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Plans may falter but planning is everything – with Marshall Elliott

Army officer turned member of the Schroders operational excellence team Marshall Elliott discusses three ways the military prepares for operating in uncertain environments – briefing, training and ‘red-teaming’

26/03/2020

Juan Torres Rodriguez

Juan Torres Rodriguez

Research Analyst, Equity Value

Andrew Evans

Andrew Evans

Fund Manager, Equity Value

“No plan survives first contact with the enemy” is one translation of how 19th Century Prussian Field Marshal Helmuth von Moltke the Elder got to the heart of the uncertainty of decision-making in the field of battle. A century or so later, a rather different kind of combatant – Mike Tyson – offered his own take on the idea, observing: “Everyone has a plan until they get punched in the mouth.”

Both lines crop up in the latest episode of The Value Perspective podcast, where our guest is Marshall Elliott – a former captain in the British Army, who joined Schroders in 2017 through the company’s armed forces programme and now works in its operational excellence team. “No matter how long you spend planning and how deeply you think about things,” he says, “almost always something will happen you did not expect.”

‘Mission command’

One way the military has historically been successful in countering uncertainty, Elliott continues, is ensuring everyone is properly briefed so they understand not just how they are doing something but why. “This concept of ‘mission command’ – delegating responsibility at every level – means people can adapt very quickly if things go awry on the field without having to go up and down a long hierarchy of decision-making,” he adds.

The military also deals with uncertainty through training, of course, and a brief anecdote from Elliott holds some resonance for investors – especially in the current environment of market turmoil. “In the early days of training at Sandhurst,” he says, “I remember the instructors asking us – if you’re in a command, why are you firing your rifle? If you’re looking down your sights, you have no context of what’s going on around you.

“When you’re in charge and you’re having to make decisions, you don’t want to be getting too much into the detail – you want to be taking a step back and assimilating what’s happening around you. And you do sometimes see people being sucked into what feels urgent and important on a given day when, actually, there is a lot of benefit to be had from taking a pause, stepping back and considering the bigger picture.”

In-house devil’s advocates

One aspect of military planning and preparation that really fascinates us, here on The Value Perspective, is known as ‘red-teaming’. This practice of using in-house devil’s advocates and contrarians to test plans and ideas also cropped up in our podcast with Air Marshal Sir Graham Stacey – and part of the fascination might just be that, despite priding ourselves on being contrarians, we found it tough to integrate into our process.

A few years back, as we tell Elliott, one of us was asked to red-team a colleague’s investment case – in effect to argue against their recommendation to buy into a particular business – and they found it impossible. Given we follow a very disciplined investment process, the would-be devil’s advocate found they agreed with all of their colleague’s conclusions. Did we miss a trick and, if so, how should we pick our next red-teamer?

“The first things I would say is it is super-important to make sure whoever is red-teaming is supported in their challenge,” Elliott begins. “If you feel like you have to comply with the known view of the team, then it can be quite difficult to challenging someone’s thinking – particularly, for example, if they happen to be the boss. So you really have to have that support – that whatever you say is being said for a good reason.

Challenging assumptions

“As for who does it – within a military context, it tends to be the intelligence team, where I spent some time. This is because red-teaming normally comes from the perspective of what an enemy force would do and that group of experts are probably best placed to understand what the common tactics and doctrine of the enemy might be and what their current situation is.

“They would therefore be able to come into a headquarters and say, as the enemy, this is what I am going to do in the next 24 hours or, if you as the friendly force are going to act in this way, this is my likely reaction. At heart, the purpose of red-teaming is really to challenge all of the assumptions that were made by the original planning team.

“Sometimes it is almost as if the intelligence team are kept away from the detail of the planning in its initial stages as that can help prevent them from sympathising too much with what emerges. Perhaps that is something that could also be a benefit in an investment context – if the person doing the challenging has not read the case ‘for’ as deeply ahead of time, they might be better able to come at it as a fresh set of eyes.”

Author

Juan Torres Rodriguez

Juan Torres Rodriguez

Research Analyst, Equity Value

I joined Schroders in January 2017 as a member of the Global Value Investment team. Prior to joining Schroders I worked for the Global Emerging Markets value and income funds at Pictet Asset Management with responsibility over different sectors, among those Consumer, Telecoms and Utilities. Before joining Pictet I was a member of the Customs Solution Group at HOLT Credit Suisse.  

Andrew Evans

Andrew Evans

Fund Manager, Equity Value

I joined Schroders in 2015 as a member of the Value Investment team. Prior to joining Schroders I was responsible for the UK research process at Threadneedle. I began my investment career in 2001 at Dresdner Kleinwort as a Pan-European transport analyst. 

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