Insight       17 May 2025

Randomness in Strategic Planning

When developing a strategy, it can be challenging to distinguish signal from noise. Is that market uptick a genuine trend or a random fluctuation? 

Our Brain’s Love of Patterns Can Mislead Us

Our brains are hardwired to find patterns; psychologists call this "apophenia." This evolutionary adaptation helped our ancestors survive, but it can lead us astray in data analysis. We're also susceptible to "confirmation bias" and "narrative fallacy," which cause us to create stories explaining random events. 
It can be too easy for us to make confident projections based on patterns that may be entirely random. Consider the company that pivots its strategy after two quarters of growth, only to discover it was statistical noise. Or the project that looks on time for six months, only to go off track in the next quarter. 

Our Brain’s Love of Patterns Can Mislead Us

Our brains are hardwired to find patterns; psychologists call this "apophenia." This evolutionary adaptation helped our ancestors survive, but it can lead us astray in data analysis. We're also susceptible to "confirmation bias" and "narrative fallacy," which cause us to create stories explaining random events. 
It can be too easy for us to make confident projections based on patterns that may be entirely random. Consider the company that pivots its strategy after two quarters of growth, only to discover it was statistical noise. Or the project that looks on time for six months, only to go off track in the next quarter. 

Approaches

Try these approaches: 
  • Test for statistical significance before acting on trends or doubling down on an approach
  • Create wider confidence intervals than you feel comfortable with to serve as a counterbalance to overconfidence
  • Run multiple scenario analyses, including ones where patterns dissolve
  • Implement decision pre-mortems to identify cognitive biases
  • Create psychological distance by imagining the data belongs to a competitor 
Or implement "red teaming," a practice borrowed from military strategy in which a dedicated group plays devil's advocate to challenge your core assumptions. 

Approaches

Try these approaches: 
  • Test for statistical significance before acting on trends or doubling down on an approach
  • Create wider confidence intervals than you feel comfortable with to serve as a counterbalance to overconfidence
  • Run multiple scenario analyses, including ones where patterns dissolve
  • Implement decision pre-mortems to identify cognitive biases
  • Create psychological distance by imagining the data belongs to a competitor 
Or implement "red teaming," a practice borrowed from military strategy in which a dedicated group plays devil's advocate to challenge your core assumptions. 

Build Systems That Challenge Your Assumptions

A well-structured red team systematically questions whether perceived patterns might be random noise. They ask uncomfortable questions, such as, "What if this quarter's growth is purely coincidental?" or "How might we be fooling ourselves with this interpretation?" By institutionalising healthy scepticism, red teams create psychological safety for questioning consensus views that might be based on illusory patterns. 
What patterns might you be overinterpreting due to your natural pattern-seeking tendencies? 

Build Systems That Challenge Your Assumptions

A well-structured red team systematically questions whether perceived patterns might be random noise. They ask uncomfortable questions, such as, "What if this quarter's growth is purely coincidental?" or "How might we be fooling ourselves with this interpretation?" By institutionalising healthy scepticism, red teams create psychological safety for questioning consensus views that might be based on illusory patterns. 
What patterns might you be overinterpreting due to your natural pattern-seeking tendencies? 

Further Reading