The Power of Pattern Matching in Leadership

If you want to build and scale a Stage 5 company and beyond, it's incredibly beneficial to have leaders who excel at pattern matching. Because when your leaders possess this skill, the hard work of aligning your team becomes more manageable, helping your organization achieve long-term growth and prosperity. But what exactly is pattern matching, and how can it help your company grow? In this article, I'll guide you through how we are using pattern matching to help turn our Vision into a reality.

What Is Pattern Matching?

Let’s begin with a definition: In the business world, pattern matching is about recognizing and identifying regularities, structures, and trends within a set of data or information. Simple, right? What many don't realize is that pattern matching has the power to transform the way you lead by helping you:

• Detect connections and correlations between different elements or variables.
• Observe and predict patterns over time so you can foresee challenges or opportunities.
• Break down complex systems into recognizable patterns to simplify.
• Use historical data and current information to predict potential outcomes and guide decision-making.
• Compare current situations with past experiences to develop solutions.

In practical terms, pattern matching might involve things like identifying market trends to anticipate customer needs, recognizing patterns in team performance to improve workflow, or spotting recurring issues in processes to make improvements. It’s all about using your analytical skills, experience, and intuition to see the bigger picture and make connections that aren't obvious to everyone. And in leadership, where strategic foresight and navigating complexity are crucial, pattern matching is a necessity.

The Importance of Pattern Matching Capabilities

Here’s a question to consider: Do leaders in Stage 5 companies and beyond need to be good at pattern matching?

The answer is yes. In fact, it’s critical. Every Stage 5 company should have at least one leader who’s skilled at pattern matching. Here’s why:

1. Strategic Decision-Making: Leaders should be able to recognize market trends, customer preferences, and emerging opportunities so they can make smart, strategic decisions. Effective pattern matching also helps you identify potential risks and devise strategies to tackle them before they become bigger issues.
2. Problem-Solving: Stage 5 companies often face complex, multifaceted problems. Leaders who can pattern match are able to uncover underlying issues and develop effective solutions. This is especially important when it comes to innovation because new approaches and products keep your company ahead of your competitors.
3. Resource Optimization: Understanding patterns in how resources are used helps leaders allocate them more effectively, reducing waste and maximizing efficiency. This applies to your people, too — identifying patterns in team member performance and engagement can help you attract and retain great talent, enhancing overall organizational performance.
4. Organizational Alignment: Recognizing patterns in organizational behavior and culture ensures your company’s Core Values and Compelling Why are consistently upheld across and up and down your organization. Similarly, effective pattern matching in communication styles and information flow helps your entire organization to remain aligned and focused on its goals.
5. Adaptability and Resilience: Leaders who are good at pattern matching can anticipate changes before they happen and adapt strategies accordingly, helping your company remain resilient and thrive amid change.

Pattern Matching and Organizational Strata

Those of you who have been following along for a while now know I’m a big fan of Elliott Jaques, whose work has been deeply ingrained into some of the world’s most successful and complex organizations, including the United States military and Bridgewater, one of the world’s largest and most successful hedge funds.

Jaques, who is best known for his work on Requisite Organization and Stratified Systems Theory, breaks organizational structure down into different Strata, or layers, each with its own cognitive capabilities and time horizons for decision-making, or what we call time span of responsibility (TSR). I dive into the details on this in my blog Grow or Die #3: The Art of Letting Go if you're interested in learning more.

Pattern matching is particularly important in Stratum 3 and above. Stratum 3 is where you can find Core Function heads or department leaders in most small and midsize organizations. Their time span of responsibility is typically 1–2 years. At this level, the ability to recognize patterns, integrate various sources of information, and identify trends is crucial. Leaders in Stratum 3 should be able to discern relationships and patterns within their teams and processes to make informed decisions and guide their teams effectively.

Stratum 4 and beyond consist of higher-level leadership roles such as founder/CEO of a Stage 4 company, C-Suite leader, or second-in-command of a Stage 5 company. The time span of responsibility for these Seats is generally 2–5 years (Stratum 4) and beyond. Because the associated roles involve strategic thinking, long-term planning, and navigating complex systems, advanced pattern matching skills are essential. Leaders at these Strata need to be able to recognize broad patterns and trends in the market, industry, and organization to drive strategic initiatives and ensure organizational alignment with long-term goals.

Assessing Pattern Matching Capabilities

The effectiveness of pattern matching, particularly in complex or strategic contexts, is influenced by several cognitive abilities that are often linked with higher IQ levels. While there isn't a universally defined minimum IQ for effective pattern matching, roles requiring advanced pattern matching typically align with higher cognitive demands.

Ultimately, while a higher IQ can be beneficial, it's in combination with other factors (such as cognitive ability, experience and expertise, education and training, emotional intelligence, and more) that truly determine one's effectiveness in pattern matching.

Here are some ways you can assess this capability in potential leaders:

• Cognitive ability tests such as Raven's Progressive Matrices, the WAIS (Wechsler Adult Intelligence Scale), and the Watson Glaser Critical Thinking Appraisal assess abstract reasoning, pattern recognition, logical reasoning abilities, ability to draw logical conclusions, and more.
• Personality and cognitive style assessments like TypeCoach and the Kolbe A™ Index can help determine pattern matching abilities. While these assessments don’t directly measure pattern matching, certain personality types (such as INTJ or INTP) are often associated with strong analytical and pattern recognition skills.
• Job-specific aptitude tests present hypothetical scenarios and assess how candidates identify patterns and make decisions based on them.

Aside from assessments, there are a wide range of interview questions you can use. Here are a few question types with examples you might consider:

• Problem-solving questions: “Can you provide an example of a situation where you had to make a decision with limited information? How did you identify the key patterns or trends that influenced your decision?”
• Analytical thinking questions: “How do you approach identifying trends or patterns in your work? Can you walk me through your process?”
• Strategic thinking questions: “How do you stay informed about industry trends and changes? Can you give an example of how you used this information to identify a pattern and make a strategic decision?”
• Hypothetical scenarios: “Imagine you are given a dataset showing customer behavior over the past year. What steps would you take to identify any patterns, and how would you use this information to improve our product or service?”

You can also present candidates with real or hypothetical business cases and ask them to identify patterns and propose solutions based on their observations. Provide a dataset and ask candidates to analyze it, identify key patterns, and make recommendations based on their findings.

Focus, Align, and Thrive

Pattern matching isn’t just a skill — it’s a strategic advantage in building a Stage 5 company and beyond. With leaders who excel at pattern matching on your team, you’re better equipped to navigate the everyday challenges of running a business, anticipate future challenges, and seize opportunities that others might overlook.

In the journey to create a truly great company, the ability to recognize patterns is not just nice to have — it's essential. By investing in the right assessments and training to help you find great talent, you can build a company that is not only extraordinarily productive but also deeply resilient and humane. With skilled pattern matchers on your Senior Leadership Team, I’m confident you’ll be able to see your organization reach new heights of excellence and impact.