Reconfiguration and Reframing

reconfiguration reframingDomino’s Pizza Turnaround Strategy is an interesting case study in strategic initiatives, which I have described in detail in this article. Its core competitive challenge involved shrinking market share, declining revenues, and public relations problems.  It decided to reinvent the pizza by changing most of the ingredients.

As part of its strategy, the company also changed parts of its communications program with consumers, franchisees, and others. It embarked on a novel advertising campaign that took advantage of social media. Just like changing the ingredients was a reconfiguration, the new actions reconfigured business processes.

Why did Domino’s choose to invest significant resources undertake the makeover of its core product, with the risk of disrupting traditional consumers? The company’s advertising highlighted customer complaints. “Instead of ignoring them, we choose to use them to motivate us to do better,” said CEO Patrick Doyle. Domino’s product development team reframed the complaints into focused inspiration to make some difficult changes. It reframed its story away from its heritage (we deliver pizzas) to one of a heroic story (we’re a team that is unafraid of challenges).

Strategy Involves Reconfiguration

I propose that the process of strategy development is the reconfiguration of assets to meet a core challenge.

Let’s unpack that statement: Organizations (and individuals) have tangible and intangible assets. When they practice strategy, identify gaps. They search out assets from within and without and start moving those assets to create power. Often, they remove assets that are not contributing to the organization’s competitive power.

As an analogy, picture two homeowners who are selling their house. They want to “stage” the house so that it shows well. They de-clutter and discard things. They arrange furniture so that it highlights the home’s charm. They repaint. These homeowners are reconfiguring their home to achieve the important end of a fast and good offer from a buyer.

The second part of the statement says that the target of reconfiguration is that of meeting a core challenge. All organizations face numerous challenges. Sometimes they are the challenges of keeping up with growth and demand.  Sometimes the challenges are in maintaining a competitive advantage. Which one is the “core challenge?”

I’ve met many senior managers over the years. All of them are concerned about their success and are actively thinking about it. Although it might be tough for them to come up with a single “core challenge” most can easily list a handful of things that deserve attention.

These same managers generally have a difficult time when examining their challenges in light of the inevitable changes that will take place in the future. None admit to having a crystal ball, and few make the time for describing scenarios.

The practice of thinking strategically can help with identifying this core challenge and with making the right choices for reconfiguration.

Don’t Plunge into Strategic Planning without Some Individual Strategic Thinking Practice

Most good strategy work involves pondering questions. These questions are open and ambiguous.

On the other hand, a strategic-planning session typically is focused on creating a deliverable: a strategy and a document to describe that strategy.

It’s best to ask people to work on the strategic thinking before engaging them in strategic planning. Give them homework in the way of data, historical analysis, and so forth.

Also, encourage their imagination: what might the future look like? The goal is not prediction, but rather to create some open-mindedness and flexibility.

Strategic Thinking Involves Reframing

Strategic thinking is an individual competency. Its greatest value to organizations is that it contributes reframed explanations of the current and future situation. That means that we are taking current assumptions and reframing them into a novel, hopefully-interesting explanation of reality.

The simplest kind of reframing is that of refocusing.  To refocus is to shift the attention from one thing to another, much the way that Domino’s shifted the attention from “crust tastes like cardboard” to “best-tasting pizza.” I think of it as analogous to cropping a picture: you’re selecting the part of the picture that you want to emphasize.

A second, more-powerful type of reframing is one that questions and challenges the validity of the current paradigm.  Is Domino’s Pizza a food delivery company. I think the answer is no: it is a restaurant that happens to deliver food. The question “Who are we?” tends to stimulate this kind of reframing.

Strategic thinking is a habit involving awareness of the current situation and the openness to new frames that explain the situation. To improve your strategic thinking competency, look closer at the concept of reframing.

Tips for Reframing

  • Identify anchors in your thinking. Do you always go to the same explanations about why things happen in your industry or to your organization? What are your biases and prejudices?
  • Be playful with ideas. How could a new competitor disrupt your industry?
  • Get to know people who hold different ideas and philosophies. Yeah, this is standard creative thinking advice; however, seriously considering the validity of other points of view can show you new ways of looking at things.
  • Practice with historical thinking. What were the key events that resulted in the current situation? How much has the organization culture affected the retelling of the story? Take a look a turning point in the past, and look for analogies: how is it similar and how is it different from the current situation?
  • Play with scenarios. No one knows what will happen in the future, but a few minutes of considering best and worst cases can give you a new perspective.

A competent strategic thinker is continually aware of mental frames and continually practices reframing. It’s part of the playful thinking style. At some point in time, your intuition will tell you when the core challenge has appeared. That’s your signal to start considering the options for reconfiguring.

With this model of reconfiguration and reframing, I suggest that organizations don’t need to be constantly making strategy. It’s too distracting from the running of the business. Instead, I believe that every organization should ask its employees to make strategic thinking a habit.

To “think about” strategy is to imagine the reconfiguration of assets and actions into a new system.  To “think strategically” is to mentally reframe the assumptions associated with personal perspective.  This gives us a more nuanced way to describe strategic thinking as an individual competency. Do you agree?

How to Develop a Perspective: Core Challenges and Strategic Thinking

Individual perspective is a foundation of strategic thinking. Perspective is more than a switchable point of view. It is an organizing framework that helps articulate an understanding of the core challenge that is the essential cause for developing strategy.

As you build your strategic thinking competency, the best way to develop a useful perspective for strategy development is to start with yourself. Don’t be concerned with strategy; be concerned with your own personal story and experiences. You already have a personal perspective, but if I asked you to put it into words, you would probably struggle.  Here are six suggestions that might help you find those words:

  1. You could make a list of things that have influenced you. It could include books, public speeches, movies, and mentors.
  2. What life experiences have influenced you? I believe that a personal perspective shares much with the concept of your life’s story, the way that you conceive of where you’ve been, where you are, and where you’re going.
  3. What has traumatized you in the past? In particular, I find interesting the presence of near-death experiences. We can make the argument that Christopher Columbus’ survival of a pirate attack and shipwreck in 1476 was a turning point in his life. Before then, he was a seafaring adventurer but afterwards we can see that he really started to grasp the strategic concepts that would lead to his endeavor to gain resources to sail west. Near death experiences can provide a compelling sense of clarity – that is, perspective – to people. Consider this report cited in USA Today in an article on CEOs and near-death experiences:

Last June [2008], management consultant Grant Thornton surveyed 250 CEOs of companies with revenue of $50 million or more. Twenty-two percent said they have had an experience when they believed they would die and, of those, 61% said it changed their long-term perspective on life or career. Forty-one percent said it made them more compassionate leaders; 16% said it made them more ambitious; 14% said it made them less ambitious.

Regardless of whether you have had a near-death experience and/or trauma, I believe that you can use your imagination to consider your perspective about what is important and what is not.

  1. What is your personal brand or elevator speech? A personal brand is represents the way that you think about yourself and how you want others to think about you.
  2. What is your sense of moral righteousness? Branch Rickey, the General Manager/Owner of the Brooklyn Dodgers is best remembered for his role in integrating Major League Baseball by bringing its first black ballplayer, Jackie Robinson, into the League. He said that he remembered how a black college teammate was mistreated, and felt that this was a wrong that needed to be righted. Besides, he wanted to do anything he could to field winning ball team.
  3. Do you have any skepticism about “the system” and prevailing wisdom. Perhaps you are offended or annoyed by traditions and the establishment. As an example, Billy Beane, the General Manager of the Oakland A’s Baseball team (and of Moneyball fame) carried with him a skepticism about the ability of scouts to accurately judge baseball talent. When he was told to win with a radically reduced payroll, his perspective likely contributed greatly to his practice of strategic thinking.

Again, use this list as a starting point for articulating your personal perspective.

The Strategist’s Perspective

The next step is to develop that perspective in light of your need to develop strategy. Note the nearby graphic. It starts with a statement that brings more focus to “a courageous and commonsense view of the competitive challenge.” This statement seems adequately descriptive of the situation that strategic thinkers like Louis Gerstner, Estee Lauder, and Christopher Columbus confronted.  It suggests some general principles of a good perspective on strategy

  • Value is found in contrarian Time and again, we see great accomplishments in taking a contrarian perspective different from than the prevailing wisdom.
    • Courage is distinctive characteristic of many strategic thinkers
  • The perspective is coherent.
    • As NVIDIA’s co-founder Jensen Huang said, “Our perspective was commonsense.”
  • It is contextualized to address the unique nuances of the situation.
    • It acknowledges the challenge facing the individual or the organization, especially regarding competitive posture and advantage.

Contrarian Coherent ContextualizedA Dance: Perspective and the Core Challenge

A core challenge is a single challenge (or a cluster of related challenges) that holds significance for the individual’s or the organization’s future success. Strategy is the designed response to a core challenge. Often people are so busy trying to solve the problems that face them that they don’t bother to think about the problem; more specifically, people spend insufficient time defining the problem. People avoid thinking about and confronting problems that are unpleasant and require action.

I’ve often asked people, “What is your core challenge? or What do you Want to be Different?” Unfortunately, the answers often show little depth of understanding.

Thus, we might have chicken-and-egg situation where it’s pointless to worry about what to do first.  The path forward, I suggest, is to simultaneously consider the two questions of perspective and core challenge. Strive to make progress and deepen your understanding of both.  As you do so, insights will emerge and you’ll move closer to understanding the strategy that best fits your situation.

Can you articulate your strategic perspective and core challenge?

Three Healthy Practices for Enhancing Strategic Foresight

Strategic Risk Probability Impact GraphBy definition, strategic thinking is concerned about success in the future. It is a style of thinking that imaginative AND systematic.  As contrasted with reading palms or charting the movement of the Zodiac constellations, strategic thinkers look to rational methods that fall in the discipline of “futures” or “strategic foresight.” The goal of the strategic thinker is to develop insights and design strategy that recognizes that the future cannot be predicted.

I tell audiences that leaders must prepare for multiple potential futures, enabling them to adjust faster to rapidly changing geopolitical, economic, regulatory and technical developments. Envisioning such possible futures and determining how to best meet those requirements can help leaders create a more agile and responsive set of strategic capabilities. To create a more agile and change-capable organization, you should focus your efforts on becoming “futures-ready.” Here are three healthy practices that can assist you in developing a robust perspective future:

Healthy Practice #1: Be Skeptical of Vision Statements

Visioning is an exercise to develop perspective and dialogue about the future, not a “locked in” objective. Many vision statements assume that the future will look a lot like the past. In this case, vision becomes the sole hypothesis about what will happen. It becomes a prediction. This single-hypothesis assumption, in a nutshell, is the difference between long-range planning and strategic planning.

Healthy Practice #2: Use Risk and Opportunity Analysis as Inputs

Most organizations spend some time with formal risk assessment, resulting in a list of “things to watch for and manage.” Although many times the risk analysis seems to be more of a litany of standard problems, I find that the effort could be used to create a greater awareness of the future.  After all, isn’t the risk analysis simply recognizing that there is a cause-effect relationship between a risk event and its consequence?

Healthy Practice #3: Imagine the Best Case and Worst Case Scenarios

Since no one can anticipate the future with certainty, it’s wise to consider scenarios. What is the best that could happen to you? What is the worst?

This is just a few of many healthy practices for developing a strategic foresight. How have you used them? What other practices do you suggest?

How to Recognize Competence in Strategic Thinking

Strategic Thinking CompetenceAs a strategic thinking coach, I help people become more competent in the art of thinking strategically. Since strategic thinking, by definition, is concerned with success, I need to provide some sort of target for competency. That is the purpose of this article.

Why before What

Strategic thinking is hard work, and that is why it is uncommon. Let’s quickly affirm that you will experience benefits from investing effort into this discipline. It offers many benefits:

  • People get promoted because of their ability to think strategically. Strategic thinking is the #1 desired skill of the next generation of managers
  • Organizations with good strategy thrive; we are in an age of exploding complexity and this complexity creates threats and opportunities. The purpose of strategic thinking is to create good strategy; thus, organizational success is directly tied to success.
  • The world is full of opportunity for entrepreneurs who think strategically

An Individual Competency, Not an Organizational Process

I remind you that strategic thinking is a style of thinking, practiced by the individual. Strategic thinking is not a set of process or a part of a process (some people mistakenly confuse it for environmental scanning) or a tool (some people mistakenly confuse it for SWOT or scenarios); although those processes and tools can enhance the practice of thinking strategically.

Characteristics of a Good Strategic Thinker

Based on my experience, the competency goal is this:

A person is a competent strategic thinker when
they naturally and intuitively think strategically.

Here is what I would look for if I were evaluating a person as a competent strategic thinker:

  • The person is continually thinking about how he or she defines success.
  • As part of the definition of success, he or she recognizes that resources are limited and must be focused on those activities that increase the realization of success
  • The person recognizes ambiguity, and does not seek to eliminate the ambiguity until they feel they understand the situation
  • The person generally curious. As part of this curiosity, he or she is alert for patterns and see patterns and systems effects. He or she is alert for opportunities.
  • The person recognizes inertia; that is, the state of affairs when there is little change and other are habitually following the status quo.  In this case, the strategic thinker might encourage change (of a low-grade variety) simply to break the routine. I recently heard of a team of executives who decided to read magazines from outside their industry and field of expertise.
  • The person recognizes when compartmentalization of functions and specialties in an organization are causing too-narrow of a view of the organization.
  • The person is more aware of strategic resources in their possession.

What does the improvement pathway look like?

Two of the most important functions of a coach are to removing misconceptions and change inappropriate habits. These misconceptions and habits are different with each individual. Thus, in the diagnostic phase of coaching, we need to find out what the person knows that is true and what they know (and do) that is unhelpful.

People who are interested in strategic thinking always start with an existing base of knowledge about the field of strategy. They are not simply empty vessels to be filled with expertise. Some of their knowledge is valid, but some of their knowledge is invalid and the challenge reminds me of the quote by Will Rodgers,

It’s not what we don’t know that causes trouble. It’s what we know that ain’t so.

Probably the most significant misconception is that strategy is what is defined in a strategic plan, and is the mission, vision, and values of the organization. Strategy is a tailored response of resources and actions to meet a “core challenge.”

Thus, it’s better to tailor coaching to the existing knowledge of the learner.

All learners have strengths, and it is helpful to use them as foundation. For example, skill in risk analysis can be leveraged because risk analysis is a process of understanding cause and effect with the recognition that the effects appear in the future. A person who is competent at risk probably is comfortable with systems thinking and imaging the future, which are traits that are useful for strategic thinking.

Self Directed & Self-Paced Learning

Undoubtedly, individuals can pursue a self-directed course of study to improve their competency in strategic thinking.

I encourage all learners of strategic thinking to study examples.  Movies are a good choice that can be fun as well as instructive.  The movie that best portrays strategic thinking is Moneyball, but other good choices are 42, The Social Network, Dirty Rotten Scoundrels, and A Beautiful Mind.  You can find plenty of examples from historical and fictional characters, too.

Do you agree with these characteristics of competent strategic thinkers? What else should be added?

Intuition and Insight

Intuition InsightThe concepts of intuition and insight are similar in that they both are unconscious realizations that can guide strategic decision making. However, intuition and insight function differently and this leads to strengths and drawbacks in creating strategic action. Consider this question,

When should I lean on intuition and
when should I lean on insight for guidance in strategy?

This article will help you further refine your application of strategic thinking.

Intuition

Intuition is the ability to understand a situation immediately, without the need for conscious reasoning. Intuition comes from well-formed memories and is a type of expertise. Let’s consider an example:

Most of us know executives who have been with their firms for a long time and who understand how the business operates. When it comes to strategy, their style is typically informal and conversational.  Ideas are kicked around, and decisions are made.  These executives are right most of the time, and are typically venerated within the organization for their abilities.  When you ask them how they make their decisions, they unapologetically say that they have a feel or sixth sense for how things could work.

Wrong Applications

It fairly common for people to go to their bosses for an important decision. It’s also common for the boss to rely on intuition. The good news is that intuitive styles are very efficient and workable.

The bad news is that reliance on intuition often allows a person to discount external changes and ambiguities. Intuition to be inappropriate for the situation.

Because intuition is learned knowledge, it shares the same bed with habits. Often the intuition falters when the external situation changes as the habits of status quo hinder framing a new model of organizational performance.

Insight               

Whereas intuition comes from the activation of something you already know, insight is the discovery of new patterns or the reframing of patterns. As Gary Klein describes it, insight is the conversion of a mediocre story to a better story.

In my article, on 3Ms Post Its, I described an “aha moment” by co-inventor Art Fry who slaps his forehead and exclaims, “what we have here is a whole new way to communicate.” Post Its were not simply scrap paper coated with a weak adhesive, but a way to call attention to a document and create focused action (such as indicating where a signature is needed).

The example of Absolute Vodka at home parties in this article is particularly instructive on the nature of insight generation.  I this case, researchers collected data and studied with a trained eye. They looked for patterns and found that alcohol at home parties represents a different kind of social lubricant, not about status and taste but about individuality and humor.

How (and When) to Apply

Those readers familiar with Meyers-Briggs assessment of personality will probably recognize that  intuition and insight generally reflect the “N” intuitive thinking preference and the “S” sensing preference. Sometimes individual preferences become blind spots, so I’d argue that it an agile, flexible style of thinking is most appropriate.

Both insight and intuition use data and result in a conclusion. Generally speaking, insights tend to come more from external data or from use of models whereas intuition leans on personal learning and experiences.

Intuition is more subjective to the individual’s past experiences and training. We might want to consider the breadth of experience that person has. You might ask questions such as these: What is the source of intuition? What experiences are being applied? What parts of the experience are relevant to the current situation?

Insight leans more heavily on objective data. You might ask questions such as these: What is source of the insight?  What data is being applied?

Both intuition and insight are valuable. Intuition comes from experience, and can make for efficient decisions.  The big caveat is to make sure that the experience is relevant to the situation at hand. When you don’t have experience to lean on, you should work on capturing insights.

Thus, we continue to build a case for the importance of self-awareness and metacognition (awareness of your own thinking) as important elements of strategic thinking competency. We need to be on guard for “flow” and effortless management of situations, because strategy often involves things that are just outside of what we’ve chosen to notice.

Do you agree that the distinction between intuition and insight is important?

Strategic Thinking: Finding Underlying Structure, Reframing, and Testing Expectations

Interesting Seminar

You’ll want to use strategic thinking for grand problems of organizational competitive position, but you’ll also find applicable to more mundane challenges such as this situation:

I was facilitating a workshop to encourage more discipline in project planning and delivery. I was well acquainted with the organization from the CEO down, and I was concerned. I knew participants would be distracted by their laptops and mobile devices because the continuing imperatives of responding to business operations in the midst of making the biggest ever company acquisition.

Every workshop leader and facilitator knows the challenge of gaining and maintaining the attention of participants. I pondered this strategic question on the plane ride: How do I create motivation and energy for the meeting? As I thought about that question, I realized a creative insight: I would start off the seminar with this question: What makes a seminar interesting?

The next day, at the start of the workshop, I wrote the question on a flip chart page. I gave the participants sticky notes and asked them to write short responses on the sticky notes. I instructed them to post the notes to a page and categorize them (see the nearby photo).

In reviewing the group’s result, I said, “Do you agree that you want this workshop to be interesting? If it this is what you want as outcome, you need to work me. You say you want fun and interactive. You need to understand that I’m not an entertainer. If you want interaction, you can’t just passively sit there and listen. You have to contribute.”

I also announced, “I’m here to help you get promoted.” That was a learning from earlier in the year when I found that the message resonates with people, especially those in the early and mid-stages of their career.

We had an engaged and energized session. Learners were willing to accept responsibility for their own learning and their own experience. One person said, “I thought you were just going to teach me some process. The message about getting promoted was really got my attention. This was one of the best workshops I’ve ever attended.”

At the surface, this vignette is just a “how to” insight. But at a deeper level, there are more profound lessons that apply to strategic thinking. First, I recognized an underlying structure that was retarding engagement, and thus strategy execution. I define the underlying structure as a system of interactions that produce recognizable behaviors. They reflect the context. To understand a strategic situation is to understand the a peculiar underlying structure.

Here is a brief description of context: This company’s top executives seldom actively engage in the sponsorship strategic initiatives, except for acquisitions. As long as operating units make their profit projections, there is little interaction with headquarters. From a governance perspective, this highly decentralized organization leaves people alone to apply their own judgment. Further, moves to gain  efficiencies are often thwarted by passive aggressive behaviors (agreeing to support new ideas, and then fighting those same ideas when they affect the local operation). Also due to decentralization and the global scope, people mostly work electronic communications, especially text and email. They find communicating through gadgets to be less ambiguous that working face to face with people. The result for this company is that an short-term operational rhythm dominates its underlying culture.

The underlying structure is one of habits, two being: short-term operational behaviors and the pre-occupation with mobile gadgets.

Second, I used a strategic question to foster reframing the expectations of the workshop participants. Although short-term concrete reactions (have an interesting and fun workshop) were important, we realized more of a balance of looking longer term and more strategically. In this decentralized organization, people could understand career success better than they could understand enterprise success. It’s easier to talk about successful strategy execution when people can see a direct linkage to their paycheck and their career.

There is a third element of strategic thinking in this story. When I developed my insight, I expected people to say that an interesting seminar would result in their beliefs being challenged. Instead, the participants wanted fun and interaction; they didn’t want drudgery. The concept of “beliefs” is just to deep – and potentially scary. The solution needed to be pragmatic.

My expectation was a hypothesis, and the hypothesis was disproven. My hypothesis reflected the story that I was telling to myself, not the reality of the participant’s story. The learning here is one that gets repeated constantly in organizational strategy: individuals carry around stories that may not match their stakeholder. To be successful, I would have to adapt my strategy. Since then, I have started to think about every situation as one that might require me to reframe my own approach. An important lesson:

Good strategy has to adapt to local situations and the stories of strategic stakeholders.

~~

Do you agree that it is useful to look for the underlying structure, to work on reframing, and to test your hypotheses?

The Six Elements of Strategy: A Pattern Perspective

Patterns

Because chess is a game of patterns, you could say that a chess Grand Master is an expert with chess patterns.  Similarly, a strategy master is expert with strategy patterns.

The proposition raises an interesting strategic thinking question, “What are the patterns in strategy?” Patterns are regularities, and their presence suggests some kind of predictability. In chess there are opening moves, in entrepreneurialism there are predictable start-up challenges. In chess, you might have several of your valuable pieces captured, in business your customers can defect to competitors.

There seems to be a countless number of patterns of strategy. Instead of a full cataloguing, let’s find the minimum elements that could describe strategy patterns. To keep it simple, I’ll assume that if a chess player plays 10 matches, there were 10 strategies used by her. Now, turning to the idea of strategy being composed of patterns, I believe there are six elements. They are as follows: players, analysis of the situation, degree of relative advantage/disadvantage in position, resources, decisions about deploying the resources, and an overall life cycle of the strategy.

Let’s see if the six-element model – a pattern – holds for the chess analogy. There are two players. The lifecycle starts with the agreement to join in a game, and its endgame is a checkmate or agreement that it is a draw with no winner. In the opening of a chess game, the players are even in terms of advantage and resources. Throughout the game, each player monitors the situation. Each player makes a decision and moves a resource, followed by the other moving a resource. Soon, the players recognize that they are in a position of advantage or disadvantage; and each continues to move resources until the game ends with victory for one of the players, or a stalemate. The six-element model is valid here!

What about the application to strategies with greater consequences than a chess game? The 2012 United States presidential election involved two principal candidates (players), challenger Mitt Romney and incumbent Barack Obama. The lifecycle begins with each’s announcement of candidacy and end with Romney’s election-night concession and Obama’s victory speech.  Each came into the contest with important resources such as the candidate’s experience, dollars, and organization. Each had perceived advantages: Obama’s incumbency and Romney’s business background.  Interestingly, those advantages were often cast as liabilities. Each campaign made decisions about its resources: where should the candidate go to speak, and where should you send a surrogate? Advantage ebbed and flowed throughout the contest, and the final advantage was not clear until late in the evening of Election Day. Again, the six-element model seems to capture the essential elements of strategy.

These six elements appear to be universal to any situation involving strategy. I call them the master pattern of strategy, but the words archetype or template convey similar meanings. I invite you to test them against your knowledge of a business’s strategy, warfare, or other situations. I would be interested to learn if there are any exceptions.

Next, let’s examine each of the six elements, and the patterns within the element.

  • Lifecycle – The lifecycle for a strategy is similar to other lifecycles: beginning, middle, and end. The lifecycle of a game of chess involves phases that I call the phases of the strategy lifecycle for chess: pre-engagement, opening, development, endgame, and post game. For a business strategy, it might be diagnosis of a challenge, formulation of intent, creation of policy and resources, and implementation of decisions. You could also view this lifecycle for a strategy as a subset of the organization’s lifecycle.
  • Players – The players are normally individuals, but could be organizations. Regardless, there are repeating patterns, such as values and habits that guide their decision making. From a strategy perspective, we know that self-awareness is one important skill for the strategist. By extension, the strategist seeks to learn their opponent’s intentions and patterns of behavior, which may yield an advantage. In some cases, each player’s narrative arc, that is, their life story becomes a resource and a link to the lifecycle of a strategy. Examples would include each of the two presidential candidates touting their life story as evidence for their qualifications for the Presidency, Christopher Columbus’ experiences as a sailor and as a mapmaker in Lisbon, and Estee Lauder’s experience as a woman in post-WWI and WWII New York City.
  • Situation – The situation is your subjective assessment of those factors that describe your status or position in the strategic milieu. This element is rich in patterns, with some patterns more relevant to others. For example, weather is a series of patterns. There are trends in the economy. New entrants enter markets. All of these affect the strategist because the context changes, putting the strategist in a new situation. Not to be overlooked are patterns that describe possible future scenarios.
  • Resources – Resources are the source of power. The rook piece in chess has a defined power different from that found in a pawn, and has constraints on how it can move. The rook has flexibilities different from a pawn. In other examples, we can see that inventors gain power by securing patents. Armies have power provided by the skill level and motivation of its soldiers and officers.
  • Relative advantage – Although related to the element of situation, the relative advantage is important enough to warrant its own category. The relative advantage is the real goal of a strategy: to create advantage over something else. This element forces an important question related to context, resources, and decisions: Am I in a stronger or weaker position?
  • Decisions to commit resources – This element involves concepts like movements of resources, reversibility of commitments, and rules (existing and emerging) and constraints. From a pattern perspective, you might consider whether habit and inertia will dominate the decisions, or whether there needs to be breakthrough.

How You Use This as a Tool

Finally, let’s return to the statement that chess grand masters are experts with chess patterns, and the logical extension that strategy masters are experts of strategy patterns.  If you are concerned about strategy in business, it will do you little good to learn chess patterns. (And, for the record, I don’t play chess.)  Instead, you need to learn about your business’s context: its success factors, the competitors, the role of government regulation, and so forth.  Consider making a list of those patterns, and consult and edit your list from time to time, knowing that often entrenched behaviors and wisdom are vulnerabilities that competitors can exploit. Even better, organize that list into a hierarchical map of patterns.

The definition of a pattern as a regularity should stimulate some useful questions: What regularities are present in the industry (seasonality, correlation with GDP)? What regularities do you have in your decision-making or other habits (pricing decisions, talent decisions, meeting management)?

Strategic thinking often involves reframing, which is the practice of taking on new perspectives.  Patterns functions as frames; they give you a sense of structure. They help you make predictions. On the other hand, patterns may also be the source of status quo thinking and make you vulnerable to a competitor who has better insights than you do.

Try applying this six element model to a strategic situation. Does it offer you a better understanding or insights?

Chess, Patterns, Analogy, and Strategic Thinking (Part 2)

Patterns & Strategic ThinkingSuccess in the game of chess is based on principles that apply in other strategic thinking situations (as introduced in the prior article in this series).

Patterns as Essential Element of Strategy

The focus of this article is further developing the concept of patterns in strategy, I will return to the example of chess introduced in the prior article. Patterns are a common element of all strategic situations.

Adriaan de Groot concludes, in his research on chess mastery (see the Wikipedia entry), that:

“it is the ability to recognize patterns, which are then memorized, which distinguished the skilled players from the novices.”

These two distinguishing characteristics – pattern recognition and memory – are relevant to strategic thinking in any domain, not just chess.  My straightforward recommendation for improving your strategic thinking is to develop your ability to recognize and learning patterns.

Recognizing Patterns              

Chess is a game of patterns with colorful names like the Catalan Opening, the Sicilian Defense and the King’s Indian Attack. These patterns -albeit jargon – help chess players improve their game strategy.

Patterns are easily observed in other strategic contexts. In business, strategists have knowledge of patterns like double-entry accounting, the CAP-M financial model, and Porter’s Five Forces of industry attractiveness. The game of American football has colorful names for patterns such as the flying wedge, the wishbone, goal line stands, and red zones. The US Army has an offensive operation known as Envelopment which was used with great success at the opening of the Desert Storm operation in Kuwait in 1990. Notice that each domain (or strategic context) has its own patterns (and jargon); doesn’t it make sense that mastery involves the ability to recognize a pattern within a domain?

Memorizing Patterns

Next, let’s examine the importance of Adriaan de Groot’s finding that chess experts have an ability to memorize the patterns in such a way that they can then access the memory and apply it to the game. Stated simply, chess masters learn and apply information about chess patterns just as people in other contexts learn and apply patterns.

Most people have practiced rote memorization, and know that they need to keep the task simple. Further, they need to reinforce with repetition to put it into long-term memory (think about experiences with multiplication table drills). In chess, rote memorization of the rules is a starting point. Rote memorization falls apart when we have to apply those rules to strategic situations.

(See the “sidebar” at the bottom of this post for an interesting examination how IBM’s Deep Blue computer bested Gary Kasparov – and its implications for strategic thinking.)

Through the work of David Ausubel others, academics now widely agree that people learn new things by associating new knowledge with related and already-known knowledge. Children learn letters, then words, then sentences. Knowledge is built up from simple to complex. Memory becomes a cognitive structure of related patterns.

Using Ausubel’s constructivist approach, we can theorize that chess players first learn a few patterns, establishing a basic cognitive structure. Then the player adds to the cognitive structure. At some point they reach mastery, and hold a rich and robust scaffold of knowledge.

The player progressively gains expertise as they add new knowledge to cognitive structure. They find that the new information helps them to refine, sharpen, and correct existing ideas.

Chunking is another concept of memory that is especially helpful for short-term memory and for moving concepts from short-term memory into long-term memory. For example, telephone numbers have chunks of digits that we know as country codes, area codes, exchange codes, and phone numbers. As a learning strategy, look for chunks of knowledge.

Neuroscientist Daniel Bor says there are three activities involved in chunking. The first is the search for chunks. The second is the noticing and memorizing of those chunks. The third is the use of the chunks we’ve already built up.

Consider chunks as a gateway to patterns:

Patterns are a tool for chunking memory.
And chunks are a tool for organizing patterns.

It seems that the quantity and quality of patterns in memory is a key to opportunity recognition, and therefore strategic thinking. It is fair to say that within each domain (warfare, chess, business, etc.) there are many patterns. The goal is to organize and structured knowledge in such a way that the brain can access the memory for patterns. This gives the person the ability to quickly match the pattern and find what is interesting.

How? Use chunking to commit some early patterns to memory, probably through some sort of rote learning or a simple analogy or a mnemonic. Further enrich them with examples. Now, practice scaffolding – working through analogy to relate new patterns to old patterns.

As an additional suggestion for memory, patterns, and culture, check out my description of Kolb’s learning cycle in this post.

Conclusion – Questions for Practical Application of Concepts

The game of chess provides a starting point for identifying some of the fundamentals of strategic thinking. In this article, I identified patterns as a generic element of all strategies, and discussed how the strategist recognizes patterns and memorizes them.

Are you alert for patterns? Do you practice analogies? Could you list the most important and essential patterns associated with your organization? Do you try to falsify your knowledge and strategies?

Do you agree that the ability to apprehend patterns and comprehend patterns is important to strategic thinking?

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Sidebar:

On Chess Patterns and the True Nature of Intelligence

In 1997, IBM’s supercomputer “Deep Blue” defeated chess grandmaster Gary Kasparov in a highly publicized six-game match. Are there implications for the study of strategic thinking? Beating Kasparov was an engineering feat, not  a breakthrough in strategic thinking. Deep Blue was programmed in a way that is akin to rote memory rather than the generation of insights. James Somers points out:

“Deep Blue won by brute force. For each legal move it could make at a given point in the game, it would consider its opponent’s responses, its own responses to those responses, and so on for six or more steps down the line. With a fast evaluation function, it would calculate a score for each possible position, and then make the move that led to the best score. What allowed Deep Blue to beat the world’s best humans was raw computational power. It could evaluate up to 330 million positions a second while Kasparov could evaluate only a few dozen before having to make a decision.

It’s hard to make the case that a computer has exercised an intelligence that we could call humanistic or strategic. Deep Blue simply recognized patterns and matched them against a repository of patterns.  Perhaps we could say that it generated insights, but those insights were of low quality compared to what humans can do (for examples, see my articles on insight generation by the inventors of 3M’s Post It notes or the field researchers for Absolut Vodka).

The above quote was from an article titled “The Man Who Would Teach Machines to Think” in the November 2013 issue of Atlantic Magazine. The “man” referenced in Somers’ article is Pulitzer Prize winning author Douglas Hofstadter, who won for his book Godel Escher Bach in 1980.  Hofstadter says that the fluid nature of mental categories is the core of human intelligence. Somers’ article quotes Hofstadter and explains,

“Cognition is recognition,” he likes to say. He describes “seeing as” the essential cognitive act: you see some lines as “an A,” you see a hunk of wood as “a table,” you see a meeting as “an emperor-has-no-clothes situation” and a friend’s pouting as “sour grapes” and a young man’s style as “hipsterish” and on and on throughout your day.

Hofstadter suggests that thinking and learning is mostly a process of forming analogies: something reminds you of something that reminds you of yet something else. Mental categories are the way that we organize the knowledge structure.

We’ve all had conversations like where the overall direction of the conversation is set by the way that each person’s recollections are stimulated by something that another said: We hear something and say, “that reminds me of _____ .” We make the connection – have an insight – and the conversation continues. Not surprisingly, strategy is developed through conversation. Initially, the conversations in organizations are about sharing each person’s sense of the situation and the solution to others.  The agreement of the stakeholders is the “buy in.”

The practical advice for the strategic thinker: become more aware of your use of analogies. How is one strategic situation (pattern) similar and different from another?  Watch for a future article that about two well-known CEO’s who changed strategic contexts: one used patterns and analogies well and was successful; the other didn’t.

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Strategic Thinking versus the “Facilitation Fluff” of Strategic Planning

Picture of marshmellow fluff

Too often, companies hire professional facilitators to support their strategic planning meetings but get nothing more than fluff. Many of these facilitators (under the claim of being a certified and master facilitator) have only a superficial understanding of strategy. They help the meeting produce something – but that something is definitely not strategy. Instead they help expensive executives and managers facilitate the production of fluff statements.

This article is not an attack on the idea of facilitation of meetings. Indeed, many meetings are wasteful and frustrating; and to be clear, a facilitator can be helpful.  However, experience shows that many facilitators push their technique at the expense of strategic thinking.

Mission, Vision, and Values: Is This Simply “Polishing the Doorknobs?”

Statements of mission, vision, and values are important; especially to small businesses. It is a good idea to have written something on paper about mission, vision, and values.  JUST DON”T TELL YOURSELF THAT YOU ARE PRODUCING STRATEGY!

  • A mission tells the organization its purpose
  • A vision establishes a verifiable future
  • A statement of values expresses those aspirations thought to be important.

If you already have a reasonably good statement, don’t let a facilitator waste your time on refreshing or rewriting them. It’s just an exercise in wordsmithing.  This activity is “doorknob polishing;” the doorknob is functional (the statement has been written), but there is not need to make it gleam and impress others.

And, while we’re at it…..

Strategic Plans are Documents – Let’s Hope that We Can Find a Strategy

In the last 3 weeks, I have reviewed three statements of strategy.  Only 1 of the 3 documents actually had something that I would recognize as a strategy.  The other two were just statements of goals and aspirations.  The one good strategy document clearly showed the nature of the business situation and constructed a focused set of guiding actions that would address the business situation. The good strategy was the result of insights that came from thinking strategically.e

Interestingly, the “strategic plan” that was produced by a professional facilitator looked great. However, I could find no strategy. It was attractive and concise, but an exemplar of fluff.  It probably worked fine to for internal alignment, but INTERNAL ALIGNMENT DOES NOT MAKE A DOCUMENT A STRATEGY!

How do I know? If I gave this document to a competitor of the company they would just yawn. If it were truly a good strategy, the reaction would be to mount a counter-response to avoid loss of advantage.  One of the acid tests of a good strategy is simply this: would your competitors be worried if they saw your strategy?

Facilitators and the Myth of High-Energy Meetings

Granted (again) that meetings are frustrating, boring, and wasteful; most of us would prefer entertainment and energy – even fun.  A facilitator that knows lots of good facilitation techniques can create the illusion of progress.  But it is really a dulling of the pain.

Your goal should NOT be to have a high-energy strategic planning meeting. It should be to design a good strategy….one that provides the organizational focus, leverage, investment guidance, and policy guidance.  As I wrote in a prior article, any written statements might be as straightforward as describing the objectives, scope, and advantages.

If you are really interested in creating a strategy that provides your organization a competitive advantage, you need to do the hard work of strategic thinking.

Hard Work – Nice Guys Finish Last

The truth is that strategy (in general) strategic thinking (in particular) is hard work.  Strategic thinking produces insights. This insight generation can be creatively fulfilling and powerful.  In my experience, this requires these essentials:

  • Quiet and undistracted time for individual reflection
  • Facts and data, not just gut feeling and aspirations
  • Listening to others, even if we have to patiently work with those who “think out loud”
  • A tolerance of ambiguity
  • A framework for taking strategic insights and putting them into a strategy

My own experience in facilitating strategy is this: you have to be clear in your own mind what good strategy looks like, and be able to discern it from doorknob polishing fluff.  You have to help your client find insights and knit those insights into a coherent set of activities that positions the organization’s resources in a logical way to meet serious and proximate competitive challenges.

There are thousands of charismatic facilitators who have a confused understanding of strategy as mission, visions, values, goals and the like. Facilitation fluff is common.

Do you agree that facilitation fluff is common and a problem? How have you seen it in practice? Do you agree that strategic thinking and insights needs a subtle and nuanced approach to finding insights and applying them?

Insights are Design Elements in the Design OF Strategy

Insights & Design of Strategy

Strategic thinking is an individual activity that produces insights for use in strategy development. The appearance of insights signifies a deepened understanding of factors that are meaningful and relevant to the strategic question at hand.

Let’s imagine a manager asking, “OK I now have some strategic insights. What do I do with them? What’s next?” The short answer is this:

Use insights in your design OF strategy.

The Strategist is a Designer of Strategy

The most important book on strategy in recent years is Richard Rumelt’s Good Strategy/Bad Strategy. Chapter Nine is devoted to explaining strategy as design. Some of the relevant points include the following:

  • Rumelt explains that “Strategy is more like designing a high-performance aircraft than deciding which forklift to buy.” Rumelt concludes (see page 140), “Good strategy is design, and design is about fitting various pieces together so they work as a coherent whole.” These various pieces involve tradeoffs, a point that I’ll discuss shortly.
  • Rumelt explains strategy as a design (see page 134) as “an adroit configuration of resources and actions that yields an advantage in a challenging situation.” The tradeoffs prescriptions are these:
    • If there is a great competitive challenge, and limited strategic resources, then the strategist has to have a clever and tight integration of resources and actions.
    • If there are higher quality resources, then there is a lessened need for the tight integration of resources and actions.
  • Rumelt identifies three elements of design of strategy: competitive challenge, strategic resources, and actions. I illustrate in nearby graphic with the added notation that the search is for insights. Thus, the design of strategy framework, involves working with three things: insights about the competitive challengeinsights about strategic resources, and insights about actions to apply the resources.  The strategist is also concerned about the relationships between the three.

Thus, the strategist fits various pieces together to achieve a purpose. Those various pieces (design elements) include insights, as I will explain later in this article.

Tradeoffs in the Design of Strategy: Starbucks as an Example

To explain the relationship of insights and design of strategy, consider this example of Starbucks. Starbucks designed its strategy by allocating its resources in light of the competitive challenge.

Howard Shultz, traveling in Italy, recognized an opportunity to replicate the coffee bar experience in the United States. His insight on competitive challenge was that no potential European rival was operating a similar concept in the US, and competitors in the US were not focusing their efforts on delivering a retail coffee experience. The strategic resources at the time of founding of the concept were Starbuck’s presence in the coffee business as a roaster, which gave it the strategic resources of a viable supply chain and business presence. Shultz realized that he could apply the strategic resources by extending them into an area that had no competition, and he could experiment and learn from mistakes because the there was insufficient competition.

Let’s examine the Starbucks situation then through the lens of Rumelt’s tradeoffs. Importantly, the competitive challenge was weak. This reduces the pressure to possess high-quality strategic resources and the need to act in a clever fashion. Starbucks could experiment with its resources to find the right combination for the American market.

Finally, let’s look at Starbucks in contemporary times. In the US, Starbucks faces strong competitive challenge from numerous national rivals: Dunkin Donuts, McDonalds, Caribou Coffee to name just a few. Theory suggests that greater competitive challenge means that there needs to be greater strategic resources combined with coherent action to apply the resources. That is what we see in the case of Starbuck’s. It has built a strong base of strategic resources: a well-known brand, network of stores, distribution channels and strong supply chain. It more cleverly applies its resources: its focus on consumer experiences and loyalty (store design, loyalty cards), its product development (instant coffees, teas), and its international market expansion.

In domestic markets, Starbucks’ enduring success is going to depend upon finding and applying insights that give it advantage over its rivals.

Design Thinking and its Relationship to Strategic Thinking

A strategic thinker should be familiar with an emerging management literature that I will call design as strategy. It might be easy for some to confuse the notion design of strategy with design as strategy. Here are two distinctions:

  • Design as strategy is concerned with gaining advantage through well-designed products and other offerings.  Apple Computer’s products are frequently cited as exemplars in this case.
  • Design of strategy is concerned with gaining advantage of the overall business model to gain or sustain competitive advantage. Apple’s skilled designers are but one competency (manufacturing, branding, channels being other notable strategic resources) that determine Apple’s ability to prevail over rivals like Samsung, Google, or Microsoft.

By using trail-and-error development of the business model, Starbucks was able to learning about customer needs and build up its resources before others recognized the scope of the opportunity. This is an example of design thinking: Starbucks uses design of logos, store layouts, and product as element of its strategy. Starbuck’s design talents are strategic resources, but not its only strategic resource.

There is now a growing discipline of design thinking.  Tim Brown, CEO of the design firm has written a book titled Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation.  Advertising for the book explains design thinking as “the collaborative process by which the designer′s sensibilities and methods are employed to match people′s needs …. It′s a human−centered approach to problem solving that helps people and organizations become more innovative and more creative.” The Wikipedia entry for Design Thinking is as follows:

“As a style of thinking, design thinking is generally considered the ability to combine empathy for the context of a problem,
creativity in the generation of insights and solutions, and rationality to analyze and fit solutions to the context.”

Substitute the word strategic for design in the above Wikipedia definition. I think this substitution explains strategic thinking’s characteristics quite well, especially if you consider the context of strategy versus, say, the context of a physical item. Consider:

In design thinking the context of the problem might be a piece of land or a medical device in a patient’s body; the design problem is to optimize the form, function, and fit of the designed solution. In strategic thinking, the context includes the external business environment, stakeholders, and rivals. The specific design problems to be solved in strategy is devising a set of actions that results in a gained advantage over rivals.

As an interesting idea for guiding strategic thinking, I believe we should differentiate the design of strategy from design as strategy.

Do you agree with the idea that strategy is designed, not decided? How have you used this idea?