How to Measure Strategy Performance with a...
17/03/2025
Strategy Requires Sense-Making and Logic - Why People Struggle with These
Introduction
Strategy is often seen as the roadmap for success. It’s the plan that guides organizations toward their long-term goals. But creating an effective strategy isn’t easy; it requires the skilful combination of sense-making and logic.
Sense-making is the ability to interpret and understand complex situations, while logic is about drawing clear, reasoned conclusions. Together, they form the backbone of any effective strategic approach.
Yet, many people struggle with these foundational elements. Why? Because sense-making and logic require focused thinking, resilience against biases, and a structured approach to decision-making.
In this article, we’ll explore the role of sense-making and logic in strategy, why people often find these skills challenging, and actionable ways to improve them.
What is Sense-Making in Strategy?
Sense-making is the process of understanding and interpreting complex information to form a coherent perspective. In strategy, sense-making means understanding the broader business landscape, competitor actions, market trends, and internal data. It allows leaders to grasp “the big picture” and foresee potential opportunities or risks.
For example, a company entering a new market must make sense of various factors. These include:
– customer preferences,
– economic conditions,
– local regulations, and
– competitor positioning.
The ability to piece together these diverse insights into a clear strategy is what sets successful companies apart.
The Role of Logic in Strategy
Logic is a systematic way of thinking that helps in drawing rational conclusions from available information. In strategy, logic enables leaders to:
– weigh options,
– evaluate risks, and
– make decisions based on facts rather than emotions or assumptions.
Logic is a structured approach that helps to analyze complex problems by breaking them down into smaller, more manageable parts.
Without logical reasoning, strategic decisions are more likely to be impulsive or influenced by personal biases. Logic serves as the foundation of decision-making frameworks, such as SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, that ensure all angles are considered before committing to a course of action.
How Sense-Making and Logic Intertwine in Strategic Thinking
Sense-making and logic work hand-in-hand. While sense-making provides the context and deeper understanding of a situation, logic guides how we process this information to reach sound decisions. A strategic leader uses sense-making to interpret the big picture, then applies logic to determine the best path forward.
Consider a scenario where a company faces a sudden drop in sales. A strategic leader might first use sense-making to identify underlying causes, such as market shifts or supply chain issues. Then, through logical analysis, they would decide whether to invest in new products, adjust pricing, or improve marketing efforts.
The Impact of Poor Sense-Making on Strategy
When sense-making is flawed, strategies suffer. Decisions based on incomplete or incorrect understanding can lead to missed opportunities, inefficient resource allocation, and ultimately, financial losses. Take the case of companies that failed to adapt to the rise of digital technology—by not fully making sense of the digital shift, these organizations were left behind by competitors who adapted more quickly.
How Biases Affect Sense-Making in Strategy
One of the biggest challenges people face with sense-making is overcoming cognitive biases. Cognitive biases are mental shortcuts that influence how we process information and make decisions, often leading to inaccurate or irrational judgments. They are unconscious, automatic processes that can be caused by various factors, including heuristics, social pressures, and emotions.
Essentially, biases are tendencies to lean in favour of or against something, potentially affecting our actions and decisions in an unfair way. Biases play a significant role in distorting both sense-making and logic.
Some common biases affecting strategic decisions include:
– Confirmation Bias: Focusing only on information that supports existing beliefs, making it hard to objectively evaluate all the facts.
– Availability Bias: Giving more weight to recent events or easily recalled information.
– Anchoring Bias: Relying too heavily on the first piece of information encountered.
Recognizing and minimizing these biases is essential to making objective, logical strategic decisions. Self-awareness and diversity of thought within teams are powerful tools to counteract biases.
Additionally, the overwhelming amount of information available today often leads to analysis paralysis, where decision-makers feel stuck because they cannot process everything effectively. When people struggle to make sense of their environment, strategic clarity suffers, and decisions become rushed or misinformed.
Emotions As an Obstacle to Logical Thinking in Strategy
Logical thinking in strategy isn’t always straightforward. One major obstacle is the influence of emotions on decision-making. Emotions can cloud judgment, leading people to ignore rational analysis in favour of “gut feelings” or instinctive reactions.
Another common barrier is the lack of training in critical thinking, which makes it harder for some to evaluate arguments logically.
For instance, a leader might have a strong personal attachment to a product, causing them to overlook declining sales trends. This emotional attachment can interfere with logical analysis, resulting in strategies that are not aligned with current market realities.
Building Better Sense-Making Skills for Strategy
Improving sense-making involves honing observational and analytical skills. Start by practicing active listening and paying attention to diverse viewpoints. This broader perspective helps in understanding complex issues from multiple angles.
Developing a habit of continuous learning—through reading, attending industry events, and networking—can enrich your sense-making abilities.
Other techniques include focusing on data trends and patterns rather than isolated events. This approach helps avoid the common pitfall of overreacting to short-term fluctuations and ensures strategies align with long-term trends.
Enhancing Logical Thinking in Strategic Planning
Building logical thinking in strategy requires a structured approach. One effective method is to adopt decision-making frameworks such as the PDCA Cycle (Plan-Do-Check-Act) or Root Cause Analysis. These frameworks encourage a step-by-step process, helping you logically evaluate options and consequences.
Additionally, using visual tools like flowcharts or mind maps can help clarify complex strategic ideas, making them easier to analyze and refine. Investing in critical thinking training for team members can also build a stronger foundation for logical analysis in your organization.
How Leaders Can Support Sense-Making and Logic in Teams
Leaders play a crucial role in fostering a culture that values sense-making and logic. Encouraging open discussions, where team members feel comfortable sharing insights and challenging assumptions, is essential. Mentorship programmes that focus on decision-making skills can also help employees build these vital strategic skills.
Another effective method is implementing “post-mortem” reviews after significant projects. These reviews allow teams to reflect on their decision-making processes, identifying what worked, what didn’t, and how sense-making and logic was applied and could be improved next time.
The Role of Data in Enhancing Sense-Making and Logic
Data-driven decision-making has become essential in strategy. Quality data provides objective insights that support both sense-making and logical reasoning. However, it’s crucial to avoid data overload by focusing on relevant information that directly impacts the strategic goals.
Using AI (Artificial Intelligence), dashboards or other data analysis and visualization tools can simplify complex information, making it easier for teams to interpret and apply insights effectively.
Case Study: Successful Strategy Through Sense-Making and Logic
Let’s look at a real-life example. Netflix, for instance, revolutionized the entertainment industry by using sense-making to understand changing viewer habits.
In the first instance, they understood customers were unhappy with paying late return fees for DVD’s and found a way to eliminate them altogether.
Secondly, they recognized the trend towards on-demand content and logically shifted from DVD rentals to streaming. This strategy required careful observation, logical analysis, and bold decision-making—all elements that drove Netflix’s success.
Tools and Resources for Improving Sense-Making and Logical Skills
For those looking to improve these skills, several resources can be helpful:
– Books: “Thinking, Fast and Slow” by Daniel Kahneman and “The Art of Thinking Clearly” by Rolf Dobelli.
– Frameworks: Design Thinking encourages a structured, creative approach to problem-solving by focusing on user needs and iterative testing.
– Courses: Critical Thinking and Problem Solving on platforms like Coursera or edX.
– Software: Tools like Miro for mind mapping and IBM SPSS for data analysis
These tools can support continuous improvement in both sense-making and logical thinking, ultimately leading to better strategic outcomes.
Conclusion: The Leader’s Role in Driving Change
In strategy, sense-making and logic aren’t optional—they’re foundational. Without them, even the best-laid plans are prone to failure. By actively working to improve these skills, leaders can navigate complexity more effectively and make decisions that are grounded in reality.
Whether it’s through ongoing training, data utilization, or cultivating a culture of critical thinking, the journey toward strategic excellence begins with sense-making and logic.
If you need help with your business strategy, execution and\or change management, feel free to reach out to me. Start by getting a free 1-hour consultation below.
To your success.
KK Diaz
CEO and Business Strategist: A-Game Business
Need help kicking your business strategy into gear? Click the button below to get a FREE 1-hour consultation.
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