Do not adjust your mind – there is a fault with reality

The title of this blog is a quote from famed Scottish psychiatrist R.D. Laing, a controversial and unconventional practitioner, whose progressive methods caused controversy in the medical profession, but later radically changed perceptions of mental health around the world. I thought it captured the essence of the context in which we are trying to shape our current business thinking.

When patterns are broken, new business worlds emerge. When things come apart, there is always the opportunity to put them back together differently. This has become our new lived business reality. It feels like we have been dumped rather unceremoniously into a strange in-between state, a place filled with tensions, unknown unknowns and paradox.

COVID-19 has wreaked havoc.  We are practising social distancing, working from home and venturing out again as lockdown is eased. Things are eerily different, yet the same.  Most businesses are highly vulnerable, especially embryonic startup ventures. How can we become more effective in making sense of uncertainty in these circumstances, to accept that the future is complex and unpredictable, and that there is no certainty, and everything is more fragile?

We all need a scaffolding to build some sort of framework to hang onto in order to help make sense of stuff. We are all in uncharted and turbulent waters together. All answers are, to be honest, guesses, transient at best. Questions matter now. A key question I’ve been posing myself is what do you do when you don’t (or can’t) know what to do?

It is hard to make sense of this pervasive, perpetual uncertainty. Despite having a clear sense of my own personal direction, it’s hard to articulate a near term focus and objectives to aim for. Some days I feel trapped by busyness, yet I make no real progress. I’m not sure if this is a personal fuzzyness, or if I am caught up in the macro situation.

Now as we emerge from lockdown, there are billions being poured into business rescue schemes, providing a safety net for recovery. But it’s just an illusion that we have more time to think, more space to craft a reboot strategy. The reality is very different: most businesses are struggling to build and maintain a framework with boundaries for thinking and doing, decision making and a sense of timing.

Talking to many startups, founders are putting off essential decisions which have immediate impact and consequences, while spending hours discussing things like rebranding. We are avoiding important decisions on the now, instead dithering on details of future issues that in reality will have little impact in the dysfunctional reality of today. One thing we cannot afford now is paralysis. Waiting and seeing, moving deck chairs around on the Titanic is the worst thing we can do. We need decisive action, even when we don’t have sufficient information to guide our actions. But this is easier said than done.

We all need to let go of the need to feel that we need to make the right decision. Rather than correctness, ask yourself: with what I know right now, what is the next best action I can take?. The most important thing now is to keep moving, don’t get stuck. It might feel like we are in chaos, but take a step back, it’s more about being confused,  overwhelmed and under informed at the same time. There are so many different opinions and sources of information and advice, we feel stuck between overly rigid constraints and no constraints at all.

So how do we step out of this virtual reality that looks like a wash-rinse-repeat groundhog day, with perpetual fog clouding everything? Here’s a suggested decision-making framework.

On 12 February 2002, Donald Rumsfeld, then US Secretary of State, used an until then little known framework to help him in making the case for the invasion of Iraq: the Knowns and Unknowns framework. I think it is fair to say that the reception by the press was mixed: some accused him of playing with words with little meaning, while others saw method in what he was trying to do.

The Knowns and Unknowns categorisation has been used since ancient Greek times. It is a powerful tool to surface what we know and don’t know about a problem. The simplicity of the approach is deceiving, but can help us to unlock our current decision paralysis and frame our business thinking to the new situation:

– what do we know already (known knowns)?

– are we aware of our assumptions (known unknowns)?

– what about biases and unconscious decisions (unknown knowns)?

– are we conscious of what we are not exploring (unknown unknowns)?

The knowns and the unknowns have to be treated in very different ways. We need to adapt our decision-making approach to the type of knowledge, and our gaps in knowledge. If you are working with your unknowns, you need to use exploratory techniques: How might we surface some of those Unknowns? How might we prepare for the surprises ahead? If you are working with what you already know about a problem, you have to work in an inductive way – the how might we approach: How might we use those facts to learn new things? How might we test our hypotheses?

NASA first used the framework as part of risk analysis in space missions, especially to uncover Unknown Unknowns, in evaluating the risks in the return journey of the Space Shuttle. They concentrated on moving the unknowns to the known realm. It is believed that it was a senior engineer from NASA that told Rumsfeld about the framework.

At its core, the way of using the Knowns and Unknowns is simply as a reminder to take all forms of knowledge into account. By doing this, we make the problem space larger and so the solution space also becomes larger too. It’s not about making the right decision, rather the best decision under the circumstances. The value of the approach comes from using a combination that allows you to surface all knowledge and lack of it, and thus mitigate cognitive bias, false assumptions and misguided guesses.

So, how would you apply this to your startup today?

Known knowns

  • Known Knowns (facts): use data to check the facts, the things we are aware of, that imply risk, but since we know them can be measured.

Facts are Known Knowns, with them you generate more knowledge. Lateral thinking techniques, like analogies, allow you to see these knowns in a different light, to create a parallel reality from the one you know. The goal is to create something valuable and new from these facts to give insight to do something new from that which is already being exploited.

Known Unknowns

  • Known Unknowns (hypotheses): things that we know that we don’t know can be confirmed or rejected with measurement to determine the risk.

With the Known Unknowns you want to create hypotheses in a relevant context. A good way that translates your thinking here is creating quick sketches or diagrams with potential solutions that lay out your thinking, and then you then need to pass through the filter of a sense check with either your team or test with users. These are basically just ideas or thoughts based on existing knowledge, ‘thinking out loud’ so to speak, ensure you don’t let bias state them facts.

Unknown Knowns

  • Unknown Knowns (our intuitions): use data you trust to put them aside and close the gaps and nonsense contradictions.

If you want to unravel Unknown Knowns, you need to speak your mind aloud without too much structured thinking. Brainstorming with your team fulfils this, the presence of a group is important, because something that one person says serves as the catalyst for others to join in and surface related facts. The technique also removes closed, personal agendas, and enables rapid collective collaboration. Be mindful to avoid groupthink though.

Unknown Unknowns

  • Unknown Unknowns (it can be anything!): look for patterns and outliers about things we don’t know that we don’t know – these are the dangerous things.

This is the tricky one! Unknown Unknowns are often dismissed and left behind as being ‘beyond our control’ and not worth spending time on. However, in reality this is what most startups should think to uncover innovation opportunities and be the source of great insight. By exploring the gaps in our data in an open-minded way, we can recognise patterns and hidden behaviours that might point to opportunities to solve very unique problems. That is the kind of insight that takes you on big leaps to understanding the problems and to creating products that solve them.

The best startups consistently focus on the known unknowns, which is a mountain you know you have to climb, but you haven’t yet found the path. Sadly, many do the easy stuff and don’t maniacally focus on the hard parts.

First, a startup begins with a problem a small group of users have. You envision a product that might solve it, and build many versions of the idea until that small group can’t live without it. That’s your first Known Unknown. You know what you think they want; then you have to prove it. It’s all that matters. Hopefully, you’ve enough capital to iterate enough times to figure it out.

Your next job is to find scaleable repeatable ways to grow. You need to figure a version of this path. Anyone can put massive numbers to put on a top-down TAM slide. The hard part is the bottom-up plan, outlining how you take on a large market, one bite at a time. That’s your second Known Unknown.

Entrepreneurs must be focused only on the Known Unknown, you don’t have time to focus on the stuff that doesn’t matter. If a problem has moved from a Known Unknown to a Known Known, where you understand the what and the how, you’ve got product-market fit and now it’s time to think about differentiation and innovation.

The reality is that we live in a business world our questions create, yet I think most of us would say we live in worlds our answers create. But startups exist because of asking new questions and focus on finding new answers to new questions. In the volatile and fast-changing context of post-lockdown, what we think we know today may not be true tomorrow. Discovering new questions, by using new techniques to shape our thinking, will broaden our perspective.

The Known and Unknowns approach enables oblique or naïve perspectives from adjacent fields the chance to inform our thoughts, and radically different insights and perspectives will emerge. The right question takes you right to the essence of a problem, and helps you solve it. For example, working out what your startup’s defensibility is, is far more useful than defending the addressable market size. The wrong question wastes time:  What cool feature should we build next? is the wrong question, when your onboarding funnel itself is leaky.

You can never completely eliminate your blind spots, but with this technique you can reduce them enough to improve your performance and spare from the mistakes that in hindsight should have been obvious. The framework opens up possibilities and forces you to think more holistically. It’s hard, at times, I have to force it as a discipline and not be put off by doing some deep thinking that makes your head hurt!

Life might be a race against time but it is enriched when we rise above our instincts and stop the clock to process and understand what we are doing and why. A wise decision requires reflection, and reflection requires a pause.  Value questions, not answers, said Einstein. Being curious (as opposed to being opinionated) and asking questions will get us much further than looking for answers to known questions.

The head fox at the ministry for henhouses reports that as number of eggs increased significantly last month, there will be no further need to count chickens. Do not adjust your mind, there is a fault with reality.

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