It would not be surprising if I told you that the business world is complex. You may vividly recall the number of fires you deal with on any given day to agree with me. But if you measure the complexity of your business world by the sheer number of things you have to deal with, then think again. What any one manager sees, experiences and touches directly is a minuscule part of the business world for a company. The reality is a lot more complicated. And to deal with such a reality, you automatically use modeling. In fact the better you are at modeling the world, the better manager you will become.
Complexity of the Business World
The reality is complicated because your world is not merely a set of interconnected pieces like customers, suppliers, business rivals and stakeholders. It is a much more complex world with different levels. Your business exists in the context of an industry and a company. The industry exists within the framework of an economy and a geography. Your enterprise exists in the structure of a governance mechanism. In short, your world exists as a network of entities, concepts, and levers. The interconnectedness of these is the real cause of complexity.
Two Methods of Dealing with Complexity
So how can you deal with complexity? In fact, you already deal with it in two ways. First, you shut off most of the information and focus on a small set of things. Second, your use modeling in a subconscious manner.
To understand how you deal with complexity using these two mechanisms let me take you through a complex decision you make every day. When you are getting ready for your day, you have to choose what you will wear. There are thousands of combinations of clothes you can choose. And then there is the issue of what you are doing during the day and who you are meeting that day. What are the plans for the evening and other similar considerations? It can be a mammoth decision-making task that you breeze through every morning. You do it because you ignore most of the combinations of clothes and focus on a handful of them. Second, you use modeling in your mind to connect a small set of clothing sets with what they mean and what you are planning to do that day.
Obviously, the world of business is a lot more complicated than this simple example I shared with you. But the beauty of the mechanism is that you can deal with an ever increasing complexity using these two mechanisms. As long as you focus on the right things and understand the vital connections between critical parts of your business world, the increasing complexity shouldn’t matter.
A Fundamental Question For All Managers
But the core issue is how do you focus on the most important pieces and ignore the rest? And how do you understand the world? The answer boils down to your mental models. A model is a reduced form of a complex system. Just as a model airplane gives you a sense of what an airplane is like without incorporating every detail of the aircraft, your mental models reduce the world into a simple model. Using that model, you understand and make meaning of the world. And as a result, you make decisions with ease.
While you make a decision in a complicated situation with ease using your mental models, someone else without those models will become paralyzed with the sheer number of data points and an unending list of connections between entities and concepts in your world. So building the right mental models is the key to being an effective manager.
Mental Models Help You Speed Up Your Sense Making
Many years back I was responsible for a custodial services business. One part of my role was to ensure that we meet the revenue and profit targets every month. One of my team members used to bring the revenue data to me. He used to be totally awed by the fact that I would look at a spreadsheet printout with dozens of numbers and within a matter of 30 seconds point out three issues in those figures. I did it the same way as millions of managers do in the same situation. They use mental models of the business and how it reflects on data. It is similar to what an airplane pilot sees on that very sophisticated dashboard. You and I will panic if we had to make sense of that maze of switches. But the pilot does it with ease. She uses accurate mental models to focus on the most important things.
When Metal Model Become Counterproductive
Although mental models can help you deal with a complex world, they can sometimes become counterproductive in a rapidly changing world. The reason is that if the world is changing, your old mental models may become obsolete. In fact, they may no longer serve you. When your mental models are wrong, outdated, or flawed, your decisions will also be flawed.
Two Fold Imperative For Your Career Success
As a result, as a manager, you ned to undertake two critical task on a regular basis. First is to build effective mental models and second it make sure they remain relevant current. We all use mental models somewhat automatically. But rarely do we update or change our old mental models. At least not until we face a massive failure. Nintendo was making the same game consoles like Xbox and PlayStation until it realized that its mental models are not working for itself. At that time, it changed the rules of the game by using a new set of mental models. It created Wii.
Keeping Mental Models Current
How do you continue to update mental models? First is to become fluid in your use of mental models. Second, is to undertake an exercise in mental modeling in a deliberate manner. You can do both by following what I call the process of strategic thinking. I have seen people in my programs on strategic thinking become fluid and adept at building and changing mental models.
Learn More About Mental Modeling
I talked about strategic thinking methods in my recent podcast episodes. You can listen to the episode on flawed thinking methods to see how old and outdated mental models can undermine you. You can also listen to the podcast on strategic thinking approach to understand how to undertake this methodology of yourself.
In short, the quality of your mental models will determine the quality of your managerial decisions and your career success. And thus you need to focus on your mental models to ensure long-term career success.