lateral-thinking

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 case study

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 reducing 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 examples in business

Apple

One of the lateral thinking techniques Apple utilizes to generate product features is known as “Random Entry”.

Teams start with a clear, well-defined problem and traverse one of de Bono’s random word tables by rolling a dice multiple times.

The team then spends time coming up with as many ideas as possible that associate the word with the problem statement.

This process is brief and no longer than three minutes in total. Ideas are then discussed and built upon if they stimulate deeper discussion before the process is repeated for another problem statement. 

According to former Apple employee Alan Cannistrato, one example is the problem statement that reads as follows:

Video editing is too hard, and should be more fun.

Now, let’s say the team landed on the word “bicycle” and was required to devise solutions that simplified video editing, made it more enjoyable, and were related to bicycles. 

Here are a few of the features Cannistrato came up with:

  • Automatically detect bike tricks and post them to Vine.
  • Render a so-called “travel-by-map” montage with established bike routes.
  • Superimpose iPhone sensor data over a live video stream, and
  • Develop an effect pack for iMovie with an 80s BMX theme.

The internet

Tim Berners-Lee is the man responsible for inventing the internet and its three fundamental components: the formatting language HTML, the address system URL, and the HTTP system that links individual sites.

Berners-Lee first proposed the idea of a global information system in 1980 while working at CERN – otherwise known as the European Particle Physics Laboratory.

His system was based on an idea called ‘hypertext’ and would enable researchers to share information irrespective of their location. He even built an early prototype and called it ‘Enquire’. 

In 1989, Berners-Lee authored a paper titled Information Management: A Proposal.

CERN was the largest internet node in Europe at the time, and he saw an opportunity to develop a global system based on hypertext and the internet.

This system, which would enable information to be distributed globally and not just within companies, was dubbed the World Wide Web.

Berners-Lee’s flash of inspiration

It is important to note that most of the technology Berners-Lee needed to construct the World Wide Web was already in existence.

Nevertheless, it remained the domain of computer nerds and was inaccessible to the general public. 

Berners-Lee noted that components “like the hypertext, like the internet, multi-font text-objects, had all been designed already. I just had to put them together. It was a step of generalising, going to a higher level of abstraction, thinking about all the documentation systems out there as being possibly part of a larger imaginary documentation system.

Based on this lateral thinking exercise, he created the world’s first website, http://info.cern.ch, which went live in 1991.

To make his system more accessible, the site explained the concept of the World Wide Web and also details on hypertext, how to build webpages, and how to search the web for information.

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.

Lateral Thinking vs. Linear Thinking

In a linear thinking mode, you tend to apply very simple logic to an event.

Thus, it makes you leverage simple thinking to navigate the world.

While linear thinking might help in many situations, its main drawback is the fact that it might lead to falling into the trap of first-order effect thinking.

First-order effect thinking is a mode of thinking where you think in straight lines, thus connecting an effect to a cause as if that’s all.

However, in the real world and in the business world, often that might lead you astray.

An example is between the short term and the long term.

Think of the case of a company consciously giving up part of its short-term profitability to actually generate much more profits and cash flow in the longer run.

A linear thinker would think this is not good, as that person might look to short-term consequences.

While in reality, if that is part of a company’s long-term strategy, giving up profits to expand the business, with an emphasis on cash flow, might be good for the long-term.

An example of that is Amazon and how, for years, the company has been giving away profitability to prioritize long-term cash generations.

For years analyses have looked at Amazon and concluded that the company was going to be bankrupt because of its lack of profitability.

When in reality, Amazon was investing those profits back into the business to enhance its mission to have a wide selection of items at convenient prices.

When Amazon finally, and after a decade, became wildly profitable and cash free positive, many of these same analysts were surprised!

These analysts were thinking linearly…

Lateral Thinking vs. Divergent Thinking

divergent-thinking
Divergent thinking is a thought process or method used to generate creative ideas by exploring multiple possible solutions to a problem. Divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. These ideas are generated and explored in a relatively short space of time. 

Lateral thinking is a form of horizontal expiration of ideas by leveraging an alternative approach to problem-solving.

Similarly, divergent thinking also leverages an unstructured problem-solving method, where creativity is critical to generate unconventional solutions.

In this respect, a model like six thinking hats helps to understand the similarities between lateral and divergent thinking.

Compared to other thinking models, like linear thinking, leverage creativity as the main problem-solving.

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.

Since lateral and divergent thinking promotes creativity for problem-solving, both leverage second-order thinking to understand the situation more broadly, looking beyond first-order effects.

Lateral Thinking And Second-Order Effects

Lateral thinking also helps in developing a second-order effect approach to things.

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 any eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

In short, with a second-order approach and thinking, you’re able to understand the cascade effects of decisions in a complex environment where there is a lot of uncertainty.

In that respect, also system thinking moves in the same direction.

systems-thinking
Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly and understanding the second-order consequences of actions and input into the system.

Lateral thinking, combined with the understanding of second-order dynamics and systems thinking, helps have a much more nuanced understanding of the business world.

Those can help when things that seem to make sense in the short term might have a cascading effect in the long term.

All these thinking models, from lateral to divergent, second-order effect, and systems thinking, are all horizontal discovery tools and thinking models which are non-linear.

Those thinking tools are extremely useful in an ambiguous environment with a lot of noise.

In the opposite scenario, linear thinking models might be more useful in a controlled environment with little noise.

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 Thinking Frameworks

Convergent vs. Divergent Thinking

convergent-vs-divergent-thinking
Convergent thinking occurs when the solution to a problem can be found by applying established rules and logical reasoning. Whereas divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. Where convergent thinking might work for larger, mature organizations where divergent thinking is more suited for startups and innovative companies.

Critical Thinking

critical-thinking
Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.

Systems Thinking

systems-thinking
Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.

Vertical Thinking

vertical-thinking
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.

Maslow’s Hammer

einstellung-effect
Maslow’s Hammer, otherwise known as the law of the instrument or the Einstellung effect, is a cognitive bias causing an over-reliance on a familiar tool. This can be expressed as the tendency to overuse a known tool (perhaps a hammer) to solve issues that might require a different tool. This problem is persistent in the business world where perhaps known tools or frameworks might be used in the wrong context (like business plans used as planning tools instead of only investors’ pitches).

Peter Principle

peter-principle
The Peter Principle was first described by Canadian sociologist Lawrence J. Peter in his 1969 book The Peter Principle. The Peter Principle states that people are continually promoted within an organization until they reach their level of incompetence.

Straw Man Fallacy

straw-man-fallacy
The straw man fallacy describes an argument that misrepresents an opponent’s stance to make rebuttal more convenient. The straw man fallacy is a type of informal logical fallacy, defined as a flaw in the structure of an argument that renders it invalid.

Streisand Effect

streisand-effect
The Streisand Effect is a paradoxical phenomenon where the act of suppressing information to reduce visibility causes it to become more visible. In 2003, Streisand attempted to suppress aerial photographs of her Californian home by suing photographer Kenneth Adelman for an invasion of privacy. Adelman, who Streisand assumed was paparazzi, was instead taking photographs to document and study coastal erosion. In her quest for more privacy, Streisand’s efforts had the opposite effect.

Heuristic

heuristic
As highlighted by German psychologist Gerd Gigerenzer in the paper “Heuristic Decision Making,” the term heuristic is of Greek origin, meaning “serving to find out or discover.” More precisely, a heuristic is a fast and accurate way to make decisions in the real world, which is driven by uncertainty.

Recognition Heuristic

recognition-heuristic
The recognition heuristic is a psychological model of judgment and decision making. It is part of a suite of simple and economical heuristics proposed by psychologists Daniel Goldstein and Gerd Gigerenzer. The recognition heuristic argues that inferences are made about an object based on whether it is recognized or not.

Representativeness Heuristic

representativeness-heuristic
The representativeness heuristic was first described by psychologists Daniel Kahneman and Amos Tversky. The representativeness heuristic judges the probability of an event according to the degree to which that event resembles a broader class. When queried, most will choose the first option because the description of John matches the stereotype we may hold for an archaeologist.

Take-The-Best Heuristic

take-the-best-heuristic
The take-the-best heuristic is a decision-making shortcut that helps an individual choose between several alternatives. The take-the-best (TTB) heuristic decides between two or more alternatives based on a single good attribute, otherwise known as a cue. In the process, less desirable attributes are ignored.

Biases

biases
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.

Bundling Bias

bundling-bias
The bundling bias is a cognitive bias in e-commerce where a consumer tends not to use all of the products bought as a group, or bundle. Bundling occurs when individual products or services are sold together as a bundle. Common examples are tickets and experiences. The bundling bias dictates that consumers are less likely to use each item in the bundle. This means that the value of the bundle and indeed the value of each item in the bundle is decreased.

Barnum Effect

barnum-effect
The Barnum Effect is a cognitive bias where individuals believe that generic information – which applies to most people – is specifically tailored for themselves.

First-Principles Thinking

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

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

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
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
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.

Bounded Rationality

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

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

occams-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

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

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

Bandwagon Effect

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: Heuristics, Biases.

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