intellectual game, and he himself warned that any classification of this kind, pushed too far, becomes artificial. For the people who run a company it is more than a game. Every company has its hedgehogs: the founder who traces every decision back to the idea they started with, the consultant who applies the same model to every company. Sometimes they are right, and their consistency is a strength. The problem begins when the world changes and the big idea goes on explaining everything.

Tetlock measured who is wrong least often

From 1984 to 2003 the psychologist Philip E. Tetlock, now at the University of Pennsylvania, collected the forecasts of nearly three hundred experts in politics and economics: tens of thousands of predictions about elections, crises, wars and economic trends. Then he checked who had been right. The results are in Expert Political Judgment, published by Princeton University Press in 2005.

Philip Tetlock followed the forecasts of hundreds of experts for years: those who reasoned with many ideas, Isaiah Berlin’s foxes, were wrong less often than those who had one big idea.

The most uncomfortable finding concerns fame. The experts most certain of their theory were often the ones most in demand with newspapers and television, because they gave clear-cut answers; and their forecasts were, on average, worse. The book’s publisher sums this up as an inverse relationship between the indicators of good judgment and the qualities the media prize most in a commentator. The foxes, by contrast, doubted themselves, combined information from different sources and revised their views when the facts changed.

The limit is one of scope: Tetlock studied political and economic forecasts, and his research says one precise thing. When the future is uncertain, those who reason through many lenses and are willing to change their minds are wrong less often than those who defend a theory. Business strategy is always made under conditions like these.

A broad view has to lead to a choice

That is also why a classical education in the humanities matters in work like mine: it makes it possible to hold the technical side and the cultural side together, and it is where my own path begins. In the video I list economics, design, sociology, art, communications. They are lenses to be used together on the same question.

Archilochus’s fox, though, runs a risk of its own, the opposite of the hedgehog’s. Someone who sees many things may end up just looking at them, and a company does not need a brilliant observer: it needs to decide where to go and what to stop doing.

A broad view is useful only if it leads to a choice: anyone who knows many things and does not decide remains no more than a good observer.

In the work on direction and priorities the different lenses serve exactly this purpose: to see sooner and better, and then to write down with the owners a few criteria for choosing, the ones that stay with the company even after the engagement is over. That is where the fox and the hedgehog stop being two families: you look at things as the fox does, and you decide with the firmness of the hedgehog. Business strategy, in the end, is this step from looking to deciding.

What to do and what not to do

• Before important decisions, look for points of view from outside your own industry.
• Be wary of explanations that trace everything back to a single cause.
• Revise an idea when the facts change, and say so openly.
• Do not mistake an expert’s confidence for the accuracy of their forecasts.
• Do not let the study of the context postpone the choice indefinitely.

Sources

• Philip E. Tetlock, Expert Political Judgment: How Good Is It? How Can We Know?, Princeton University Press, 2005 (new edition 2017). https://press.princeton.edu/node/7721
• Isaiah Berlin, The Hedgehog and the Fox: An Essay on Tolstoy’s View of History, Weidenfeld & Nicolson, 1953 (the line from Archilochus, in Berlin’s translation, opens the essay; Italian edition: Il riccio e la volpe e altri saggi, ed. Henry Hardy and Aileen Kelly, translated by Gilberto Forti, Adelphi, 1986).
• J. Scott Armstrong, review of Expert Political Judgment, International Journal of Forecasting, 23 (2), 2007. https://repository.upenn.edu/marketing_papers/50