September 16, 2020

Market Analysis

Practical Wisdom and Satisficing: The Keys to Placing the Right Tech Bets in an Uncertain World

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I’m not sure about you, but keeping track of all the new “names” for this period in which we’re living is getting a bit exhausting.

I’m as guilty as the next guy when it comes to promulgating them. I talk endlessly about the Digital Era, the post-Industrial Age, the New Human Age (I’m supposed to be writing a book about that one!), etc.

Of all these, however, the most apt may be this: the era of continuous disruption.

While the pandemic and resultant economic crisis is the most recent and visceral upheaval to hit us, we have been in a state of near-constant disruption — or at least threat of disruption — for a long while now.

While this steady stream of disruptive threats has had many consequences, one of the greatest (but also least discussed) may be its impact on your decision-making process.

As an enterprise leader, you are tasked with making critical decisions about the direction of your organization. Especially when it comes to leveraging technology to solve problems, drive innovation, and create competitive advantage, you are charged with placing large bets that may dictate the future of your organization.

And the stakes are only increasing.

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The combination of these increasing consequences, plus the rising sense of disruption-induced uncertainty, can leave you paralyzed and wondering how to proceed. However, we may find the answer to this conundrum in two ideas, one ancient and one relatively modern: practical wisdom and satisficing.

Placing Bets in the Era of Continuous Disruption

It wasn’t always this hard.

When I was running IT operations (yes, I know it was over twenty years ago!), the equation was pretty simple. A business need would lead to a technical challenge, which would lead to us selecting some technology to solve it.

Our decisions’ relative impact was consequential, but mostly measured in terms of increased or lost efficiency and return.

Today, the consequences are much more extreme, and sometimes existential.

The technology decisions you make now dictate almost everything about how your organization functions and competes in a rapidly shifting market. And you have more options when making those decisions than ever before.

Throw in heaping servings of economic, societal, and technological uncertainty, and it should be no surprise that these bets are getting ever-harder to make.

How Practical Wisdom Can be our Modern Decision-making Framework

This current state of affairs is demanding that we re-evaluate the enterprise decision-making process. Traditional approaches of assessing simple ROI or technical fit are not enough in an environment rife with uncertainty.

Writing in Behavioral Scientist, professors Yael Schonbrun and Barry Schwartz contend that in this period of disruption, and the uncertainty it brings, we can use what Aristotle called practical wisdom to cope.

“In our environment of competing priorities and rampant uncertainties, we can turn to a particular kind of judgment that Aristotle explored in his classic Nicomachean Ethics,” Schonbrun and Schwartz explained. “This kind of judgment, called ‘practical wisdom,’ means knowing how to balance conflicting aims and principles. This kind of wisdom acknowledges that uncertain risk cannot be eliminated, but guides us in becoming wiser about how we manage it.”

They explain that there are four essential elements when applying this ancient idea, and I find them particularly useful for enterprise decision-making.

First, the application of practical wisdom begins with data. You must gather it to understand what is known and unknown — and to understand the scope of your control.

But the data cannot be viewed in isolation. It also requires that you apply empathy to make it applicable. “Those data are a critical place to begin. But wisdom also depends on something besides cold, hard facts,” they shared. “It requires lived experience and knowledge of the people for and about whom we are making decisions.”

I can summarize the balance of the elements as “embrace the uncertainty.” They explain that we are prone to black-and-white, dualistic, and rigid thinking in times of stress — and that we must resist it if we are to apply practical wisdom.

Yes, you need to create rules to help you and your teams manage in a period of continuous change, but you must also be malleable as circumstances shift. Here again, empathy is critical.

Understanding how the decisions you make will affect your customers, your employees, and others is essential — and rapidly leads to a recognization that there is no perfect answer, particularly when it comes to the technology you apply to any given situation.

It is only by embracing that there will never be a “perfect choice” that you will ensure that you maintain the mental dexterity to avoid vendor, technology, and cultural lock-in.

Why the Efficiency Impulse Will Lead You Astray

However, the challenge that you and your team will likely face is that you have been programmed to seek out that perfect choice.

Creating value in the Industrial Age was all about efficiency and optimization — or what economists call utility maximizing. The theory goes, according to Dr. Shahram Heshmat writing in Psychology Today, that rational individuals will “approach decision-making with the goal of achieving the best possible outcome. In order to accomplish this, they are willing to engage in an exhaustive search of all possible options, investing substantial time and effort in the process.”

This approach was the foundation of the Industrial Age operational mandate — and what we are most inclined to fall back upon during times of uncertainty. When all goes to hell, buckle down, optimize everything, and ride it out.

The problem is that this efficiency impulse in which you strive to make the perfect choice to maximize your outcome is the exact opposite of what you need in times of uncertainty — particularly in this era of exploding complexity and options.

Instead, the better approach is to move away from maximizing and embrace a decision-making approach optimized for uncertainty. “What should we do in the face of this radical uncertainty? When making decisions, instead of asking ourselves which option will give us the best results, we should be asking which option will give us good-enough results under the widest range of future states of the world,” explained professor Schwartz in his Psyche article Why Efficiency is Dangerous and Slowing Down Makes Life Better. “The term used to describe this approach to decision-making is satisficing. And satisficing with an eye toward a radically uncertain future might be called robust satisficing. Satisficing is a form of insurance.”

It may seem counterintuitive, but by satisficing you are building in a degree of inefficiency. That inefficiency, however, creates resiliency against the unpredictability of an uncertain world.

Intellyx Take: Placing the Right Tech Bets

As you contemplate the enormous technology bets you need to make amid all the uncertainty of the world as it is today, it’s natural to fall back on so-called rational decision-making approaches.

But those approaches will lead you exactly where you don’t want to go. Collecting and leveraging data empathetically, embracing uncertainty, and building in inefficiency may feel backward, but they will give you precisely what you need most during periods of disruption: options.

Adopting this mindset will also radically change the way you approach technology decisions. Focusing on good-enough, choosing adaptability over efficiency, and empathetically addressing the impact of technologies on all stakeholders rather than taking a purely functional or siloed view may lead you to a dramatically different architectural footprint.

Making this shift, however, will demand more than just a different set of technology purchases. It will require a mix of cultural transformation and courageous leadership. It will also mean changing how you apply your technology stack by putting current needs and future options on an equal footing.

Even with this approach, however, there will still be no such thing as a safe bet. Nonetheless, those enterprise leaders that understand and adopt the ancient principle of practical wisdom and the more modern philosophy of satisficing will be the ones that ultimately beat the house and come out on top.

© 2020, Intellyx, LLC. Intellyx publishes the weekly Cortex and Brain Candy newsletters, the Cloud-Native Computing Poster, and advises business leaders and technology vendors on their digital transformation strategies. Intellyx retains editorial control over the content of this document. At the time of writing, no parties mentioned in this story are Intellyx customers.


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