I first came across the concept of sensemaking a few years ago. By working closely with fantastic designers and some self-study I gained a better sense of how it’s done and why it’s critical across the product lifecycle. Now working in the venture space, I’ve seen how sensemaking is relevant to investors too.
While working with the analyst on my team recently, I wanted a few resources on sensemaking to give her some context for how to execute her research project. I came across the first chapter of The Handbook for Teaching Leadership, which describes sensemaking as follows:
Admittedly, the example above is in the context of leadership more broadly rather than just research, but it’s relevant here. It’s also worth highlighting that as humans we engage in sensemaking every day. What makes sensemaking in a professional sense (i.e., design, research, investing, etc.) different from the general heuristics we develop as we make our way through life is the deliberate act of creating, testing, refining, and, sometimes, throwing out, different frameworks to help organize and explain unknowns as they are uncovered.
Jan Chipchase, a researcher based in Japan, has made a career of sensemaking. He and his team at Studio D help organizations around the world better understand their customers, users, constituents, and more through field-based research. His book The Field Study Handbook is a guide to running field-based research and includes a number of great frameworks for the research process itself. When it comes to sensemaking, he lays it out on a spectrum from Hypothesis to Wisdom, akin to the Data→Wisdom spectrum that’s referenced in data analytics, just with a bit more detail.
On a related note, Chipchase also recently described how his team employs “Framework Darwinism” during projects. The post provides inspiration to be comfortable scrapping hard work as part of the research process and tips for deciding which frameworks make it and which don’t. Even if you’re not interested in design research, Chipchase’s work is worth a read.
Making sense of the unknown, and building frameworks to represent it, is key for corporate VCs. The continuous stream of new technologies and new companies externally combined with evolving corporate strategies and leadership perspectives internally requires near constant sensemaking. Whether working with deal sponsors or running diligence, experimenting with frameworks to establish a shared view of a topic or strategy is critical.
As a recovering perfectionist, historically I’ve wanted to get a framework (typically in a PPT slide) right the first time around and be done with it. What I’ve learned, similar to what Chipchase describes in Framework Darwinism, is that by trying a number of different frameworks, testing them with people, and being willing to change course I end up in a much better spot, and with more stakeholder buy-in as a result.
As fate would have it, we went through Framework Darwinism recently as we took a diagnostics company through governance. During diligence we typically group companies into three buckets in comparison to the company we propose for investment: companies solving a different problem in the same space (potential adjacent entrants), companies solving the same problem differently (substitutes), and companies solving the same problem the same way (direct competitors). For the sake of continuity with our Investment Committee we’ve kept it the same for each investment we’ve made this year.
A colleague collaborating with me on this deal - with significant domain expertise and a great thinker in general - started to make tweaks to the slide as he did his competitive analysis. Not wanting to stifle his creativity I kept quiet knowing that we could always go back to the original framework. By the time he was done with it, it was fantastic. It told a great story and helped us frame how this early company was doing something that nobody else in the market was. It was a great example of 1) the value of being comfortable making changes along the way and, more importantly, 2) the value of letting talented people do their thing.
With the fast pace of innovation, as with life, it’s important to be flexible and to know when a decision is no longer the right one. As John Maynard Keynes said, “When my information changes, I alter my conclusions.” I’m reminded of this quote often when I find myself changing my mind on something I felt very confident in previously. It’s a great mantra as you practice sensemaking, and not a bad bit of advice when deciding how you invest your time or money, personally or professionally.