Scout Mindset: Leverage Tech Investments to Drive Better Decisions

By Cristina Carvallo | June 29, 2021 | 0 Comments

Supply ChainPower of the Profession

Supply chain planning is about making decisions to balance service, cost and inventory. It’s about making decisions on how to leverage our assets to deliver the most value to our customers and consumers in a profitable way.

A lot of the conversations that we have with supply chain leaders are about how to improve planning processes (S&OP, S&OE, demand planning, supply planning) to drive better and more integrated decision making. I was listening to a TED Talk called, “Why you think you’re right — even if you’re wrong.” The talk is about “motivated reasoning,” the phenomenon in which our unconscious motivations shape the way we interpret information and, in turn, impact our decision making. It made me think about how the phenomenon might be at play in organizations, hindering their capacity to maximize value.

Julia Galef, co-founder of the Center for Applied Rationality, explains in the TED Talk how our mindset highly influences our decision making. We can either have a “soldier mindset” or a “scout mindset.” With a “solider mindset,” we see ideas as winners or losers. In this mindset, we blindly trust the data that supports our gut feeling (or the status quo), looking for flaws and discarding any data that challenges it. With a “scout mindset,” we try to get an accurate picture of reality, even when that’s unpleasant or inconvenient.

A perfect example of how this plays out in an S&OP environment is when the demand forecast has been showing a consistent positive bias over the last three to six months. In this example, despite what the data shows, our business leaders are still committing to the overly optimistic demand plan. Business leaders are discarding the bias data that goes “against” their belief on how demand should behave when we implement all our commercial initiatives. This also happens when organizations continue to build supply plans that can’t really be executed because they are based on a capacity utilization rate that has never been achieved.

According to the 2020 Supply Chain User Wants and Needs Survey, 61% of organizations declared they were expecting to increase their investments in supply chain applications and technologies during 2021. “Enhancements in decision making,” according to the survey, is the most mentioned as one of the top three factors motivating the organization to invest. However, 84% of supply chain leaders believe technology will augment human activity for decision making, while only 11% think technology will replace human activity.

Most organizations are investing in getting more data and hoping that data will help their teams make better decisions. But will we truly use the data to make better decisions or just use some of the data to support whatever decisions we want to make? To ensure the first is true, supply chain leaders should strive to build a “scouting culture.”

Scouts think differently. The scout mindset presents three key behaviors:

  • Scouts are curious: They find joy in finding new insights or solving puzzles.
  • Scouts are open: They are intrigued when they find data that counters their beliefs. They think it’s virtuous to test their own beliefs.
  • Scouts are grounded: They don’t take it personally when they are wrong. They don’t connect being right with their self-worth.

Organizations can make higher-quality decisions by reinforcing and promoting the scout behaviors:

  • Curiosity: Planning should be about understanding the market in which you operate, your demand and your supply chain. What is the effect of demand-shaping initiatives, or the impact of different supply risks in the supply chain’s ability to deliver against customer expectations? Drive a relentless pursuit of data and understanding the relationships across different data sets. Drive a bimodal planning process in which you operate your regular planning process, but in parallel you are always trying to find new data sources and correlation with your performance.
  • Openness: Making good cross-functional decisions requires transparency. All teams must feel they can speak up, recognizing that some of their previous assumptions might have been wrong. Help the team realize that the earlier you share information, the more time you have to mitigate the risks or to prepare to capitalize on opportunities. Use metrics to drive improvement and celebrate transparency, showcasing when a better result is achieved thanks to the team’s openness to accept what the data says.
  • Grounded teams: Planning is about making integrated decisions. You can do better by spending less time focusing on determining who is wrong and who is right, and more time focusing on how to resolve existing issues. Drop the one-number approach in which cross-functional teams are at war to align to one number. Instead, use scenarios to identify different versions of how the future might look to drive a one-plan culture.

As you build a “scouting culture,” consider designating one person in the room to be the scout for each meeting. This person should be curious and challenge assumptions, ensure data is being used to inform decisions, and push for identifying scenarios and one-plan alignment.

So, are your decisions being made by scouts or soldiers?

Cristina Carvallo
Director Analyst
Gartner Supply Chain

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