What Is Lateral Thinking And Why It Matters In Entrepreneurship

Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Understanding lateral thinking

Lateral thinking was coined by Maltese psychologist Edward De Bono, who argued that the concept was useful in forcing business executives to think outside the box. Traditional methods of introducing new products to the market involve analyzing market needs and then creating products suited to specific audiences. 

In mature markets however, this approach leads to a proliferation of niche offerings that in turn increases market fragmentation. Inevitably, the individual segments become so niche that businesses cannot turn profits in them.

Lateral thinking is an alternative approach to this way of thinking. While there is an obvious need for creative thinking in gaining a competitive advantage, creativity itself is difficult to define. Indeed, many individuals have trouble summoning creativity at will and others may simply view themselves as uncreative individuals.

So what is the answer? Provocation.

Provocation causes mental instability in an individual and as a result, it forces them to develop new ideas. Importantly, the provocation must be outside of the experience or comfort zone of the individual or business concerned.

The four categories of provocation in lateral thinking

Consumers in modern society are quick to take offense, so businesses often find themselves appeasing the masses. But to stand out, provocative lateral thinking is the best way to verify whether creative ideas have potential.

Here are the four categories of provocation that such ideas may fall under:

  • Exaggeration – where normal properties of products or services are exaggerated. Given that Guinness beer takes longer to pour than some competitors, the company exaggerated the slow preparation time through its “great things come to those who wait” advertising slogan.
  • Escape – which forces businesses to cancel, negate, drop, remove, or deny what they take for granted. A car manufacturer may take for granted that their cars have wheels, but what would happen if cars didn’t have wheels? While it is obviously not viable to sell a car without wheels, perhaps the company could design a car where the wheels were hidden from view.
  • Reversal – where conventional wisdom is replaced by any form of an opposite, perverse, or backward viewpoint. In an Australian government-run ad campaign on the dangers of speeding, advertisements described the consequences and depicted accident scenes. 

However, the campaign had little effect on speeding among male drivers. The campaign was later revised, showing footage of young men speeding and being judged negatively by women in their age group. The message caught on and was highly successful, with over 60% of young male drivers admitting to reconsidering their driving habits.

  • Wishful thinking – where a business turns a fantasy wish into a provocation. Wishful thinking is often related to vision, mission, and company values and is perhaps one of the simplest ways to put creative ideas into practice.

When a marketing team brainstorms potential provocations, many of them will be unrealistic, politically incorrect, ineffective, or just plain ridiculous. 

However, a combination of unreasonable provocations may subsequently result in a good idea coming to mind. Therefore, it is important to write down ideas – irrespective of potential viability – and move through the process regardless.

Lateral thinking examples

Lateral thinking can be used to solve many complex workplace problems. We have explained three common predicaments below to show how it can be used to arrive at the correct solution.

Problem 1 – The company must reduce real estate costs

The conventional approach here would be for the company to increase the density of its workspace and reduce the floor space that each desk occupies. This may involve a reduction in the size of work cubicles or assigning two people to an office previously occupied by one person. Other actions that may be immediately obvious include making better use of wasted space in hallways, meeting rooms, and storage rooms.

A solution based on lateral thinking, however, is to reduce the floor space that every person occupies. This means more shared areas and fewer dedicated areas. While it is true that desk sizes may become smaller irrespective of the solution, shared spaces are beneficial in that they are located near focus areas, work cafes, and huddle rooms where employees can interact and collaborate.

Problem 2 – The company must pander to millennial employees to secure the best talent

When faced with an inability to secure the best millennial talent in an industry, many businesses create work environments characterized by free food, contemporary design, open desking, and an excessive amount of lighting and other gimmicks.

How could lateral thinking be employed here? Instead of the company becoming preoccupied with catering to a certain generation of employees, it could devote its resources toward corporate social responsibility, a focus on community, and superior work/life balance facilitated by mobile work and flexible work practices. These initiatives will appeal to every generation – not just consumers – and, as a result, the business may discover that it has access to a larger talent pool than it realized.

Of course, contemporary design and free food are still worthwhile workplace features. But by using lateral thinking, the business can attract and then retain a talented workforce.

Problem 3 –  The company must address a reduction in employee productivity

Faced with unproductive employees, a leader’s first impulse may be to implement a quick fix such as creating more enclosed offices or increasing the height of the walls between cubicles. Others may introduce a number of new rules around acceptable forms of behavior.

The less obvious – and perhaps counterintuitive – solution would be to reduce the height of cubicle walls and designate specific areas of the office as quiet zones. How could this solution be beneficial? For one, lower cubicle walls mean employees become more aware of those around them. They may instinctively lower the volume of their voice or form other habits to be more considerate toward others.

Quite zones also act as an insurance policy against certain employees who will be disruptive regardless of the solution imposed. These zones are a sanctuary for those who need work in a quiet environment without necessarily leaving their area. Quiet rooms designed to accommodate small groups can also be used to conduct impromptu but non-disruptive meetings.

Lateral Thinking vs. Vertical Thinking

Lateral thinking is the process of developing many creative solutions to problems – irrespective of whether they are considered good, bad, wrong, or right.

Vertical thinking, on the other hand, is a problem-solving approach that favors a selective, analytical, structured, and sequential mindset. The focus of vertical thinking is to arrive at a reasoned, defined solution.

The characteristics of a lateral thinker

The lateral thinker can be distilled into three characteristics:

  1. The ability to focus on overlooked aspects of a problem or situation.
  2. The ability to seek alternatives, whether that be alternative solutions or more importantly, alternative ways of thinking.
  3. The ability to challenge their assumptions and break free from the status quo. This is otherwise known as critical thinking.

Most people are born lateral thinkers but lose their creative flair at schools that promote strict adherence to the rules and one correct answer to any problem.

How can lateral and vertical thinking be combined?

Despite the distinctions between the two methods, it’s important to note that neither type of thinking should be used in isolation all of the time. Instead, think of lateral thinking and vertical thinking as two sides of the same coin. 

Lateral thinking encourages the individual to create a long list of new ideas to find the best solution.

But to ensure that at least one of these ideas comes to fruition, vertical thinking should be used to consider the possibility of implementation.

In this process, vertical thinking should determine whether the solution is valid or indeed viable.

Key takeaways

  • Lateral thinking is an indirect, creative, and non-linear approach to problem-solving.
  • There are several lateral thinking techniques, but the mental instability caused by provocation forces individuals and businesses to consider a range of creative possibilities.
  • Lateral thinking can produce a variety of unrealistic solutions, but it is important to explore them thoroughly. Doing so may subsequently yield better, potentially viable ideas.

Connected Business Concepts

First-Principles Thinking

First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Ladder Of Inference

The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.

Six Thinking Hats Model

The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.

Second-Order Thinking

Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

Lateral Thinking

Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Moonshot Thinking

Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.


The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman in 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Bounded Rationality

Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Dunning-Kruger Effect

The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.

Occam’s Razor

Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.

Mandela Effect

The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.

Crowding-Out Effect

The crowding-out effect occurs when public sector spending reduces spending in the private sector.

Bandwagon Effect

The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.

Read Next: BiasesBounded RationalityMandela EffectDunning-Kruger EffectLindy EffectCrowding Out EffectBandwagon Effect.

Other related business frameworks:

Additional resources:

Scroll to Top