Unprecedented uncertainty is forcing companies around the world to rethink their rulebooks as trade agreements are rewritten and technology drives industry-wide disruption. The good news is that new opportunities are emerging almost every day. The not-so-good news is that the new opportunities come with new challenges and competitors. And unfortunately, traditional ways of planning, along with the incremental improvements they generate, have become insufficient for business success, let alone marketplace survival.
To be a disruptor—rather than a disrupted—new processes, new methodologies, and new ways of thinking are required. In other words, as they navigate the changing competitive landscape, managers need to get serious about stress-testing their strategies, not to mention challenging assumptions. And to do this, they should take advantage of a planning tool with historical roots running from the Catholic Church’s Devil’s advocate office, which was established in 1587 to argue against canonization candidates, to the Kriegsspiel exercises (war games) of the Prussian General Staff.
What is this tool? Simple. Be your own worst enemy via corporate red teaming, a systematic way of making critical and contrarian thinking part of the strategic planning process of any organization. Consisting of a battle-tested set of tools and processes, red teaming is designed to probe plans for hidden weaknesses, identify missed opportunities, and uncover unseen threats—precisely the sort of things that competitors look for to gain competitive advantage. By applying these tools and processes against yourself first, before your adversaries do so, you can disable the competition and gain that advantage for yourself.
As noted in my book Red Teaming: How Your Business Can Conquer the Competition by Challenging Everything, the U.S. military and intelligence communities deployed a modernized version of red teaming to improve decision making following the 9/11 terrorist attacks, and the disastrous wars that followed them. It was a sobering time for America’s generals and spymasters. After the fall of the Soviet Union and a stunning victory in a one-sided war with Iraq in 1991, America believed its technological superiority and mastery of information would guarantee a future of security at home and victory abroad. In the ruins of the twin towers, and the short-lived victories in Afghanistan and Iraq that followed, American military and intelligence agencies discovered just how wrong they were.
“Whatever approach or strategy you choose for your business, remember that red teaming is not a better planning process; it is a process that makes your plans better.”
Drawing on the latest research in cognitive psychology and human decision making, the Central Intelligence Agency and the U.S. Army began pulling together an array of critical thinking and groupthink-mitigation techniques and developing a systematic approach for applying them to complex problems. They also began assembling teams tasked with using this system to evaluate strategies, improve plans, and support decision makers.
These red teams were soon offering alternative interpretations of intelligence in Washington and challenging existing strategies for combatting insurgents in Afghanistan and Iraq. Their penetrating insights and sobering analyses began raising eyebrows—not just in the United States, but around the world. As reports generated by American red teams were shared with allied forces, other countries saw the value in this contrarian approach and were eager to emulate it. Soon, British, Canadian, and Australian forces had established their own red teams.
When red teaming was allowed to work, the results were often stunning. The 2007 troop surge in Iraq that led to a dramatic reduction in violence in that war-torn country was one of the first products of red team thinking. Iraq’s subsequent descent into anarchy and the rise of the so-called “Islamic State” were arguably partly related to the consequences of abandoning this new way of thinking and returning to a more traditional calculus.
And you can gain a competitive advantage by applying this approach to your business.
Red teaming has the power to help established companies think differently and act like innovative disruptors, while also inoculating companies—even successful ones—against complacency and groupthink. It offers techniques to help your organization uncover alternative perspectives, identify and evaluate unconsidered options, and ensure that the best ideas are heard, regardless of where in the hierarchy they originate. You can use these potent weapons to attack your weaknesses head-on, before your competitors use them to their advantage.
By looking at your business from the perspective of customers, competitors, and other key constituencies, you can see how they will react to market moves you make before you make them. Red teaming can also show you how to turn disruptive events to your advantage.
Simply put, red teaming is how your business stays relevant, keeps ahead of your competition, and copes with an increasingly uncertain world. When I first learned about red teaming in late 2013, I immediately saw the value it could bring to businesses as they struggled to contend with an increasingly complex and rapidly changing marketplace. So, I convinced the Pentagon to allow me to take the Red Team Leader course at Fort Leavenworth. I was the first civilian from outside government to attend the program, which is regarded as the gold standard for red team training worldwide. And after graduating in 2015, I began working with companies to apply the methods I had learned from the military to the world of business.
The most innovative and disruptive companies, of course, already employ some red teaming techniques—albeit in a less systematic way. Critical thinking is part of the fundamental culture of Amazon, Google, and Toyota. The best venture-capital firms, such as Kleiner Perkins Caufield & Byers, use a similar approach to vet potential investment targets. Many businesses strive to emulate these companies, but their methods are often obscure and hard to transplant. However, while every red teaming exercise is unique, the formal process is relatively easy to implement. It is typically divided into three phases: analytical, imaginative, and contrarian.
THE ANALYTICAL PHASE: QUESTIONING THE UNQUESTIONABLE
All plans are based on assumptions, and all assumptions are based on our understanding of the problem that those plans are designed to address. Unfortunately, cognitive psychologists such as Daniel Kahneman and Amos Tversky have proven that our understanding is always limited—and often wrong. (For an excellent introduction to the field of cognitive biases and heuristics, see Kahneman’s bestselling book Thinking, Fast and Slow.)
Red teaming works by breaking a strategy or plan down into the assumptions it is based on, then challenging those assumptions to ensure that they are really correct and likely to remain so under all circumstances. As the U.S. Department of Defense explains, “It is this aspect of deliberate challenge that distinguishes red teaming from other management tools.”
To accomplish this, red teaming relies on an array of analytical tools including the following resources:
- Key assumptions check: A simple technique for evaluating the individual assumptions a plan or strategy is based on
- Probability analysis: A more detailed tool that uses weighted anonymous feedback to identify the parts of a plan that are most at risk of failure, and which would have the greatest impact if they did fail
- String of pearls analysis: A comprehensive system for mapping out the assumptions, dependencies, and second- and third-order consequences of proposed strategies
By challenging our assumptions and making them stronger, we also strengthen our plans. And by making our plans stronger, we increase the likelihood that they will succeed—not just in a best-case scenario, but even if the future turns out differently than we had hoped.
THE IMAGINATIVE PHASE: THINKING THE UNTHINKABLE
Figuring out the different ways in which the future could unfold, and understanding how those possibilities could impact a plan or strategy for better or worse, is another aspect of red teaming analysis. This phase is becoming increasingly important as the macro environment becomes increasingly unpredictable.
Red teaming cannot predict the future, but it can help you plan for a range of possible futures. To do that, red teaming relies on various imaginative techniques such as the following strategies:
- Alternative futures analysis: A systematic way of exploring how a strategy might unfold if different variables have different values
- Being your own worst enemy: A role-playing approach akin to war-gaming, designed to figure out how a competitor might respond to a proposed strategy
- Pre-mortem analysis: A powerful tool for identifying the ways in which failure could occur
Understanding the ways in which a plan could fail allows companies to proactively adjust their strategies to address any weaknesses before they become problems. It also allows companies to develop contingencies to deal with events outside their control.
THE CONTRARIAN PHASE: CHALLENGING EVERYTHING
Sometimes, our fundamental understanding of the problem a strategy or plan is designed to address is wrong. Too often, alternative perspectives within an organization are suppressed by groupthink or the internal politics of the organization.
To make sure all perspectives are heard, and all alternatives are carefully considered, red teaming relies on the following methods:
- Liberating structures: An array of tools designed to uncover different ideas and perspectives from within the organization
- Team A/Team B analysis: A comprehensive approach for evaluating two different courses of action
- Devil’s advocacy: A powerful approach aimed at systematically challenging the prevailing view inside an organization, not necessarily to prove it wrong, but to make sure that it really is right
Deploying red teaming techniques, you can find holes in your strategy and plug them before competitors take advantage of them. But while you can do this on your own, it is important to understand, real red teaming requires exactly that—a team. Why? As Nobel Prize-winning economist Thomas Schelling once said, “One thing a person cannot do, no matter how rigorous his analysis or heroic his imagination, is to draw up a list of things that would never occur to him.” That is why a formal red teaming process is a group activity.
However, there are different models for applying red teaming. And there are different ways to make red teaming part of your organization’s strategic planning process. Four different team arrangements are detailed below:
- Ad-hoc red team: An in-house team led by an employee who is a trained red team leader that convenes on an as-needed basis to provide alternative analysis of the organization’s strategies, plans, and proposals
- Outside red team: A team composed of trained red teaming consultants who are hired to analyze a particular strategy or plan
- Facilitated red team: A team made up of the senior leaders of an organization that is guided by trained outside facilitators through a comprehensive red teaming analysis of a plan or strategy
- Dedicated red team: A permanent in-house red team composed of trained red teamers, and led by a trained red team leader, that is available on demand to support the organization’s senior leadership and regular planning staff
Each of these models has its own strengths and weaknesses. Choosing the right one will depend on the size of your organization, the complexity of its problems, and the time and resources you are able to devote to red teaming.
Whatever approach or strategy you choose for your business, remember that red teaming is not a better planning process; it is a process that makes your plans better. Embrace it and red teaming can help you figure out ways to do what you do better, before your rivals do. It can help you disrupt your own industry, before a new entrant does.
But keep in mind that red teaming is only for companies that are not satisfied with their success. It is for organizations that know they can always do more, go farther, and fly higher. If you are happy with the status quo and resist change, then red teaming probably isn’t for you—although it may prove very attractive for your competitors.