Systems mindset examines the quality of decisions, not just outcomes

The default mindset for most people (or teams, organizations, etc.) is oriented around outcomes: what worked vs. what did not work. The most strategic teams develop a systems mindset that probes not merely the outcome, but the decision-making process that led to it. Bahcall explains the difference in Loonshots:^[1]

The weakest teams don’t analyze failures at all. They just keep going. That’s zero strategy.

Teams with an outcome mindset, level 1, analyze why a project or strategy failed. The storyline was too predictable. The product did not stand out enough from competitors’ products. The drug candidate’s data package was too weak. Those teams commit to working harder on storyline or unique product features or a better data package in the future.

Teams with a system mindset, level 2, probe the decision-making process behind a failure. How did we arrive at that decision? Should a different mix of people be involved, or involved in a different way? Should we change how we analyze opportunities before making similar decisions in the future? How do the incentives we have in place affect our decision-making? Should those be changed?

System mindset means carefully examining the quality of decisions, not just the quality of outcomes. A failed outcome, for example, does not necessarily mean the decision or decision process behind it was bad. There are good decisions with bad outcomes. Those are intelligent risks, well taken, that didn’t play out. …

Importantly, the most strategic teams do not merely analyze failures (i.e. “What went wrong, why, and what about our system made it possible?”), but also analyze successes (i.e. “What went right, why, and are we sure that it wasn’t due to luck?”). Bahcall continues:

Evaluating decisions and outcomes separately is equally important in the opposite case: bad decisions may occasionally result in good outcomes. You may have a flawed strategy, but your opponent made an unforced error, so you won anyway. You kicked the ball weakly toward the goalkeeper, but he slipped on some mud, and you scored. Which is why probing wins, critically, is as important, if not more so, as probing losses. Failing to analyze wins can reinforce a bad process or strategy. You may not be lucky next time.

#systems-thinking #strategic