Several months ago, Malcolm Gladwell wrote an article for the New Yorker in which he explored the difference between puzzles and mysteries. It’s a fairly long article, but full of excellent insights. Gladwell, noting Gregory Trevington’s distinction between puzzles and mysteries, described the location of Osama bin Laden as a puzzle, while what would happen in Iraq after the fall of Saddam Hussein was a mystery.
The distinction is not trivial. If you consider the motivation and methods behind the attacks of September 11th to be mainly a puzzle, for instance, then the logical response is to increase the collection of intelligence, recruit more spies, add to the volume of information we have about Al Qaeda. If you consider September 11th a mystery, though, youâ€™d have to wonder whether adding to the volume of information will only make things worse. Youâ€™d want to improve the analysis within the intelligence community; youâ€™d want more thoughtful and skeptical people with the skills to look more closely at what we already know about Al Qaeda. Youâ€™d want to send the counterterrorism team from the C.I.A. on a golfing trip twice a month with the counterterrorism teams from the F.B.I. and the N.S.A. and the Defense Department, so they could get to know one another and compare notes.
The distinction may be easiest to see in national security affairs, but much of the article is about Enron, which has been treated as a puzzle (we weren’t told enough), but was more accurately a mystery (we didn’t properly interpret what we were told). Those analysts that treated Enron’s financial statements as a mystery, were the people who recognized the compnay’s problems before the rest of the financial world.
There are major ramifications for national security as we move from treating the world as a puzzle to treating it as a mystery. During the Cold War the CIA spent a lot of time trying to solve puzzles like the size of the Soviet missile arsenal.
Now most of the world is open, not closed. Intelligence officers arenâ€™t dependent on scraps from spies. They are inundated with information. Solving puzzles remains critical: we still want to know precisely where Osama bin Laden is hiding, where North Koreaâ€™s nuclear-weapons facilities are situated. But mysteries increasingly take center stage. The stable and predictable divisions of East and West have been shattered. Now the task of the intelligence analyst is to help policymakers navigate the disorder.
It seems to me that when companies with strong financial controls and frequent internal financial reporting still somehow find themselves surprised by bad news they feel they should’ve known earlier, they have fallen victim to a puzzle mindset. With controls in place to set standard costs, capture variances, and report massive amounts of information monthly, the company believes the puzzle can be solved. With perfect information, costs are a puzzle, it’s just that the “perfect” part never quite seems to happen. For that reason, treating costs as a bit of a mystery, may just be the proper approach. What CFO, though, is willing to admit that despite a smart staff and millions of dollars spent on an ERP system, costs are still a bit of a mystery? Yet with the hubris of believing that your system will capture all of the information you need, often comes an inability to recognize when unexpected business events disrupt the system. You may be set up to capture all of those emergency air freight costs coming out of Shanghai, but what about the vendor who decided to air freight out of Tianjin?
Strategy, of course, is a mystery at its heart. It’s tempting to view it as a puzzle, using what happened yesterday as the interlocking pieces, because that means there is an answer certain. We want that to be true, but it isn’t. As Gladwell explains, “Puzzles are ‘transmitter-dependent’; they turn on what we are told. Mysteries are ‘receiver dependent’; they turn on the skills of the listener…” For this reason, puzzles “require the application of energy and persistence, which are the virtues of youth,” while “Mysteries demand experience and insight.” This is a good lesson for businesses trying to transform themselves as they move into a new century. While many things have aspects of both puzzles and mysteries, the future is a mystery. Some puzzles need to be solved along the way, but after the data is collected, it still comes down to the application of experience and insight.