Business Thinking Meta Model:
Proactive Thinking, Reactive Thinking, and Passive Thinking
by Hidetoshi Shibata  Copy rights © H. Shibata all reserved, 1998          Send me E-mail !

Every year many new business concepts appear and previous concepts disappear.

Which concepts should we pick up?

This report plans to develop a universal model for business thinking. The universal model gives us a higher viewpoint to evaluate business concepts and help us to understand essences of business concepts. This report calls the universal model

the Business Thinking Meta Model.

The Business Thinking Meta Model is composed of three thinking patterns such as Proactive Thinking, Reactive Thinking and Passive Thinking. We can think effectively by selecting an appropriate thinking pattern, responding to the purposes of thinking.

The main findings are as follows.

The scope of Thinking:Thinking processes should be isolated from implementation processes. If we consider implementation processes simultaneously, we unconsciously eliminate challenging alternatives. Based on this proposition, this report considers only thinking processes.

The result of the research:We can utilize our thinking power effectively with the Business Thinking Meta Model.

The power of Proactive Thinking:We can escape from causation, which is applicable only under predictable business situations, by adopting mechanical analysis, which is the analysis part of Proactive Thinking and is typically realized by the Lateral Thinking, the Game Theory, and Econometrics.

The power of Reactive Thinking:Causation, which is the analysis part of Reactive Thinking, is the most efficient business thinking method under a predictable condition.

The trap of Passive Thinking:Many business analysis tools are mal-adapted as powerless static frameworks, which only arrange information on formats passively.

We start to understand the Business Thinking Meta Model.

The Business Thinking Meta Model

The Business Thinking Meta Model is composed of three typical thinking approaches such as Proactive Thinking, Reactive Thinking, and Passive Thinking. Further, the Business Thinking Meta Model divides a thinking process into three parts such as Exploring, Analyzing, and Deciding. Each of the three approaches has conceptual terms for each divided thinking process. This three-by-three categorization and nine conceptual terms give us an exhausted recognition about business thinking and systematic selection criteria to pick up one or a combined appropriate thinking approaches. Moreover, by understanding and applying the Business Thinking Meta Model, we can understand the usefulness and limitation of business concepts.

Next, we can see more examinations of the three thinking approaches and newly defined conceptual terms. In order to understand the thinking approaches and utilize the power of them, this report explains the strengths and weaknesses, the requirements, and the adaptations, of the three approaches.

Proactive Thinking: Beyond Causation

We identify the strengths and weaknesses of Proactive Thinking, set the three requirements of proactive thinking and examine several popular business thinking approaches which include Proactive Thinking.

Strengths and Weaknesses of Proactive Thinking

Though Proactive Thinking is a powerful approach to considering uncertain future situations, Proactive Thinking is not a conventional thinking approach. The strengths and weaknesses of Proactive Thinking are as follows.

Strengths

  • Proactive Thinking is useful to break through a current situation.
  • Proactive Thinking is efficient to conceive alternatives.
  • Proactive Thinking is competitive under an uncertain business condition

Weaknesses

  • Results of Proactive Thinking are only possible scenarios, not plausible scenarios
  • Results of Proactive Thinking are less persuasive (because it has no causation).
  • Proactive Thinking is not applicable to daily business thinking (Reactive Thinking is a better alternative).
  • Proactive Thinking is time-consuming.

Requirements

Formulating a new structure, analyzing future possibilities mechanically, and developing contingent scenarios are three requirements of Proactive Thinking.

Meta System Structuring

When we plan to progress beyond a current system, we should think about an environment of the system and a meta environment of the environment. Exploring the wider ranges helps to find new ideas and to develop a new system, which substitutes a current system.

Mechanical Analysis

In order to escape from persistent causal thinking in our mind set, mechanical analysis is required. Edward De Bono1, who is a popular imaginative thinking researcher, conceived "Lateral Thinking," which is a typical mechanical conception method.

Alex Osborn2, who is also a famous imaginative thinking researcher, proposed another mechanical conception method (we call his method the Osborn method). The Osborn method includes adaption, modification, substitution, addition, multiplication, subtraction, division, rearrangemnet, reversal and combination. All these approaches target perspective change.

Further Econometrics and other mathematical models such as break even analysis, the Discount Cash Flow Model, and statistical test models are typical approaches of mechanical analysis.

Contingent decision making

When we think of an uncertain future, contingent planning is powerful. Multiple scenarios are outcomes of contingent decision making. The Game Theory is a typical contingent decision making approach.

Other considerations for Proactive Thinking

Vision

Vision making is thinking in an abstract level. Vision making has Exploring, Analyzing, and Decision Making, in an abstract level. All Proactive Thinking, Reactive Thinking, and Passive Thinking can include vision making.

Importance of a vision is in its nobility, challenging spirit, heroism, and contributing spirit, which encourage members of an organization. Since these aspects relates to the implementation of thinking, vision should be researched with the implementation of thinking.

Intuition

Intuitive conception is frequently recognized as Proactive Thinking, but intuition comes from accumulated experiences. Intuition can eliminate a time-consuming logical causation process but is still based on an empirical mind set.

Time-based competition

Proactive Thinking itself is relatively time-consuming, but after we prepare multiple scenarios, we can respond to environmental changes quickly. Proactive Thinking is time-consuming in a thinking process but agile in an implementation process.

Adaptations of Proactive Thinking

We can see a few Proactive Thinking approaches, but Proactive Thinking is not common as much as Reactive Thinking and Passive Thinking are. As adaptations of Proactive Thinking, this report picked out Michael Porter's Competitive Advantage analysis, Peter Senge's System Thinking approach and Gary Hamel's "Strategy as Revolution" concept.

Porter's Competitive Advantage analysis

Porter's analysis3 is a typical proactive thinking example. But unfortunately his conceptual frameworks are frequently segregated by adopters and each of frameworks is used as an independent and static frame. Further, his scenario analysis, the most powerful tool of his analysis for Proactive Thinking, is not popular, though other frameworks such as the five force model, the generic strategy matrix and the value chain are famous and are frequently adopted for strategy formulation, which should be proactive.

Senge's Systems Thinking approach

Senge4 explained the limitation of a system with escalation and delay, which are built in a system and cause a malfunction in a system. Using escalation and delay, Senge practically proposed an alarm to know the time to develop a new system. New system development is the very proactive thinking. But Senge did not mention clearly the necessity of contingent decision making or multiple scenarios. Contingent decision making or multiple scenarios are requirements for proactive thinking.

Senge also mentioned "Creative Tension" which is an adaptation of a traditional problem solving concept. A traditional problem solving method uses a kind of subtraction to define a problem. The definition is "Ideal Situation - Current Situation = Problem." This formula assumes that a current situation has problems. Senge applied this formula to Proactive Thinking, assuming that a current situation does not have problems. Senge's formula is "Vision - Current Reality = Creative Tension." Senge focused on the proactive side of problem solving.

Hamel's "Strategy as Revolution" concept

Hamel5 mentioned that breaking through accumulated experiences is essential for strategizing. Hamel's strategy is not exclusively a corporate strategy. Hamel emphazied strategic approaches for every business activity. Hamel used a "revolution" as an analogy for a strategic activity. Hamel proposed the importance of proactive thinking but he did not mention how to realize his idea. Proactive Thinking, which we see in this report, can realize Hamel's concept.

Reactive Thinking: Power of Experience

We can see strengths and weaknesses of Proactive Thinking, three requirements of Reactive Thinking and two popular business thinking approaches which include Reactive Thinking.

Strengths and Weaknesses

Reactive Thinking is a popular and efficient problem solving approach, but it is applicable only when business conditions are stable.

Strengths

  • Reactive Thinking is widely applicable (Almost all daily analyses and decision-makings should be based on Reactive Thinking).
  • Reactive Thinking is persuasive (Because Reactive Thinking has causal explanations).
  • Reactive Thinking is powerful when we target continuous improvement
  • Reactive Thinking is time-efficient

Weaknesses

  • Reactive Thinking can not propose drastic changes.
  • Reactive Thinking is powerless when business conditions are uncertain.

Requirements

Setting functional relations, analyzing causation, and developing an optimal solution are three requirements of Reactive Thinking.

Functioning

This report names the thinking process through which we set functional relations of the targeted field "Functioning". Functioning is the first requirement for Reactive Thinking. An analysis process of Reactive Thinking uses the functional relations to find causation. (A set of functional relations is frequently called "system")

Causation

To clarify cause and effect relations of a targeted field is the analysis process of Reactive Thinking, called Causation. Causation is an universal and persuasive analysis method, since most of us are influenced by causation through educational and cultural experiences.

Further, we can find causation only based on our accumulated experiences, which are both direct experiences and secondary experiences. Secondary experiences include informative experiences through reading books, hearing others' experiences, and so on. Since each of us has familiar causation method, finding causation is time-efficient (We are frequently unconscious of our familiar method, but we are influenced by it). But under uncertain business situations, experience-based causation is powerless.

Optimal Decision Making

To find a best solution scenario, which solves the true cause, is the third requirement of Passive Thinking. Since causation can find reliable causes of a problem, though the reliability is not 100 %, we can focus on the causes to find solutions. Therefore our solution can be one scenario, or a set of scenarios, which target the same causes. This report names this type of decision making Optimal Decision Making.

Further, since Optimal Decision Making comes from causal analysis, it is impossible to find a reengineering type of solution. Causal analysis can set only a continuous-improvement type of solution.

Adaptations

We can see many Reactive Thinking approaches. Reactive Thinking is the most popular business thinking. As adaptations of Proactive Thinking, this report picked out KAIZEN method and Charles Kepner's rational thinking.

KAIZEN (Continuous Improvement) method

KAIZEN is a typical Reactive Thinking. KAIZEN is elaborated in Japanese manufacturing companies. In a typical KAIZEN method, front-line workers propose a small change in production system. Their proposals target the improvement of productivity. Even if they think about future improvement, they focus on eliminating inefficiency from their current production systems. They do not think a total system change. Further, they propose one cause of each inefficiency and one solution to the cause. Their approaches are typical Reactive Thinking.

Charles Kepner's rational thinking

One of the founder of the Kepner Torigoe method, Charles Kepner6, mentioned that a solution should be selected among possible alternatives, and that a selection among alternatives is better than a rushed decision making based on the initial idea. Kepner's idea is a combination of Proactive Thinking and Reactive Thinking. Kepner combines contingent decision making with Reactive Thinking, but he recommends picking up one solution. Since Kepner's method is based on an optimal decision making, it is useful only when business conditions are stable.

Passive Thinking:Mal-adaptation of Business Thinking Tools

We can see strengths and weaknesses of Passive Thinking, three requirements of Passive Thinking and adaptations of Passive Thinking.

Strengths and Weaknesses

Passive Thinking can recognize situations but is not useful for decision making.

Strength

  • Passive Thinking is efficient to recognize situations.

Weaknesses

  • Passive Thinking can find neither future possibilities nor causes of past systems.
  • Passive Thinking is easily to misunderstood as adaptations of popular business thinking concepts such as the value chain analysis, SWAT analysis, Life cycle model, and Core competence model, but these adaptations are mere data mappings on certain formats.

Requirements

Setting a frame, which arranges data and possibilities, analyzing the data and possibilities through the frame and deciding with intuition are three requirements of Passive Thinking.

Framing

Making a frame, which is supposed to exhaust existing data and future possibilities, is the required exploration for Passive Thinking. Passive Thinking does not require finding causal relations or a meta system.

Mapping

Verifying whether the proposed frame can exhaust data and possibilities is the required analysis for Passive Thinking. This report calls this process Mapping. In order to verify whether the data and potentials are exhausted or not, the Pyramid Principle and the MECE Principle are conventional. Both principles were mentioned by Barbara Minto7. The Pyramid Principle suggests collecting and arranging data hierarchically. Higher layers include more abstract expressions and lower layers include more concrete expressions. Since we say the same things with different levels of abstraction, arranging information into a hierarchical frame is a powerful method to clarify complex situations. MECE stands for Mutually Exclusive and Collectively Exhaustive. If we can arrange information exhaustively and without double counting in each level of the hierarchy, the way of arrangement is ideal. The Pyramid principle and the MECE principle is useful for Mapping process.

Intuitive Decision making

Since Passive Thinking does not have causal analysis, we can not find causal criteria to pick up one optimal solution in Passive Thinking. Further, since Passive Thinking does not have mechanical conception, we can not find multiple scenarios as Proactive Thinking can find. Therefore Passive Thinking can only depend on intuitions for decision making. Intuitive Decision Making is the third requirement of Passive Thinking. Intuition can go beyond causation but is still influenced by accumulated experiences. Sometimes intuitions work very well, but usually intuitions are clueless. Intuitive Decision Making seems to be practical but is risky.

Adaptations

We can see many Passive Thinking approaches, but frequently Passive Thinking approaches are mis-adaptations of Proactive Thinking or Reactive Thinking. As adaptations of Proactive Thinking, this report picked out Financial Statements and SWAT analysis.

Financial Statements

Financial statements are typical static frames. Even if financial statements exhaust relevant information, financial statements themselves say nothing. In order to know meaningful information from financial statements, we must use Proactive Thinking or Reactive Thinking to predict the future or find cause and effect relations.

SWAT analysis

SWAT analysis is one of the most popular marketing analysis tools. But a SWAT frame is used only for arranging information. After analysts arranged information, they can use only their intuition to formulate action plans.

Conclusion

In an uncertain business situation, which we face these days, Proactive Thinking is most useful. When we use Proactive Thinking, we must watch for the unconscious induction from causation, which comes from accumulated previous experiences. Further, we should recognize that most of our thinking should be Reactive. We do not have to use Proactive Thinking for our daily thinking. Moreover, the easy adaptation of business thinking concepts is apt to be only Passive Thinking and the results become only an arrangement of information. Passive Thinking is useful only for recognizing situations. The next table summarizes three thinking approaches in terms of main usage, applicable situations, required time, and persuasiveness.

Further, we can appropriately utilize business thinking concepts with the Business Thinking Meta Model. We can examine whether the concepts are proactive, reactive or passive by checking how the concepts explore situations, how the concepts analyze issues, and how the concepts make decisions. After the examinations, we can apply the concepts for suitable usage and situations, efficiently and persuasively.

Summary of Business Thinking approaches

 

Usage

Situation

Time

Persuasiveness

Proactive Thinking

Break through

Unpredictable

Time-consuming

Less persuasive

Reactive Thinking

Continuous Improvement

Predictable

Time-efficient

Persuasive

Passive Thinking

Situation Recognition

Anytime

Time-efficient

Least Persuasive

Note

1 Edward De Bono: Serious Creativity, HarperCollins, New York, 1992

2 Alex Osborn: Applied Imagination, Creative Education Foundation Press, Buffalo, 1993

3 Porter's Analysis: Competitive Advantage, Free Press, New York,1985

4 Senge: The Fifth Discipline, Currency and Doubleday, new York, 1990

5 Hamel: "Strategy as Revolution", Harvard Business review July-August 1996, Boston

6 Charles Kepner: Managing Beyound the Ordinary, Ama Com, New York, 1996

7 Barbara Minto: The Pyramid Principle:Logic:in Writing and Thinking

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