Today’s political and business leaders are forced to make decisions in ambiguous, poorly defined and highly uncertain situations with incomplete information. Within this complex, volatile and rapidly changing environment, ambiguities rule the day.
The global environment was not always this uncertain. During the Cold War – when the US and the USSR led opposing political, economic and military blocs – the US attempted to solve a fairly simple (albeit extremely important) problem. It needed to determine how many Soviet warheads there were, where these missiles were located, and their possible targets.
The US’s problem was a “puzzle”, in that it had an answer. The US military knew the answer existed; it just needed to be found. The standard problem-solving approach was to acquire more data – to literally generate more and more dots on a map until the density of data turned into insight. Unsurprisingly, the US embarked on a massive intelligence gathering effort that included flying spy satellites over suspected areas and intercepting communications to generate enough “dots”. (Incidentally, at its 1989 peak, the USSR is believed to have had 1,379 launchers with 7,031 warheads.)
While puzzles such as the USSR’s missile count represent one extreme of the problem-type spectrum, the other extreme is something I refer to as a “mystery”. Mysteries are fuzzy; they are ambiguous, uncertain and probabilistic. Mysteries do not have answers. Instead, the best one can hope for is to generate an understanding of the various scenarios that may play out, and the ramifications of each development.
Think about the rate of Japanese inflation next year. In a gross simplification, you could consider running scenarios, such as differing oil prices and currency fluctuations between the Japanese yen and US dollar, in an attempt to understand the likelihood of inflation. But you can analyse all the data you want – heck, you can even interview Shinzo Abe – unfortunately there is no definitive answer to a mystery. Unlike a puzzle, where if you generate enough dots the answer is likely to emerge, to understand a mystery you need to connect those dots.
As the above examples illustrate, the correct approach to addressing a topic is contingent upon the type of problem. For puzzles, we need to generate dots. For mysteries, we need to focus on connecting the dots.
Understanding Dots
Leaders now operate in multiple spheres of interconnected domains with responsibility to nested layers of stakeholders that transcend corporate and geographic boundaries. As a result, there is a dizzying array of complexities and apparent contradictions plaguing today’s business environment. For example, as economic growth has resumed, central banks are threatening to alter their accommodating position, which could result in a financial sell-off. That’s right; the positive news of economic growth now creates the bad news of falling markets.
It is not surprising that navigating such uncertainty and interconnected complexity is difficult for business leaders. In this environment, how leaders make decisions becomes even more important. Leaders need to be comfortable understanding the nuances of both puzzles and mysteries, and adopt appropriate approaches to tackle them. However, until recently, most leaders have tended towards specialising only in puzzles, with disproportionate attention to developing dots. The time has come to emphasise connecting them as well.
Hedgehogs seem to be Winning
Despite the need for broad thinkers with diversified skills and the ability to draw from different domains to address new and evolving problems, we have been training our future leaders to become increasingly specialised. Many people and organisations see domain expertise as an enduring source of advantage in today’s competitive environment.
By valuing expertise so highly, governments and corporations have placed a tremendous premium on depth rather than breadth. In our quest to capture this excess value, we have heavily discounted the value of breadth. Surely a better balance exists.
In his 1953 essay The Fox and the Hedgehog, philosopher and scholar Isaiah Berlin posited that there are two fundamental human types: hedgehogs and foxes. Drawing on an old European fable, Berlin contrasted hedgehogs, who “relate everything to a single, central vision”, with foxes, who “pursue many ends… connected, if at all, only in some de facto way”.
Berlin’s classifications are really a story of specialists versus generalists. The move towards specialisation can be clearly seen in the sphere of education, where career-relevant skill development dominates. As evidence, consider that in 1991 the most-popular undergraduate programmes of study at Yale University were History and English, with 165 students graduating with an English degree. In 2012, only 62 students graduated from Yale with an English major. Anecdotal evidence from students suggests parental pressure and “job market realities” have been driving this trend. For the class of 2013, the most popular majors among graduating seniors at Yale were Political Science and Economics. If this is a dynamic taking place within a leading liberal arts college, one can only imagine the severity of the shift within education at large.
Hedgehog logic has boxed out foxy thinking – with students becoming increasingly inter-ested in learning what to think rather than how to think.
The story does not stop there. It continues on through professional development post-graduation. In the 60 years since Berlin penned his essay, hedgehogs have come to dominate academia, medicine, finance, law, and many other professional domains. Research conducted by executive recruitment firm Spencer Stuart found that 33% of the CEOs heading companies in the S&P 500 held undergraduate engineering degrees. There are also literally hundreds of tech-industry CEOs that have computer science backgrounds, and more executives trained in business administration than any of us can count.
In some sense, this is not surprising. Education and professional development has responded to competitive incentives. Business thinkers, organisational psychologists and leadership trainers point to domain expertise as an enduring source of advantage in today’s competitive environment. The logic is straightforward: learn more about your job, acquire expert status and you will go further in your career.
The Case for Generalists
While the current environment appears to favour the specialist, there are two reasons I believe the future belongs to the generalist. First, generalists appear better suited to navigate mysteries, while specialists may be less well suited to tackling the increasingly fuzzy problems facing leaders today.
Consider the oft-cited work of Dr Philip Tetlock. Over 20 years, he asked 284 mainly political experts to predict the probability of various occurrences – both within and outside of their areas of expertise. Analysis of 27,451 forecasts found that experts are less accurate predictors than non-experts in their area of expertise.
Analysis of 27,451 forecasts found that experts are less accurate predictors than non-experts in their area of expertise.
Tetlock concluded that when seeking accuracy of predictions it is better to turn to non-experts who – like Berlin’s prototypical fox – “know many little things, draw from an eclectic array of traditions, and accept ambiguity and contradictions”. Ideological reliance on a single perspective appears detrimental to one’s ability to successfully navigate poorly defined situations, which are more prevalent today than ever before.
Second, our dynamic global economy drives increasing interconnectedness, with seemingly distant and unrelated events affecting each other. For example, recent developments in China’s economy include a rapidly decelerating growth rate driven by slowing capital investments. Given the commodity linkages between the Chinese and Australian economies, it should not be surprising that changes in Chinese capital investment ripple into the Australian mining sector.
But what if we consider broader ramifications? Might Australia’s housing market (seemingly driven by local dynamics) be vulnerable to developments in China? Consider the following. Global job hunters are attracted by high-paying mining jobs in Australia, which fuels significant immigration. As a result, demand for housing grows, and housing prices and incomes rise concomitantly. The resulting price strength emboldens Australian banks to lend more aggressively, comforted – incorrectly, I believe – by the assumption that the price trend will continue.
Is it then possible that Australia could suffer a systemic banking crisis as a result of a Chinese slowdown?
Future Proofing
The stakes are high. Globalisation, economic and financial interconnectedness, and international resource-based linkages are the reality of today’s socio-political economic existence. National economies and large corporations are increasingly in need of dynamic, flexible human capital that knows how to think, not what to think.
Technological innovations have effectively commoditised information. As a result, value has shifted from generating the dots – something a specialist is well suited to doing – to connecting them, which is a more pronounced skill among generalists. Specialists are still needed. Without specialist-generated dots, generalists would have nothing to connect. Nonetheless, while it may seem axiomatic that tomorrow’s surprises are likely to be new and unexpected, our preparation for facing them seems misaligned. The fact that our world is more mysterious means we need to be less rigid and embrace the power of generalist thinking.
General Implications for Human Capital Management
Hiring
Perhaps recruiters need to look more favourably upon liberal arts graduates. Should Asian or multinational corporations begin hiring philosophy, arts, and literature majors to diversify their human talent’s perspective? If “the ability to learn is the most important quality a leader can have”, as noted by Padmasee Warrior, Chief Technology O-cer for Cisco Systems, then graduates from liberal arts programmes will become increasingly hot commodities.
Given the breadth of knowledge presented in many liberal arts programmes, most graduates draw on different perspectives. They are perhaps better placed to embrace uncertainty, often developing solutions within it rather than seeking to abolish inherent ambiguity. Forward-looking companies should begin hiring liberal arts graduates from schools like the recently launched Yale-NUS College, the first liberal arts college in Singapore. Such programmes provide students with multiple lenses and tools with which to interpret and attack new problems. This could materially reduce organisational groupthink. Further, when evaluating candidates, diverse experiences – across functions, companies and industries – should be viewed as evidence of possible dot-connecting skills.
Talent Development
When setting development plans for potential leaders, emphasise variety of experience over depth of knowledge. Support and encourage those talents who demonstrate combinatorial skills, as well as those who develop and integrate disparate perspectives. Force rotations amongst employees in order to take ambitious professionals out of their comfort zones. As seemingly illogical as it seems, place your rising marketing stars in charge of an engineering project. Provide opportunities for operations executives to interface with – if not lead – public relations.
By developing talent with the explicit objective of balancing depth with needed but tough-to-get breadth, home-grown talent pools will be larger, more accomplished, and more effective at leading – making organisations less vulnerable to labour market conditions. Consider the generalist approach to be an ongoing process and support it constantly.
This article was first published in the print version of HQ Asia, Issue 7.