This content is locked. Please login or become a member.
Pattern recognition is a foundational discipline of strategic thinking. I was originally trained as an electrical engineer, and one of the most important concepts that I was taught is the idea of the signal-to-noise ratio. The ability to find the signal, the important information in what can be a sea of noise. I think about it as sensing so you can respond. And if you can’t sense, that is recognize those most important patterns in the environment, you really have no hope of responding.
Pattern Recognition
Pattern recognition is the ability to look at complex, uncertain, volatile, ambiguous environments and figure out what’s really important and what isn’t. Doing so means, first and foremost, immersing yourself deeply in the domain that you’re operating in. There is no effective strategic thinking in the absence of deep immersion but you need to do so in an organized manner. You need to discipline yourself to be looking for what’s important and what isn’t, what’s connected and what isn’t, not just absorbing what’s happening but thinking about why. And that’s a core ability of people who are great strategic thinkers, and it’s directly about pattern recognition.
In addition to immersing yourself, find people who are great strategic thinkers to work with because you begin to absorb how they think. You can work with them to identify why are you focusing on this as opposed to that. So these are the sorts of things to think about. Right? But first and foremost, ground your efforts to build yourself a strategic thinking capability in the discipline of developing your pattern recognition.
Avoiding Pitfalls
As you embark on your journey to become better at pattern recognition, it’s important to recognize that there are some substantial pitfalls that you need to avoid. These are really biases in the way the human mind works that serve us in some circumstances when we need to make rapid judgments about things, but often lead us astray in more complex and consequential situations. One example of this is what’s known as the confirmation bias. This is the tendency, once you’ve reached a conclusion about something, to gather data that supports your belief and push aside data that doesn’t. Think about what that does to your perceptions and how it can really, really impede your ability to see the most important patterns in what’s happening in the environment you’re operating in. It’s about selective perception and selective perception can be incredibly dangerous.
A second example is what’s known as the sunk cost fallacy, right? The tendency to continue to invest resources because you feel like if you don’t you’re going to suffer a big loss of some form. This is the rocky road to ruin. We’ve certainly seen it in the context of financial markets where people continuing to make bets to try and win back what they’ve already lost have led to the ruin of major institutions.
Another example of a potential pitfall that can affect your ability to engage in effective pattern recognition is what’s known as the halo effect. It was coined originally by my IMD colleague, Phil Rosenzweig, and describes the situation where success creates the halo around you that leads you to have greater confidence and others to have greater confidence in your ability to come up with the right answers or decisions than really is justified by reality. The way I sometimes describe it is, watch out for beginning to believe your own press. That can really lead you down a road to bad decisions and ultimately to negative outcomes.
Recognize that things like the confirmation bias, sunk cost fallacy are present with us simply because we’re human and it’s the way our minds work. You need to have as clear a perception of what’s going on as possible and really understand your biases and work to de-bias yourself to the degree you possibly can.