The Art of Negative Thinking

International Harvester was started in the 1800’s by the McCormick brothers, ushering in the end of manual harvesting and revolutionizing the agriculture industry. A century later, in the 1980s, all was lost when corporate strategists leaned too heavily on the power of positive thinking to hold up their lofty goals and ‘stretch’ objectives with little in the way of critical thinking and solid strategy. 

The “strategy” focused on increasing market share and cutting costs but failed to deal with the most pressing issues. International Harvester had a profit margin only half that of their competitors.  Production facilities were inefficient and labour relations were fraught but the strategy didn’t address these issues.  After a crippling labour strike the company collapsed, selling off its truck and agriculture divisions.

A positive outlook on life is important but if you want things to turn out rosy in your business some negative thinking can be helpful. In business, a strategy based on positive thinking promotes the illusion of control and an over confidence that things will “work out”. Without a solid look at the negative this is rarely the case. While perhaps inspiring to listen to, these  faux strategies only serve to paper over the hard work of developing a real strategy. So what is a real strategy then and why’s negative thinking so important? 

According to Richard Rumelt “a strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge.” If that challenge is not well defined, it’s  impossible to develop a quality strategy. This is where negative thinking comes in.

Negative thinking is the relentless unraveling of the crucial factors in a business situation and then designing actions to deal with them. The response to the challenge is the focussing of resources on those critical business areas so positive outcomes can be achieved. Prioritizing the direction of resources is the hard work of strategy.

What can we learn from International Harvester….

1. Strategy is not wishful thinking. Strategy is hard work and requires some brutal negative thinking to expose weaknesses and exploit competitive advantages

2. The challenge must be well defined: International Harvester never identified what was causing the poor profit margins thus the strategic focus was not on the most pressing issues.

Business books, magazines and podcasts are full of voices equating strategy with ambition, leadership, vision, or planning, but strategy is none of these. The strategist’s work is always the same: discover the crucial factors in a situation and design a way to coordinate and focus the actions of the enterprise to deal with them. Some solid negative thinking can get your bottom line into the positive.