Decisions With Limited Information

Classical strategy combines a number of practical approaches to enabling good decisions with limited information.

Since information is critical to decisions, the first tools are those designed to gather as much relevant information as possible. By its nature, the environment frustrates information gathers. On one hand, it provides more information than we can handle. On the other, it seeks to hide the most critical information. Therefore, the tools of strategy limit our data collection to what is key and use methods that give us at least some insight into what we do not know. The concept of positioning is designed to limit the gathering of information to certain key areas where useful information can be found.

The next step is filtering that information so that decisions about actions can be made. This step requires its own specialized set of tools used for identifying opportunities and comparing them. The process of advancing a position identifies the most likely areas where an advance can be made.

As Will Rogers once said, "It isn't what we don't know that gives us trouble. It's what we know that ain't so." Because each move is an experiment, Sun Tzu's first priority is experimenting safely. For example, classical strategy teaches that initial moves should be  small, limited, and local because they are the least risky.

After that, each move is a probe designed to test the information in real time and determine its value. In making these moves, however, we must adapt to the situation as we find it. This systematic testing requires its own toolkit for adapting our experiments to the conditions we discover in the environment and that we can only discover by attempting something. Each strategic move seeks to make progress in a certain direction, but the immediate path to progress is discovered in the process of making the move.

The final step is recognizing both our successes and failures. As Thomas Edison recognized, most experiments fail. However, if conducted correctly, even failed experiments are helpful because they give you good information. Every move is successful in the sense of improving your quality of information about the competitive environment.

Though we must be prepared for failure, we cannot expect it. We can usually find success, however small, in every move.  The final step is claiming our new position. These are the tools necessary to get every drop of value from a new position.

Given the proper methods, the chaotic nature of the environment becomes your ally. Many of the techniques developed in classical strategy allow you to use the shortage of information to your advantage. It is always easier and less expensive to control a situation by controlling the flow of information than by using physical force. For example, you create strategic momentum by introducing new information into the environment when you are prepared for it and your opponents are not.

For a complete description of the process of advancing positions in competitive business environments, we suggest you read our book 9 Formulas for Business Success: The Science of Strategy.