Situational Awareness. What it is and how it can transform your managing style

Today we’re looking at the concept of situational awareness and how you can implement new tactics today for greater competency managing employees and better business analysis techniques. John Baldoni (who wrote a great primer on situational awareness for CIO magazine) defines situational awareness as “knowing where you are, what you can do, and how you can do it.” Similar to a naval aviator flying at night over a dark sea, engineering managers tend to rely on instrumentation (analytical models) but there are times that our instruments may fail us or lead us to a wrong conclusion. Having better situational awareness can help you avoid otherwise unforeseeable pitfalls and develop better relationships with employees.

Three main elements of situational awareness:

CONTEXT: This is about understanding the forces that are shaping your world and your decisions. Who or what is pushing for a decision? What is happening in the industry and the competitive landscape? Where are we in the business cycle?

CIRCUMSTANCE: What has happened? Where is momentum going and who has the advantage from a momentum perspective? What can recent and long term history teach us about where we are and how we got here?

CONSEQUENCE: What could happen in the future as a result? What are the possible and likely outcomes? What are the implications and extrapolations from the decisions we and others are making?

Using the tools you already have.

Engineering managers have a variety of tools to help in all three aspects. Statistical analysis helps us understand context and circumstance. Trend analysis can help us understand whether the data we just collected makes sense and is consistent with the past and part of a slowly evolving picture, or is possibly part of a picture that is undergoing rapid and dramatic change.

A systems approach to problem solving is often helpful in understanding the broader context. A simple example comes from the auto industry. We can look at supply chains and ask what the current rate of consumption of new cars happens to be, but without also knowing the current rate of production and the current inventory levels, it is hard to assess whether the industry is moving in a healthy direction or not. Without knowing these types of figures in individual regions, you may also get a distorted picture.

For example, Hurricane Sandy’s aftermath caused a major increase in the consumption of cars as replacements for those lost in the storm. Before increasing production across the board, it may make sense to check inventory and demand levels in other regions (outside the Eastern seaboard) before concluding that a long term commitment should be made to added production levels.

Advancing to the fourth element.

Engineering managers tend to ask and answer questions of context, circumstance and consequence in mathematical terms and tend to quantify the models—whether they are financial or logistical or project schedule type of models—in ways that are mathematically appealing. Engineering managers have the analytical tools to help better develop all three aspects of situational awareness, but need to be aware of the fourth aspect of situational awareness, which may not be so easily quantified: perspective. Perspective gives us a chance to understand that other factors beyond models affect a situation. Further, that our models are often flawed and inadequate. Perspective allows us to question whether the assumptions we are making are flawed or insufficient.

Situational awareness in business practices.

During the housing boom, many financial models included residential house price appreciation assumptions of 5% or more per year as part of the “paradigm” of residential housing in the US. For most of the US, for most of the last 20 years, this may have been a reasonably sound assumption. As we painfully learned, some systems behave in non-linear ways and periods of rapid price appreciation are often followed, in many asset classes, by periods of rapid price depreciation. This could have been learned by looking to other housing markets (such as Japan in 1990) and their historical behaviors, but this requires a more long term global perspective, and perhaps a less arrogant one that otherwise presumes “it could never happen here.”

Developing a sense of situational awareness, and in particular perspective, requires insight into the particular portion of the business cycle that you happen to find yourselves in. Perspective can come with personal experience, or better yet, a sense of the historical context of the industry, the company, and the products themselves. These business cycles, once very well analyzed and described in graduate business programs of the past, have been set aside for other topics that are more tactical and expedient, but are part of a broader situational awareness that engineering managers may be uniquely qualified to articulate.

Situational awareness in the work place.

Situational awareness is not only an ability to understand the greater context of a market or business cycle, but also the system in which you work. The term MBWA or “management by walking around” was popular in the 1980s. It sounds silly but you cannot lead people by simply sitting at your keyboard. You need to walk around and talk to the people who are actually doing the work to get a sense of what they are going through and what the issues truly are. You need to ask probing questions in a face-to-face context to get a better understanding of the system.

Regularly talking to the people in the trenches, in a safe and honest way, will give you a sense of local context that is otherwise hard to obtain. This simple technique has served me well over the years, including more than 25 years in industry. Situational awareness involves understanding a combination of both levels for us to be credible leaders and credible managers in today’s technological world. See Professor Werwath’s post on managing up to continue polishing your managing skills.