42 does not exist!

There is no perfect answer.

In the book, The Hitchhiker’s Guide to the Galaxy, we come across 42 - the answer to the Ultimate Question of Life, the Universe, and Everything. An all encompassing answer. The answer to all questions that life has to pose!

For those who have not read the book, a pair of programmers ask a super computer Deep Thought to compute the answer to everything, and after a short deliberation of just 7.5 million years, Deep Thought arrives at the answer - 42. Nothing more, nothing less.

This utopian answer is what most managers are looking for! The one to solve them all, the one to rule them all.

An answer so simple, that you doubt whether it makes any sense at all.

Most strategy teams are filled with analysts because there is an overwhelming group of people who believe that you can analyze your way to success. It is all hidden, waiting to be unlocked by some amazing piece of analysis and modelling.

They push their analyst to put numbers behind a model so that they can justify their hypothesis. If you do not have data, let us make “intelligent” assumptions. Most of these assumptions are as intelligent as a piece of rock!

The teams keep toiling, consultants are called in, model after model is created. Numbers pile up, all to justify that the answer is perfect. There are no holes in the hypothesis.

Once the model is complete, the pay back period calculated, the growth rate double digit, the EBITA in line with industry expectations (even better), the hockey stick in year 3 of the strategy plan, the sojourn is complete!

Well let me tell you something - 42 does not exist! You cannot model your way to a strategy!

The only way is to go out there and test it, experiment by experiment, learning by learning, pivot by pivot.

This unhealthy obsession with analyzing your way to a perfect answer is fraught with missteps

- Crucial time wasted while competitors pilot and move ahead with real world learnings

- Unnecessary financial costs both internally due to resource waste and externally with large consultant teams

- Models are wrong in excess of 90% of the time

- Armchair theorists end up dominating strategy conversations rather than actual practitioners and implementers.

Even though the above might seem obvious, we see this repeated ever so often. Strategy planning every year heavily relies on business modelling rather than experiments. New CEOs appointments are usually accompanied with massive business modelling and external consultant teams staking out many midnights to conjure the perfect model.

What is worse, most such models are nowhere close to real outcomes. Revenue targets are missed more often than not, costs are always higher than envisaged. But still we indulge. One may question, Why?

Because we want assurance before we move forward in the new strategic direction. And what gives us comfort, NUMBERS. No matter how made up they are (which they are). Because what are ideas if they are not backed up by arbitrary numbers!

The chase for 42 is fruitless!

What I suggest instead is an experiment based approach. I am not against analysis and setting a general direction. What I am against is over analysis and needing to put a number behind every discussion for the sake of it.

I wrote about this approach in our series on Lessons from Nature. Our 2nd post in that series was Let it Bee, which talks about lessons from a bee colony on experimentation. Sharing the link below.

Create experiments to test your strategy. Run them and analyze the results. This is a better approach to determine your strategic direction rather than theoretical number crunching and betting big money based on made up assumptions.

Now you may argue that in some cases, like acquisitions, modeling is essential. I would say yes indeed but also know that most M&As fail. So does that mean most modelling is wrong? Maybe not but it does mean that good modelling is certainly not the answer!

Remember one thing, it took Deep Thought 7.5 million years to come up with the answer 42! So this utopian search is time consuming and more often than not the answer will be underwhelming.

PS: My favourite number is 37!

See you all next week. Sorry for being away for sometime from long posts but I needed the break :)