Project Management Institute

The Insight Discipline

Description

JOE CAHILL

Hi everyone, today we’re joined by Liam Fahey. Liam is the Cofounder, Partner and Executive Director of the Leadership Forum LLC. He is also the Creator and Leader of the Intelligence Leadership Forum, IFL, and this forum allows intelligence and insight practitioners to learn from each other, to hone their personal professional skills and to augment their organizations thinking and decisions capabilities.

Liam is an author or editor of eight books and more than 50 articles and book chapters. His most recent book, The Insight Discipline, provides a framework for organization analysis through enhanced intelligence and insight. Quite impressive. He also has corporate clients that include some of the world’s best-known brands and he has delivered executive education for more than ten universities around the world.

Prior to co-founding the Leadership Forum, Liam taught at Northwestern University’s JL Kellogg Graduate School of Management and at Boston University. Currently he serves as Professor of Management Practice at Babson College. He holds a PhD degree from the University of Pittsburgh. So, Liam Fahey, welcome to Center Stage.

LIAM FAHEY

Thank you, Joe, looking forward to it.

CAHILL

Absolutely. You have a very impressive background and I’m very excited about the insight you’re going to be able to provide our audience here today, so let’s get on with it. Let’s start with Insight Discipline. Your recent book is titled The Insight Discipline. Within the book you’ve written on topics of knowledge, insight, intelligence and strategic thinking. Tell us how these topics interact with one another and which ones are most useful in understanding markets and today’s world?

FAHEY

The insight book, which recently came out, is the product of 30 years of working with corporate clients and teaching executive programs, working on projects. And one off the challenges that I took on in the book was to try to clarify some of these key terms that you’ve just identified—knowledge, insight, intelligence, strategic thinking, et cetera, et cetera.

So let’s start with some of the basics here. I draw a big distinction between knowledge and insight. Knowledge is essentially what we know or what we think we know or we take as facts and descriptions of the world around us. And intelligence comes out of insight. And insight I define very simply as new understanding that makes a difference to our thinking, decision making and action.

So insight I describe as new understanding. So when we look at new understanding what we are talking about here is new customer understanding, new competitor understanding, new technology understanding. And the emphasis is upon new, which is a difference compared to past.

To take a simple example, one of the examples in the book, a major information technology company develops some new competitor understanding related to some new product understanding where they projected that three technologies would interact over a two and a half, three year period to create a whole new product solution for the market. So the new understanding was the kind of product or solution that would be in the market in two to three years’ time, and that had some significant implications for the organization’s current strategy, decisions that it was making and how it was operating.

And one of the implications was that its major product line was highly likely to be completely obsolete within two to three years. Obviously that had major implications for strategies for the future, et cetera. So intelligence then is putting insight into practice. And that again has obvious implications for strategic analysis, strategic thinking…

CAHILL

Absolutely. And it sounds like there’s quite a bit of data-driven aspects of this entire topic area, right?

FAHEY

The example I just gave you was all about data projections into the future. So let’s be very clear. There are not too many facts about the future. So what we are doing is making judgments about how trend lines will interact to create that new product solution, which means that people are making judgments about how those trend lines will unfold, how it will interact, what the outcome will be and then what the consequences are of that insight.

CAHILL

So let’s talk about another definitional type question. What is intelligence insight and what are the implications of that on work itself?

FAHEY

Major mistake that lots of firms fall into is that once they create an insight, they’re kind of done. So we develop this big customer insight. We now have new insight, new understanding of customer need or new understanding of customer behaviors. Or a competitor insight, we suddenly have a new understanding of why the competitor is moving its strategy in a particular direction, or why a competitor is going to launch a new product faster than planned. So that is the insight. But it’s the implications of the insight is what makes the difference.

So our definition of an intelligence insight is where you have both the new understanding and its implications. So let me make two points here very strongly. One, the discussions, deliberations within organizations should be much more on the implications of the customer insight or the competitor insight, and not on the insight per se.

And two, in those deliberations of implications please make sure that you bring multiple perspectives to bear on the discussion. So, get the marketers involved, get the engineers involved, get the technical people involved, get the strategists involved. Don’t allow the conversation to be dominated by one perspective, one viewpoint, one organizational unit. That is the big failure I see in the execution of what we call intelligence insight.

CAHILL

So the implication of that implication is that you have to put the time in or build the systems such that you can actually digest this across the organization. That’s a compelling talent.

FAHEY

And one observation related to picking up on that point is the following. The best analysis tool that I see being used by lots of companies is putting all of the data aside, closing off the computer, and have six or seven people stand around a white board and just engage with each other around the topic. That is where people get to express their tacit understanding, others get to play off it and collectively they build a new understanding that none of them alone could have generated at the beginning.

CAHILL

Excellent. That is right in line with PMI, how we look at things. In fact, we have a product called Wicked Problem Solving where that is exactly what happens. A bunch of people get around a table and figure out how to solve a problem from a multi-disciplinary approach. So, very, very exciting for me. So also, on this topic of your book, which is The Insight Discipline, tell us what you mean by the insight funnel. How does a leader navigating the complex changes of our world, how do they use this concept in practice?

FAHEY

Actually, it is really simple at one level, but as you’ll see, complex in execution. The basic notion here is the following. We start with what we call domain insights—customer insights, channel insights, competitor insights, technology insights, political insights, who knows what.

Often what we saw in lots of organization and working on projects is that they tended to stop at that point. And because their organizations are functionally designed, which means that the market research professionals don’t get to spend much time with the competitor analysis folks or with the industry analysis folks, and so what when we began to observe was the need to move from what we called domain insights to competitive space insights—that is, industry level or competitor space level.

So, when you took some customer and competitor and technology insights and looked at them at the industry level, you tended to see something fundamentally different. If you took those domain insights and went to the competitive space level and you began to develop new understanding, for example, that the industry growth rate was slowing down, or that a technology was coming from left field that was going to dramatically reshape the products in the industry, these were very different insights at a different level than the domain insights.

So we would typically ask the analysis teams get to the three or four competitive space or industry space insights that emerge from your domain insights. And people would find that the focus of their analysis was very different, and the insights, the new understanding that they would generate, was very different than the mere domain insights. But they’re not finished. Once you get some industry level or competitive space level insights, you’re still left with another big question—how do those insights give rise to generic—that is, available to anybody - new marketplace opportunities or new competitive risks, or new major strategy vulnerabilities, or the need to change industry level assumptions? And these are what we call generic marketplace insights. And there’s usually only a small number of these.

So at the end of the day you’re looking at what’s the new understanding of marketplace opportunities, where are these competitor risks coming from, what are the vulnerabilities to existing strategies, and what kinds of changes are required in assumptions. So now you are moving from the industry and the main level analysis, to looking at implications for anybody in the market. And note so far, we have not gotten to dealing with implications for our company.

So the next level in the analysis is what we call implication insights. So implication insights would be the following out of a recent experience. We need to change our assumptions about the rate of change in our industry. We have been previously looking at an average growth rate of total sales in our industry of 10–12 percent. Based on our analysis now, we need to look at an average growth rate assumption of 4–6 percent. Massive implications for our strategy.

Another one we had... because now we are coming back to implications for our company... Another one we had was our historic R&D strategy will not create products that will enable us to win in the changed market we are looking at. Profound implications for the company... we’re basically saying that our historic R&D strategy, if continued in the current direction, will not get us the products and solutions that will help us to win in the industry we now know we’re going into three, five, six, eight years out. Profound implications for where we allocate investments, et cetera.

And then the last stage of the insight funnel, and obviously a critical one, is taking all of this and now determining what are the action implications at the strategy level, the operations level, the organizational level and the mindset level. But we only get to those action implications at the end of that insight funnel.

So there are two challenges in doing this work and it’s a question that’s usually asked. The first challenge is making sure that the analysis teams and managers and executives involved do not jump too quickly to the action implications level. You need to get people embedded in the thinking and the outputs of each of the earlier stages.

And then the second big implication that I like to point out to people, beyond not moving too quickly, is getting deep in the weeds in the analysis, in the data, and understanding what those driving change factors are in their competitive context and what their implications are in terms of implications insight back to our firm.

CAHILL

Excellent. What I hear in there is a lot of integrative thought and activity, communication across teams in order to pull this off. And I think that’s... the word “discipline” does come to mind and it is in the title of the book. So thank you. I want to talk about another book you wrote, Learning from the Future. Really, just the title itself sounds very intriguing. Please spend some time to tell our audience how we can actually learn from the future.

FAHEY

If you are living in a world of significant change and you’re dealing with companies that often don’t reflect on their internal mindsets, how they see the world, what kinds of methodology can you deploy to help build future pictures of the world, analyze those in terms of their implications for the competitive space and your own firm, and you’ll see the connection of course now back to the insight book.

So, scenarios very commonly used, very well developed in many companies all around the world, we use the notion of scenarios as the means of projecting alternative futures and then coming back and looking at their implications at the industry level and then back to the firm level. And that is why we came up with the nifty term “learning from the future before it happens.”

CAHILL

Since we are talking about the future and everyday it seems to be the uncertainty that comes with the future gets more and more dynamic, let’s talk about radical uncertainty. What tools and methods and ideas do you find most useful in decision making and planning as it relates to the radical uncertainty that we actually face in this new world?

FAHEY

Historically I and lots of other people have used the phrase “ambiguity” but I think it’s the same thing. And by ambiguity I essentially mean the following. You are in situations where you don’t really know how to define what the issue or the problem is. You’ve got lots of alternative data about it, you’ve got multiple different indicators of change that seem to be going in all kinds of directions.

You’ve got all kinds of stakeholders that are involved with their own interest and propagating their own perspectives. And the complexity is overpowering because you don’t know... you do know with certainty that the traditional old tools of analyzing these kinds of situations simply don’t work. Multiple technologies coming at you from different directions is a classic example of a messy problem where you do indeed have radical uncertainty or high-end ambiguity that we talk about.

So to get to the tools and methods and ideas involved in it, scenarios is clearly my favorite methodology for dealing with this, which we have talked about. But there are other tools and techniques that people can use. One that I like to talk about is alternative assumptions assessment. Because all of these complex, messy, distributed problems with radical uncertainty, you are always talking about alternative sets of assumptions. And so getting those alternative sets of assumptions down, looking at the data and the reasoning that supports or refutes them becomes one way of unraveling the ambiguity in these kinds of situations.

Another method that we have used quite frequently is getting teams of people to take different perspectives, different points of view and argue them out as if we were in a court, and therefore looking at the reasoning involved in how people want to define the issue or problem, what alternative solutions they have, how they’re coming to those solutions, what the implications of those solutions might be.

CAHILL

Thereby you’re going to figure out the strength of the actual assumption itself, right?

FAHEY

Therefore, it takes you back to testing the data and the reasoning support assumptions. So, for example, if you are in an R&D driven company, you’ll classically have multiple different perspectives on where R&D should be focusing its attention, what kind of external organizations should be collaborated with, what’s the state of the relevant research at particular points in time, what’s the future trajectories of that research. Very, very messy situations. Dealing with scenarios, dealing with assumptions, dealing with alternative project teams become ways of unraveling a lot of the uncertainty.

CAHILL

Let’s talk about a messy problem. I’m glad you brought it up. We all can see that data analytics, AI and machine learning are growing with great importance and great speed. How are these technologies going to change the future of work from your perspective? And most importantly, what will be the role of people?

FAHEY

We now have this concept in our organizations called data scientists who do wonderfully great work. You’ve got all kinds of new tools and techniques, et cetera. My observation to begin with is, where are our change scientists? Where are our people scientists? Because at the end of the day, the analysis output is coming from data analytics, AI, machine learning, et cetera, et cetera, have got to be interpreted in the context of the change that we are seeing inside our organizations and external to our organizations, which kind of takes us back to the scenario context.

So no question that data scientists are creating all kinds of interesting new pathways into understanding the worlds around us. But that’s got to be taken into context of our analysis, of what’s happening in broader environments and within our organization and what’s happening to people. So a precise response to your question, without doubt AI, data analytics, machine learning, et cetera, et cetera, are changing the work that a lot of people do, are obsoleting the work that historically a lot of us have done.

But again, my observation here is, is it helping us get to insights? Is it helping us to get to new customer understanding, new competitor understanding, et cetera?

CAHILL

This is very, very insightful. I like the sound of it, because every company is faced with this, right? You have problems with your current data, your data on your current customers, let alone branching out to these other data areas. So let’s talk a little bit more about leadership qualities. Tell us about your role at the Leadership Forum and get into what qualities you think are most useful for successful leadership in this current world and in the future world that we can see. And then just finish up on how you have seen this change through the years?

FAHEY

Well, probably like a lot of organizations, Leadership Forum came into being largely by accident because I was working with my co-collaborator, co-founder and leader of Leadership Forum, Wanda Wallace, and we were talking about how we could connect what she does with what I do and involve others. And the focal point became, no surprise, questions of leadership. How do we enhance the capability of leaders, how do you grow and develop leaders, what does good leadership mean? That’s how Leadership Forum came into being.

And it’s largely built around the two of us with support from other people, and our whole notion was to create a network of people with shared interests. And a lot of the work we do is at the individual leadership level, creating leadership capability, but also at the organizational level in developing, growing and proliferating leaders and enhancing the role of leaders. So that’s largely what we do.

The second part of your question is one of the critical ones. This is my personal viewpoint. You’ve got to start with the integrity of the individual. And a CEO 25 or more years ago told me in no uncertain language that we humans as individuals cannot allow anybody to take away our integrity. In fact, another person cannot take away our integrity. But unfortunately we as humans find all kinds of ways to give up and relinquish our integrity.

So the critical issue for me is the integrity of the individual who as in the position, leadership or otherwise. Because if people see that you are lacking integrity there is really no reason why they should support you as a person and as a leader. That’s always my starting point in conversations with leaders.

The second point I usually emphasize very strongly is, leaders need to be stunningly inquisitive because if you’re not inquisitive, you are not asking questions. If you’re not asking questions, you’re not learning. If you’re not learning, you’re not reflecting on the world around you and yourself.

My third item is usually values that are explicit and visible to others. So if you look at integrity, inquisitiveness with values, to me you have a triangle that you’ve got to look at in the context of any leader at any level in the organization.

CAHILL

The three-legged stool of leadership, I like it. I want to get your insight on the topic of change in terms of large change. If you carve out the disruption of the Covid pandemic, what are the most significant changes you’ve seen in global markets in the past decade?

FAHEY

Take corporations and look at large global corporations and the mindset change that’s evolving and I think pretty quickly in many global corporations where they are now fully recognizing that to be a global corporation you’ve got to be very active in all of the countries in the world, especially those with large people populations. So you see where companies are investing in R&D, in product development, et cetera, et cetera, and are now looking at how their products can be adapted to these countries, where 10-15-20 years ago that was not part of the mindset.

And then link that then to global supply chains, which Covid has indeed interrupted, where we had literally, in a literal sense, global supply chains where we had a lot of product being created and developed, raw materials and component supplies in China, India and elsewhere, and these were then being moved to Europe and the U.S. into manufacturing, distribution, retail, et cetera.

Now we’re looking at how can we better do those global supply chains. And in particular, the question I am really intrigued by, where should pockets of expertise be created? So again, rightly so, scientists, development engineers, increasingly are located in India, in China, in Southeast Asia more generally. And a lot of the knowledge work that historically had been done in the U.S. and in Europe is now being done outside of those geographies. And how to develop those capabilities at the same time that you build strategies for a global... global strategies becomes one of the big challenges facing a lot of these global companies.

CAHILL

Its interesting though, if I pull back into the Covid context, if you relate it to say resourcing and human resourcing and so forth, the ability to source talent around the world has really changed in the last year, at least the mindset, in terms of we can get it from anywhere because we have proven that people can work from anywhere and so forth.

FAHEY

That is true, that is true. But kind of like in 9/11, in many respects it changed everything, in many respects it changed very little.

So when we look at Covid and we ask ourselves the question, how is Covid affecting the R&D and technology strategies of global companies? In some respects it is going to indeed change but in many respects it’s not because you have to look at where is the talent, where is the skill, where is the knowledge base, where are the universities doing genuine research work. And they are not just in Europe, they are not just in North America, they are literally all over the globe.

So the challenge you now have as a global company is how do you collaborate around deep pockets of expertise and knowledge that’s located literally all around the world and do so efficiently and faster than was done previously.

CAHILL

Interesting times that we’re in, that’s for sure. So let me shift gears here as we close out here. I really want to ask you more of a personal question—what are your dreams and ambitions and aspirations for shaping the future of work and society as you look forward into the future? You certainly have tremendous insight. What are your secrets for staying engaged and motivated in that regard?

FAHEY

To me you ask a really very, very important question, which is how do we as individuals stay mentally, intellectually engaged and motivated. Because I am seeing a lot of people who are getting less engaged and less motivated falling into their bubbles whether of a political nature, intellectual nature, et cetera, even inside organizations and especially inside corporations. For me personally it’s all about reading widely. If you don’t read widely, you won’t have the inputs to reflect and challenge on yourself. So I read all kinds of political and religious stuff. I read all kinds of economic stuff. I read very different kinds of newspapers, journals and magazines, which tends to drive my poor spouse wild because the physical copies of these tend to mount up very quickly and I’m asked what are you going to do with these?

The second part of self-motivation and engaging is asking a diverse set of questions to a diverse set of people. So make sure that you have within your entourage and your circle people of a very different perspective to you who see the world very different, have very different political interests, have a very different view on the economy, have a very different view on what success means in an organizational sense.

And then for me the third part, reflecting my Irish genes, is writing. Because I fully, fully believe in the old maxim that I was trained on, which is if you don’t write, how can I know what I think? Because the art and skill of writing is taking something that is very often tacit or implicit within your brain and getting it down on paper, reflecting on it and changing it. So it’s a matter of talking out loud through the process of writing. That is really how I stay intellectually challenged and engaged and motivated, to use your words.

CAHILL

I like that, particularly that last part about the writing because it is true. Its self-evident. To write, to communicate to others so they can understand what you’re thinking, as you’re saying, you really do have to carve out a lot of time and effort to really engage the reception of what you’re saying. So I find that to be so true. And it is the hardest part at least for a person like me.

FAHEY

Yeah and there is another part of that that I think is very important to your question. It’s with executives and leaders who are about to make a significant presentation or give a significant speech is getting them to invest the quality of time—it may not be long—to put down on paper themselves—not their support staff or their colleagues—what they think they want to communicate and why.

And it may only end up being a couple of sentences but once they get clarity on what it is that they want to communicate and to whom and why, then they can build their speech, build their presentation around that coat hanger and keep coming back to it because that is the point of emphasis. I sit in on so many different presentations by different kinds of people, and at the end of it, you are totally lost as to what was the core point, what was the core message that they wanted to get across to people and why, and why should I as the listener, the observer, be at all interested in the point of view that they wanted to communicate.

CAHILL

Excellent. Thank you for that. I want to thank you so much for your time and insight here today. I think the audience has learned quite a bit. Certainly at the top of the discussion we learned that insight is about things that are new and particularly focused on the future and what we can do in the future in terms of implications and actions. We learned the definitions of what an insight funnel is, we talked about scenarios, alternative assumptions assessment.

We also touched on the change scientist notion that you brought forward to us and the data gaps that companies have. We have to continue to fill those gaps. Very, very great insight and very specific insight into leadership and what successful leadership is, integrity, inquisitiveness, evident values, explicit values. And closing up here, the significant changes in the world and the mindset shifts that are needed and are happening right now quick and in large corporations.

I’m very, very thankful for this conversation. Thank you again, Liam.