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Posted: June 30, 2011

Do you know what you don’t know?

Known knowns, known unknowns and unknown unknowns

Todd Ordal

"There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know."
- Donald Rumsfeld, former U.S. Secretary of Defense

Donald Rumsfeld may be one of those tragic characters who's brilliant but will be remembered as an ineffective leader. However, it was quite entertaining to watch his press conferences in his stint as Secretary of Defense, the quote above being one of my favorites. It's a bit like the old Alan Greenspan testimonies given to Congress where he admittedly tried to obfuscate issues and perhaps sound like the smartest guy in the room to avoid more questions.

Rumsfeld's remarks were in relation to not finding weapons of mass destruction in Iraq, and he no doubt would've liked the issue to go away if the bombs couldn't be found. (Perhaps there is a fourth category, unknown knowns - things you know to be true that aren't!)

Known knowns, known unknowns and unknown unknowns also apply to business strategy. Many businesses operate in the world of known knowns and do quite well. They have a stable environment and viable strategy, and they execute well. A great place to be, but one that attracts competition and will change over time.

Many of these businesses - really, their leaders - also have many known unknowns. They may not know where the market for their product is heading, what their competition is doing, what environmental forces will apply in the future or what substitute products may knock them out of the ring. An effective strategic thinking process, however, can allow leaders to make informed guesses about these things and how they'll affect their business. Many leaders, however, refuse to think of these things because it requires the ability to deal with ambiguity, and it's hard work. But avoiding the known unknowns is like driving in downtown Denver without looking for traffic and obstructions - just keep your head down until you hit something. With luck, it'll be a speed bump, not a building.

We can unearth known unknowns with good questions. Unknown unknowns, however, are more difficult and are typically only visible through exposing yourself to many different things and trying to relate them to your situation. I recently coached a talented executive who spent virtually no time outside her own company. She worked many hours every week but was unaware of adjacent industries, new marketing tactics, organizational practices, and so on. What a shame. She didn't know what she was missing!

What are you doing to reduce the number of known unknowns and unknown unknowns and poke holes in the things you know to be true that may not be? As we have seen, being brilliant, like Donald Rumsfeld, will not protect you.


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Todd Ordal is President of Applied Strategy LLC. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He speaks, writes, consults and advises on issues of strategy and leadership. Todd is a former CEO and has led teams as large as 7,000. Follow Todd on Twitter here. You can also find Todd at http://www.appliedstrategy.info,  303-527-0417 or todd@appliedstrategy.info

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