The Next Next Common Sense
Companies like Netflix have developed sophisticated capabilities for seeing patterns in viewing data that others miss entirely. They don’t just see individual shows or viewer demographics; they perceive complex pat- terns of engagement that allow them to identify building blocks (content types, narrative structures, visual styles) that can be recombined into original productions with high probability of success. Similarly, Tesla doesn’t just see batteries, motors, and software as sep- arate components; they perceive an integrated energy and mobility system where these elements can be continuously reconfigured to create value in multiple domains—from cars to home energy storage to grid services. Recognizing a building block means seeing its parts and wholes. The recognition of goals, cues, expectations, and actions is part of what it means to recognize a situation. If managers recognize a situation as typ- ical and familiar, they can proceed to take action. With recognition, they understand what to build (which priorities to set), which cues matter from the context (thereby preventing an overload of information), what typically to expect next (preparing themselves for both that action and for noticing surprises), and the usual ways of responding. They also recognize a course of action likely to succeed (notice we didn’t say the best course, just a course). If the situation does not clearly match a typical case or maps on to more than one typical case, the manager may need to gather more in- formation. Information gathering takes time, and raises the risk that the situation will be altered by the time the information is gathered. Patterns observed then disappear and new patterns emerge. What managers in this situation frequently do not see is the likelihood of such change and its consequences. Many decisions to search for more information assume that time stands still and that information acquisition is free. It is critical to any decision that full account is taken of these complications. In fast-moving digital environments, this challenge is particu- larly acute. The situation may change before analysis is complete, rendering the gathered information irrelevant. Organizations like Amazon have addressed this by developing “two-way door” decision
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