“There are known knowns; there are things we know that we know.

There are known unknowns; that is to say, there are things that we now know we don’t know.

But there are also unknown unknowns; there are things we do not know we don’t know.”

Logically, we believe that there is fourth condition that is missing: the “unknown knowns”.

The nineteenth century American humorist, Josh Billings^[2] is quoted as saying that “It ain’t ignorance causes so much trouble; it’s folks knowing so much that ain’t so”. This is sometimes cited as “It ain’t what you don’t know that gets you into trouble. It’s what you think you know that just ain’t so”. ^[2]  So, we can expand Rumsfeld to include a fourth condition;

There are unknown knowns; there are things that we believe we know that are not true.

Arguably, the search for Iraqi weapons of mass destruction fits this last logical case better than the three that Rumsfeld cited in his discussion about the complexities of the war and military intelligence.

In business strategy, all four conditions apply, and we need to be aware of them.

Known Knowns

In your business there should be a lot of known knowns, or you are really in trouble. The truth is, however, that much of what we believe we know to be “true” may not be.  This is further complicated by the nature of “truth”. We all perceive events and conditions differently and our sense of “truth” may not align with that of others.  Cold hard facts can generally be accepted by most, though almost never by all, and other “beliefs” will not be universally agreed upon. The truth is that there is no “truth”.

We need to be careful when we do environmental scans to make sure that our data is truly valid.  It is quite common for our self-perceptions to be out of alignment with the perceptions held by our suppliers, customers, competitors and staff.

The truth is that there is no “truth”

One of the values that third party industry experts, new employees and consultants bring is that they are outsiders who are not embedded day-to-day in your culture.  Accordingly, they can bring a fresh and dispassionate perspective to your business and strategy.  New employees also bring real value early in their engagement, when they ask “silly” questions and make fresh observations.  Unfortunately, the politics of the workplace can quickly reorient the newbies and they ultimately fall into line.

When you develop strategies and declare data and truths, take a moment to dispassionately test for self-fulfilling perceptions and unsubstantiated data. Whittle the “known knowns” down to those statements for which there is absolute objective evidence.

A push back on the “truth” should be both encouraged and rewarded.

Given that you “know”, you can dig, learn and prepare.  Make sure that you actually know and that you are not being delusional or living in an echo chamber – see “unknown knowns”, below.

Known Unknowns

There are things that you know about but you can’t quantify.  This is where we focus a lot of effort because these are the gaps that we are aware of. What will my competitor’s bid price be? What are my product revenues going to be in 5 years? What improvements and upgrades are my competitors developing? What disruptive technology is coming down the pipe?

But are these really “unknown” or “unknowable”?  It is part of the business developer’s and strategists challenge to convert these to “known”.  You should be able to find absolute answers or, at least, data expressed as a probability.

Disruptive technologies and products do not pop out of a vacuum; there are hints, often for years, about these developments

There are tools and techniques for working the unknowns and bringing then into the light.  For example, many competitors leave a surprisingly rich field of data lying around. If you know where to look and how to manipulate the disparate bits of data, you can tease out their underlying costs and pricing data.  Decent competitive analysis tools and techniques work here, sometimes with surprising results. Equally, disruptive technologies and products do not pop out of a vacuum; there are hints, often for years, about these developments. It is our biases that often blind us to the next disruptive development. Our article on “the five stages of strategic grief” ^[4] gives some insights as does the bias section of our article “why strategies fail and what you can do about it” ^[3] .

The point here is that if you are aware of an “unknown”, you can do something about it and you are, at least, prepared, with your guard up.

Unknown Knowns

“It’s what you think you know that ain’t so”.  We have discussed this is other articles. It is easy to become a captive to your corporate culture, your corporate self-perceptions and your value propositions. It is easy to believe what you want to be true (see ^[3] and the section on Bias). Long term employees and product development leads have the curse of knowing all about your company, products, clients and markets. When you are close to the action, you have blinders and filters on that can make what you “know” passé or worse, flat out wrong.  Business development and sales staff are notoriously unreliable, as they swim in their own pool of value propositions and differentiators, making an objective perspective on the competition largely impossible. “Know They Self” is a worthy commandment.

Long term employees and product development leads have the curse of knowing all about your company, products, clients and markets

What you “know” about your market could be quickly undone.  Use outside sources to “black hat” your environmental scan.  Black Hat reviews are normally associated with the Shipley proposal process and with developing competitive intel during competitive bids.  This same technique, assisted by informed outsiders can be used effectively when considering your current place and planned future position in a complex market.

The real danger here is that your guard is down. You can fail to see “the truth”, you can easily write off tell-tale signs because you “know”. It is this hubris of knowledge that trips up established companies and industries and allows change to fly in under the radar.

Unknown Unknowns

Yup, there are things out there that you don’t know about and you don’t know that you don’t know about them – true black holes.  There shouldn’t be many of these, but they can certainly exist. We prescribe, among other things, flexibility and continuity^[3].  You can’t know what you don’t know, but you can have your ears and eyes open, and have sufficient “nimbility” to be able to react correctly when new ideas, technologies, legislation, market shifting events, products and markets suddenly appear.

If you are doing everything else correctly, there should be very few true unknown unknowns

Knowing that there are unknown unknowns (oh Donald, you have perverted my sense of English grammar), allows you to build defenses and create techniques for learning.

Knowing

Rumsfeld was right and wrong.  You can know a lot, convert unknowns to knowns, or at least to probabilities, and have the flexibility to accommodate change that would otherwise blindside you.

Avoid being locked into a single mindset. Beware of corporate group think. Exploit informed third parties. Pay close attention to your competitor’s values and potential advantages. Have an element of your organization that does blue sky thinking and looks for connections in all the wrong places.  Be ruthless when you tag something as “known”.  Know your knowledge gaps and target them for filling in. Push your Business Development staff to really understand your competition. Do Black Hat reviews and role-play as the competition. Make the process of being informed from multiple perspectives (even when the “truth” hurts) a fundamental part of your ongoing strategic planning and assessments.

Unlike Donald Rumsfeld, know that there are the unknown knowns, things that you claim to “know” that are just flat out wrong

Call us and ask about our complete list of strategic planning, change management and program management tools and techniques.  We can build a solution that is custom tailored specifically for you.

1. Steyn, Mark (December 9, 2003). “Rummy speaks the truth, not gobbledygook”. Daily Telegraph. Retrieved 2008-10-30.
2. Josh Billings, https://en.wikipedia.org/wiki/Wikipedia:Josh_Billings
3. Synappsys, “Why Strategic Planning Fails, and What to Do About It”
4. Synappsys, “The Five Stages of Strategic Grief”