I’ve always been drawn to thinking strategically about the world. As a child, I read a lot about history and how important men and women thought about the tapestry they were part of as well as how they made key decisions. On our living room rug, great battles would play out with my soldiers seeking the winning strategy, a series of moves that would split the enemy apart and result in victory. Playing chess and war games from Avalon Hill gave me insight into strategic dilemmas encountered in war, the ultimate test of thinking strategically. This habit also carried over into my work life too, first as a consultant, later as head of strategy for Instec, which culminated in 2021 in one of the most successful ESOP transactions of all time.

Throughout the years, I noticed something strange. Despite the overwhelming value of strategic thinking, fewer and fewer people were doing it. Encountering fewer and fewer people in business that I would consider strategic thinkers made the ones who could see the big picture and how the pieces related to one another all the more fascinating. Time and time again, I witnessed people whom I considered smart making moves on the game board thinking it would result in their desired outcome and were surprised when the move resulted in an outcome completely opposite of what they intended. It seemed that people no longer understood the world they operated in. They were either operating on flawed information, or simply were not spending the time required to think through the results of their actions. This seemed strange to me because the strategies I saw being executed were for bigger and bigger stakes. The need for strategic thinkers was getting greater, but few strategic thinkers were being developed.

At the highest level, thinking strategically means thinking about your long term goals; what they are and how to achieve them. It focuses on the big things that matter. Everything else in life falls out from these big things. It answers the big questions of what are my goals and how do I achieve them. Thinking this way requires an understanding of how the world works at the cause and effect level, which moves are required to achieve the outcomes you want. It also requires thinking in time; thinking backwards to see what other people did throughout history as well as how we got to where we are today. Thinking about the future requires us to recognize patterns that may be playing out over time and how best to take advantage of them.

At its simplest, strategic thinking is the scientific method applied to strategy.
You hypothesize about what is going on and what actions are required to achieve your goals. It requires a constant awareness and assessment about the current situation. You are able to identify strengths, weaknesses, opportunities, and threats so that you position yourself for maximum flexibility/

Strategic thinking is the most difficult of all types of thinking to do because its involves the future, which is inherently uncertain. It also requires the ability to see the essence of the situation at hand and what features are key and which are window dressing. It is a craft that takes a lifetime to master, which few people reach; the master strategists. The craft of thinking strategically is getting harder not only because of the problems we face and but also the competitiveness in the world we live in.

The problems are much more challenging than problems in the past due to their size and potential impact. From the proliferation of weapons of mass destruction to global warming, debt among developed countries, and the return of war and global pandemics, there is no shortage of problems we have to tackle. These problems are so challenging they have their own category: wicked problems. Wicked problems are very complex issues that next to impossible to solve for a variety of reasons, including no definitive formulation, no clear point at which you can say the problem is solved, no single right answer or solution with an immediate test, their uniqueness (no two wicked problems are like), their connection to other wicked problems, multiple dimensions allowing multiple entry points into it, and a resistance to grand, one shot solutions, requiring instead tinkering and tweaking. Wicked problems carry with them extreme costs both in economic terms (measured in trillions of dollars) to potential threat to our very existence. The challenge today is made difficult because of the scope, scale, and interrelatedness of these wicked problems.

The world is also a much more competitive place than in the past. We compete against more players than in the past, both locally and abroad. There is simply more intelligence in the world, both natural intelligence residing in over 8 billion people inhabiting the earth, as well as artificial intelligence residing in computers. Given the technology backbone that exists in the world today, it is easier than at any point for individuals to form alliances that can be permanent or fleeting. All of these individuals and groups have their own agendas which can overlap with some agendas and compete with others. These conflicting games of power also exacerbate the wicked problems we face as some players use the situations to their advantage.

All of this interplay results in a world that is highly dynamic full of daunting challenges and responses, a world in which the playing out of strategies can spawn a chain reaction of events that are exponential and universal in scope. Something that is exponential is non linear in scope. The human mind is not built to think exponentially and universally; we think linearly and locally. exponential with every passing day. This too adds to our challenge.

In the strategic games being played out in real life on a daily basis, the moves are often simultaneous and virtually infinite. In today’s world, the available intellectual, technical, and capital resources to create and play moves that change the game has never been greater. The number of moves available at any given time, which in turn increase the range of possible outcomes available to us in the future, has never been greater. Sometimes the best moves to make are the ones that limit options instead of expanding them.

All of this poses a challenge to the human brain. How do we navigate the world around us when it is increasing in both complexity and exponentiality? The world is too vast to experience in its totality. The parts we do experience are simply the tip of a far larger iceberg. Fortunately, the brain evolved a hack to deal with this very situation; abstraction.

The human brain’s main strength is identifying recurring patterns we encounter and encoding them for future use. We can teach these patterns to others; indeed all through school we learn these patterns. Let us call them mental models. A mental model is a simplified representation of how some aspect of the world works. Its simplified because it omits details considered unnecessary. We simply abstract out much of the detail leaving only the important ones. Models explain cause and effect to us. They explain various mechanics of the world so we know what happens when we push the metaphorical buttons and levers around us.

Our human brain is built for thinking with models. In an iterative fashion, we are observing the environment gleaning whatever information we can from it, hanging this information on a lattice work of models (the famous quote from Charlie Munger) and orienting our minds around it, deciding what it means, and then acting. For example, I have never been to Topeka, Kansas but if I do visit I will be able to navigate it just fine. I have models in my head of restaurants, hotels, and rental cars. I then combine these models into an overall travel model.

Models differ in their scope and scale. Some models are universally accepted around the world why some are local. The models that work well in Topeka do not work at all in the Sahara Desert or remote parts of Africa. The genius of the human brain is that we can select the appropriate model for the appropriate situation.

Collectively, all of the models we believe in combine together to form our worldview. This worldview is what we use to navigate life. Models are to brains what air is to humans and water to fish. It is the environment we swim in. Without models, we would have to learn everything over from scratch. This leads to an interesting question; what happens when the models in our heads are outdated, ineffectual, or just plain wrong? Models are based upon patterns that echo throughout history. What happens when those patterns change?

It is my contention that the vast amounts of technology, capital, and intelligence are changing many of our core models. Models such as the American Dream are under assault from the dynamism and complexity we see around us. I have named this condition Frankenstein’s World, after the eponymous doctor in Mary Shelley’s novel

In the novel, Doctor Victor Von Frankenstein attempts to solve the most wicked problem of all; death. Cobbling together spare body parts, he constructs a creature and re-animates him using advanced scientific and medical techniques. At this point, he has conquered death. And yet, while he is at the peak of his powers, he has already sown the seeds of his own destruction. The creature escapes the laboratory into the wilderness, where he learns to read and write. He witnesses a family sharing love and tenderness. The creature thinks about the world and realizes he too should have a family. The creature has experienced the world in a way that has led to the creation of some of the most universal models we have; those of companionship, family, and love. The creature has developed new goals and seeks the good doctors help in achieving them.

Frankenstein is completely taken by surprise by these developments. This was not part of his original plan. The creature was merely a tool in his desire to rewrite the overarching model of life and death. He is not interested in the creature’s changing worldview so he refuses, which sets off a series of tragic events.

Frankenstein is a very apt metaphor for the world we face today. It has all of the elements we face today. Wicked problems, gutting edge science and technology, intelligence, models that are both outdated and undergoing radical change, changing worldviews and goals, conflicting agendas, the interactive processing of information, the lack of second order thinking and unintended consequences, and extreme dynamism.

It is my belief that in order to progress as a species, we have to relearn the art and skill of thinking strategically. Strategic thinking means understanding
our models and worldviews are consistent with reality or run the risk of being disconnected from it. It means deriving from those models cause and effect and second order thinking which help us understand not only unfolding events, but also events that came before and are likely to come after.
It means adapting new strategies to handle the extremely complex, dynamic, and technology laden environment we find ourselves in today. It means understanding how the game is played as well as the art of making strategic moves which change the nature of the game. It means learning inside and out the owners manual for our brain recognizing the biases and fallacies that warp its powers. It means recognizing intelligence in its various forms. And above all, it means synthesizing the two operating systems we have in our mind, the rational and the intuitive, into a new form of thinking that is not wholly one or the other but rather uses them together like a finally tuned machine. This is what I will be writing about. I hope you enjoy it and find some models of gold.