Harvard Business Review Japan: What is Sensemaking – A Conversation with Christian Madsbjerg

By Yuka Yamazaki

Artificial Intelligence can’t yet do it, but every human can. Top leaders in the world, like George Soros, excel at it. I am referring to “sensemaking.” I asked Mr. Christian Madsbjerg, author of the book Sensemaking, about how he cultivates his sensemaking ability.

YY: Since your book "Sensemaking: The power to identify what is really important" has been translated and published in Japan, it has become a topic of conversation. Please tell us how you define sensemaking.

CM: For me, "sensemaking" is the ability to gather different types of data and integrate them. The data I’m talking about includes numbers, yes; but it also includes the ways in which people feel, perceive, and navigate their worlds. Big data can show us the number of clicks and swipes in the digital world. But our complex lives – our existence, our actions, and why we do what we do – cannot be grasped by click rates or financial expenditures alone.

And critically, unlike machines, people can comprehend data beyond numbers. Sensemaking capitalizes on our human ability to solve problems, generate ideas, and understand the world in ways that incorporate numerical data with human observation and contextual information, as well. Sensemaking is understanding the world using many types of information – this is human intelligence. And AI can’t do it yet.

YY: Could you explain this with a concrete example?

CM: Let's take a doctor as an example. If I complain of a stomachache to a doctor, the doctor will ask me questions about my body, maybe run some tests, and then form a diagnosis from all of this information. So far, you can also do this with a machine. But while a doctor is talking to me, he or she can simultaneously evaluate my demeanor, and realize that my condition might be related to my mental health – perhaps I appear overly anxious. This is an observation a machine can’t make, but a good doctor can.

Sensemaking is not something only social scientists can do – everyone can. I have met top leaders around the world who excel at sensemaking. Their decision-making integrates numerical analysis with additional information like timing, personnel, and skills.

However, in recent years, the trending vision that such human abilities are not particularly important is gaining ground. When people study humanities, they still receive training in sensemaking. Overall though, our society is placing too much emphasis on the capacity of machines – so much so that we are forgetting the sensemaking ability which we have simply because we are humans. And as a result, we let our innate capacity for sensemaking to deteriorate.

YY: You run a company called ReD Associates, which provides consulting services to companies using a humanities approach. What vision or idea shaped how you created the company?

CM: When I was young, I dreamt of becoming a scholar. I wanted to be a Professor of Philosophy. But when I entered university, I saw many professors who didn't seem particularly happy.

Professors who have secured tenure are assured for life. They can research what they want to research, teach what they want to teach, write what they want to write; and they generally have greater freedom with their time. But despite this wonderful position, I scarcely ever saw my professors laugh. So I thought it best not to move into the world of scholars and set up a consulting company instead.

My idea was to apply methods for learning in the humanities to the high-level strategies of companies. So for example, think of a car company. If that company wants to sell its cars, it needs to determine not just price and sales volume, but also what a car really means to people, as well.

We were very lucky. We first worked with Lego. Then Lego recommended us to Adidas; Adidas recommended us to Samsung; Samsung recommended us to Intel, and so on and so forth. The people who we worked with at the food company, Mars went on to work at the Coca-Cola company, and so ended up working with Coca-Cola too. And we did this all without pursuing any sales or marketing – at first, we didn’t even have a website.

Then I wrote up what we were doing in a book. The first book published was The Moment of Clarity: Using the Human Sciences to Solve Your Toughest Business Problems. Last year, a version of my second book, Sensemaking, was translated into Japanese. Both books got a lot of response; Sensemaking in particular became very popular in Japan. I wanted to find out why the book is gaining so much traction in this country, so I came to Japan.

Look at the obvious with wonder

YY: You mentioned that you started the company with the idea that the humanities would be useful for business. How was this idea implemented?

CM: I appreciate practicality. I wanted to connect the humanities to actually making and changing things. I didn't want to be a professor who wrote papers that few read.  I feel that if you have written something, it should be put to use. That’s what I appreciate about the dynamism and clarity in the business world: If you have an idea, you can put it to use. If your methods are shoddy, the results will inevitably be made clear in the market.  This is quite distinct from the political world, where genuine and superficial successes are more difficult to distinguish.

So, ultimately how did we do this?.... I actually don’t know [laughs]. I just followed my instincts.

YY: What kind of method or approach did you bring to the business world?

CM: Cultural anthropology utilizes a data collection method called ethnography, which relies heavily on observation. Ethnography entails: Going to people; observing how they live; paying attention to what is happening, rather than merely asking interview questions; taking pictures; recording what is said; and writing detailed notes about what one saw and experienced.

Ethnography is a powerful method. As an independent observer, you can note the experiences and practices that people do not consciously recognize in themselves. Why are we dressed the way we’re dressed today? Why are we eating what we’re eating today? These kinds of inquiries cannot be understood from interviews since they’re extremely difficult to articulate cogent answers to. Ethnography is a method that enables someone to look at what seems to be obvious and see it as magical. In other words, we look at ordinary things with wonder and try to understand why they are as they are.

These days, ethnography is regularly used in business. But it is too often done in short timeframes, which merely scratches the surface. Many consider ethnography to be spending two hours in someone's home to ask a family some questions. But that’s an interview, not an ethnography. What we do is the kind of ethnography that cultural anthropologists do in the field. It takes at least three weeks – sometimes six months –for people’s wariness to subside, and for us to see their genuine feelings and real lives.

For example, we have been working on mobile phones with Samsung for over 12 years. One project is about six months to one year, but different projects with similar themes almost always start immediately afterwards. So in fact, our research for Samsung has more or less been continuous. In the span of 12 years, we have been to 30 countries digging deep into how family relate to their phones.  With Ford, for another example, we have been working on mobility for over 7 years now. One could say that these are far more immersive and in-depth than the majority of academic studies.

It takes a lot of hard work. And we always work with the [client’s] top management. They are the ones dealing with big essential questions like "Why do people move?"

YY: Can you give us some examples where ethnography can help a business?

CM: At the core of automated driving is a technology called Lane Assist. It’s a technology that detects the white line of the road and redirects a car when approaching it. This makes sense if you live in the state of Michigan, because the roads there are of a consistent quality. But let’s say you want to sell this car in India, well then, there are fewer consistent white lines on the road. And unlike in Michigan, there may be more people using roads as footpaths, or possibly more animals crossing the road. People’s use of roads is different in different countries and contexts. It would be an egregious error to try and export this technology to Brazil, China, India, etc. based on the US and Japan experience alone.

Technology needs to be adapted to the customs, culture, and experiences of any region. Ethnography is an extremely useful methodical tool for understanding people in different regions, of different generations, from different contexts and backgrounds, etc. But in reality, most software developed in Silicon Valley is created by people of a similar age who get trained in the same places, have similar experiences, and think the same way.

Speaking of cars, cars are made by mechanical engineers who are often men with specific interests and experiences. But cars are used by people around the world – obviously including those who are neither engineers nor men.  With an ethnographical mindset, you can design a product based on more peoples’ experiences rather than those creating the product.

YY: Do you also train employees in client companies so that they can do sensemaking themselves?

CM: People from the companies who have worked with us for many years naturally learn to do their own sensemaking, but mostly we do it by ourselves.

If you want to produce a car, you should be a mechanical engineer. In the same way, if you do ethnography and any kind of sensemaking, you should have some humanities background. Companies do increasingly feel the need to hire people trained in humanities, and many companies are. Facebook is one. They recently hired 800 social psychologists and cultural anthropologists, and asked us to create a plan for how to integrate those competencies into their work. Of course, if you simply hire 200 cultural anthropologists or 50 philosophers without the process, structure, and ability to link their knowledge to the business, it will be a mess.

YY: What kind of people do you hire in your company, and how are they trained?

CM: It costs an awful lot of money (laughs). We receive thousands of applications for one position. Most people we recruit have a PhD. We don’t take undergraduates; something more than a Masters degree in the humanities is required. Some of our people have studied philosophy, cultural anthropology, comparative literature, art history, etc. As they get into the actual projects, they learn the basics of business. Even for a very smart person, it takes about 2-3 years to become a fully-fledged consultant.

We employ very smart and young people and we train them by ourselves. In the past, we have hired senior consultants from strategic consulting companies, but because our approach is quite unique, that didn’t work out very well.

YY: What do you mean by "smart"? There are many kinds of wisdom.

CM: That's a good question. It is a raw, natural intelligence. It is the ability to read, analyze data, make hypotheses, and have the intellectual honesty to admit when you are wrong. It is [the ability] to gather a huge amount of data then structure it, understand its meaning, and draw conclusions.

In addition to these basic intellectual abilities, curiosity about and a broad outlook on many things is also important. No matter how intelligent you are, if your outlook is narrow-minded, you will know little about life and have little to contribute. For example, in the case of a project on cancer and the immune system, scientific knowledge is of course necessary; but at the same time, it is critical to understand and empathize with someone who has just learned their family member has cancer.

 

YY: What is particularly important during sensemaking?

CM: "Independent thinking" is important. Independent thinking means having time to think without immediately jumping to conclusions. Don't be fooled by experts, try to see things on your own, and if your way of thinking proves to be wrong, accept it in a forward-looking way. To do this, you need intellectual honesty and openness. And actually it is very difficult to find people who have this. Many people, when they become experts, want to see confirmation of what they know.

[Independent thinking] means doing "abductive reasoning": observing and building hypotheses based on observation. I believe that creativity comes from hypothetical reasoning. It is not something that develops when you sit in HQ and brainstorm. Creativity is born when you go out into the world, understand what is happening there, and translate this for others. Ideas emerge when you look carefully at the world.

YY: Feel and understand what is happening. Can one train and enhance such sensitivity?

CM: Yes, I think it is something you can train. However, and I don’t know why, there are people who do just innately have high levels of this kind of sensitivity. For example, the people who work with George Soros say that even though they’ll attend the same meeting as him, he’ll glean much more from it than they do. Soros doesn’t only see what people say and what happens in the meeting, but also what people do not say, what people are silenced by, and who is not in the meeting.

What made Soros so successful is that he is far more sensitive and perceptive than most about many things, be that a meeting or market situation. He seemed to consider everything: politics, financial conditions, interest rates, what other investors were doing, etc. In other words, he was “sensemaking.” There are many people like him who are successful in the world. But where does this come from? I do not know.

 

YY: What do you do to maintain and enhance your sensemaking ability?

CM: I read. My life centers around reading. What we do in practice is similar to what news editors do. A good editor looks at the world, determines what is important, gets as much in-depth information as possible, and decides what to bring to the top page. I do the same thing.

For example, when I do a project on perfume, I immediately immerse myself in the world of perfume. To understand how perfume is made, we fly to a perfume production site and watch the process. We read books on perfume history. We observe how people use perfume. We find out perfume impacts our lives and what role it plays...Because when you do “sensemaking” about something, you need to not only think with your head but with your body too.

When George Soros launched his own fund in the 1970s, he said that he was the market. Great corporate leaders like Soros can physically feel the rhythm of their companies.  And in doing so, they can determine whether they should wait or move forward with an adjustment. They can do this not because they’re geniuses, but because they’re highly sensitive. Their receptors are wide open and they see everything with wonder. They see things without judging. These are skills that make both for good journalists and good cultural anthropologists too.

 

YY: Many major Japanese companies change their CEO every four years. Can you then still do “sensemaking”?

CM: I think short-termism is destroying many companies. CEOs who have to worry about quarterly performance struggle to be aware of what is happening in the world. But there are occasions and opportunities for insights continue to live on even after a CEO leaves.

Take Samsung. For our first project with Samsung, we looked at televisions. Since Samsung is an engineering company, they primarily looked at the technical and functional aspects of a television. They operated with the assumption that their buyers – who they assumed were predominantly men – viewed their TVs as a home appliance.

We went to different parts of the world and observed the role TV played in peoples’ lives. We found that while fathers might provide the money for a TV, it was usually mothers and children who decided which TV to purchase. We saw that families did not view TVs as home appliances but as furniture. Seeing TVs as furniture, they wanted their TV to fit the design of their living rooms and interior decoration. As soon as Samsung recognized that the TV was considered furniture, everything from design to advertising changed.

At an electronic trade fair earlier this year, Samsung presented its wall television. It’s a TV that disappears into the wall when it’s not switched on. Even after ten years, the idea that a television is furniture not a home appliance continues to live on at Samsung, even under different CEOs.

YY: Have you ever worked with a Japanese company?

CM: We are doing a lot of projects for global companies focused on the Japanese market, but we have not worked much with large Japanese companies yet.

I love Japan. For me, coming from Northern Europe, the sense of beauty in Japan is very comfortable. Whatever I see, my heart feels immediately connected. I would really like to work in Japan, so I would love to set up a project with a large company here.

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