Why mental models should be the key topic of your next executive seminar

The Covid-19 crisis completely disrupted the strategy of all organizations, reducing plans to nothing. Like any disruption, it corresponded to a process in development whose consequences unfolded, and continue to unfold, progressively on all levels: sanitary, social, economic, but also political and geo-political. It was followed two years later by another disruption, the invasion of Ukraine, which had a similar effect. For organizations, such disruptions impose a complete revision not only of their strategy, but of the way it is defined and of the fundamental beliefs on which the process is based, and in particular on how decisions are made in an organization. It requires a rethink of strategy, management and leadership.

At the beginning of an organization’s existence, decision making is direct: it rests with the founders. A problem arises, and they solve it. As the organization grows, decision making becomes indirect, relying more and more on processes that encapsulate its knowledge. When its business model is stabilized and its size is important, its knowledge of what to do and not to do to succeed is encapsulated in the form of mental models, i.e. core beliefs that one builds about oneself, about one’s organization and about the world. This is the age of indirect management: the leader can no longer give instructions directly, except to the small group of top managers. This indirect management is necessary because of the size of the organization on the one hand, and because of the multiplicity of situations encountered. The complexity and uncertainty in which the organization evolves means that it is not possible to foresee all situations in defined processes.

These mental models are the product not only of the founders’ actions but also of the situations encountered and the way in which the challenges faced by the organization were resolved. Over time, the organization has kept what worked and discarded what did not. At the stage of maturity, the organization is successful if the mental models it has developed are relevant to the environment in which it is evolving: it has created an effective representation of reality, and the beliefs on which it is based serve it positively.

Mental models determine how decisions are made

How does this effectiveness work in practice? Mental models determine how decisions are made on the ground by everyone in the organization. If the hotel concierge goes out of his way to help you bring your luggage from the parking lot to the front desk in the pouring rain, it’s not because it’s written in the instruction manual, or because his boss has explicitly asked him to, but because he believes it serves the organization’s strategy of providing quality service to its customers. Relying on a mental model, rather than on a procedure, allows him to decide what “quality service” actually means in the circumstances. This allows him to manage the uncertainty of situations. If a salesperson calls customer A rather than customer B first, it is because she believes that A is more important than B for her and her organization. This in itself is not strategic; it is what we call a micro-decision; but if there are 3,000 sales people in the organization, each with 25 such decisions to make each day, that corresponds to 375,000 decisions per week, plus the decisions of all the other actors (accountants, production agents, etc.), and the aggregated impact becomes strategic. If the beliefs are wrong, or obsolete, or if they do not correspond to the organization’s intention (its stated strategy), the organization goes to the wall, carried away by its hundreds of thousands of misdirected weekly micro-decisions.

Mental model failure (Picture: Vlad Chetan on Pixels.com)

The organization’s realized strategy is therefore the sum of the micro-decisions made on a daily basis by all the actors that make up the organization. These decisions are made on the basis of their mental models. If we want to change the strategy, we must change what its members do, and therefore we must change their mental models. The very fact that these are beliefs lodged in the minds of hundreds or even thousands of agents makes this extremely difficult. It is therefore easy to understand why injunctions such as “Be customer oriented!” or “Be innovative” as well as ambitious objectives are ineffective because they will not anchor themselves in the beliefs.

Mental models become fixed in certainties

The difficulty becomes particularly great when, over time, the mental models prove their effectiveness and the organization achieves significant success, because then its models become fixated. They are no longer seen as working hypotheses. Beliefs become self-evident and seen as universal and eternal truths. Consider Kodak, for whom it was obvious that everyone would always print their photos on paper. Or the cab drivers who were certain that the state monopoly will always protect them from competition such as Uber. Or executives I work with who before Covid-19 thought home working was impossible in their organization.

When models become fixed as certainties in this way, the organization becomes very fragile in the face of disruptions, because a healthy relationship with reality no longer exists. This is what happened with Covid: the crisis was the occasion for a profound questioning of the environment. What used to be possible became impossible, or vice versa. What once worked no longer did, or vice versa. What was scandalous becomes commonplace, or vice versa. What was certain became false. Beliefs must be questioned. Of course, the crisis had the merit of forcing certain changes in the model, as we have seen with the very rapid switch to home working, including by organizations that were very reluctant to do so, but these are exceptional circumstances and the question is to know if the changes thus accepted by force will last when the “normal” returns, whatever that “normal” may be. As we moved away from the initial shock of the crisis and the pressure from the outside diminishes, the deep mental patterns tend to return with force, with their pros and cons, and to sweep away any sincere intentions to change. The organization returned to the starting point and I now observe helpless strategists with their off-the-wall scenarios, even if they are updated in a hurry.

Your next executive seminar

Strategy can only be successfully developed by understanding how decisions are made on the ground, which requires exposing the mental models that determine them and making them explicit. Mental models are therefore the key tool of management, especially in the period of profound change that began with the Covid-19 crisis. Put otherwise, in uncertain times, mental models matter more than strategy or processes. Exposing mental models, testing them to see how valid they still are, and adjusting them if necessary, must become a key competence for the leaders of the organization. If you don’t want to build the future of your organization on sand, the development of this competency should be high on the agenda of your next executive seminar.

➕To discover more on the topic of mental models, you can read my previous articles: How crises disrupt our mental models and what that means; How Mental Models Prevent Change: The Tragedy of the Greenland Settlers.

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