Strategic Thinking & The Game of Chess: Myth and Reality

This animated GIF was created on 29th July 200...

This animated GIF was created on 29th July 2007 by Sylvain Gadenne. In the context of the Budapest Gambit (an opening in the game of chess), it presents the strategy of pressure against the e3-pawn. It is intended to be used in the Wikipedia article about the Budapest Gambit. (Photo credit: Wikipedia)

“Make sure your resume says that you play chess. It shows you are a strategic thinker,” advised the older businessman to the young man networking into an industry trade group. The young man knew that his next job would largely define his career prospects, and he wanted to get into a position where he could provide impact.

For good reason, chess has become an iconic representation of strategy. Chess is a game that requires structured thinking and deliberation. However, chess is not a perfect analogy for organizational strategy.

The Myth: Chess Strategy is a Linear, Pre-Calculated Plan

A Vice President of OnStar, the General Motors subsidiary, was being interviewed in an article on the topic of innovation for a professional association magazine. Guided by the “overarching business strategy of creating great customer experiences,” he likened “his company’s innovation strategy to the way chess masters approach their game.” He said:

“They decide before they begin what their checkmate will be and work back from that point, unraveling all the moves necessary to get to that outcome. By beginning with a specific goal, they don’t get mired down in the myriad possibilities in front of them.”

Research shows that chess masters do not work with a goal and establish a linear (step-by-step) strategic plan.  Here is supporting research cited in the chess entry on Wikipedia:

In his doctoral thesis, Adrian de Groot showed that chess masters can rapidly perceive the key features of a position.  According to de Groot, this perception, made possible by years of practice and study, is more important than the sheer ability to anticipate moves. De Groot showed that chess masters can memorize positions shown for a few seconds almost perfectly. The ability to memorize does not alone account for chess-playing skill, since masters and novices, when faced with random arrangements of chess pieces, had equivalent recall (about half a dozen positions in each case). Rather, it is the ability to recognize patterns, which are then memorized, which distinguished the skilled players from the novices. When the positions of the pieces were taken from an actual game, the masters had almost total positional recall.

The de Groot research illustrates well the essence of strategic thinking. In this case, chess acumen – acumen being considered the accumulation of knowledge of useful patterns and key features of the situation – is applied with thinking that is imaginative, systematic, and opportunistic. Chess masters have the ability to perceive, classify, and use patterns.

The context of chess is different from the context of business, games, or war because the patterns of activity are different. Strategic thinkers develop acumen – the knowledge of patterns relevant to their competitive context, and blend it with a cognitive framework. Because the mind structures knowledge differently, the definition of strategic thinking as an individual competency is reinforced.

Reality: Chess Strategy is Developed – But there is a Role for Preparation

Here are some more research insights useful for understanding chess’s application and limitations to strategic thinking.

Eric Leifer, an American sociologist, asked chess grand masters how many maneuvers they pre-calculate.  The answer was none to one maneuver. Rather than working backwards from the end point of winning the game; instead, they develop it a move at a time. One obvious reason: chess is a competitive game, and opponent’s moves cannot be predicted.

Chess grand masters build up their game as do their opponents. Leifer asked for the reason for this strategy and got the answer that it is the only way to correct mistakes from the beginning of the game. As each player builds up their game, the winner eventually – in the endgame – finds a maneuver that breaks any resistance and puts the opponent out of action. Leifer found that skilled players seek to preserve flexibility.

This might lead you to believe that chess talent is inborn, and there is no need for planning. But, chess masters do prepare for their matches. What do they do? In planning for a chess match, chess masters spend little time visualizing the win and the steps to get there. Instead, their preparations focus on game development: the patterns of moves in their own games and that of their opponent. Key to this is looking for things that might be habitual, especially regarding the willingness to recognize mistakes, repeat mistakes, and correct mistakes.

Reality: Chess Is Strategic Venturing with Willingness to Say, “How Might I Be Wrong?”

In research described in Nature magazine in 2004, Michelle Cowley and Ruth Byrne found that chess players indeed “mentally map out the future consequences of each possible move.”

Cowley and Byrne found that good chess players do something that is qualitatively different; they invest more time thinking in an imaginatively and conceptual way about their opponent’s response.  Specifically, they imagined how the opponent could or would react and exploit whatever weakness is present in their position.  Good chess players falsify their own strategies by imagining the competitor’s response.

This expert approach has leadership implications: Experts are constantly testing their approach to find its vulnerabilities, and make their best choices that least-weaken their strategy.

Novices, on the other hand, tend to be blinded by their own optimism. They start telling themselves a story that they will be successful. In the case of novices, hope is a strategy.

Here is a great question that I heard asked by my friend Paul O’Connor when we were interviewing managers at a scientific instruments company:  What could your competitor do to you that would totally destroy your business?  In this particular instance, we learned that the company’s business thrust into China was very vulnerable, and needed to be made more robust.

More than Deductive Thinking

In my experience, I have seen many people flounder in strategic situations. Much of this can be explained by their preference for (and habits of) deductive thinking.  Deductive thinking is a style of thinking where the thinker takes broad principles, rules, conclusions, and truths and “backs into” the facts and arguments that support the outcome.

The VP quoted early in this article appears to be leaning on deductive thinking (“They decide before they begin what their checkmate will be and work back from that point). Perhaps he simply selected a poor analogy for making his point (planning a road trip involves knowing your goals and deducing the best ways to achieve it). Strategy involves recognizing competition and counter moves; moves which can only be guessed at.

Thus, we can see a distinction between long-range planning (the road trip) and strategy (winning at chess).  Long-range planning is relatively more deductive; however, it has a limitation because the planner needs useful, valid knowledge as a planning input. Who can predict what an equally talented and motivated competitor is going to do?

Strategy is often frustrating to people who habitually rely on deduction as a style of thinking.  As Richard Rumelt points out, treating strategy like a problem in deduction assume that anything worth knowing is already known. To generate a strategy, one must put aside the comfort and security of pure deduction and launch into the murkier waters of induction, analogy, judgment, and insight.

What are the other differences of chess with business strategy? Are there any transferable learnings?

How to Improve Your Ability to Imagine the Future

how to improve your ability to imagine the futureStrategic thinking is a style of thinking that – among other things – is concerned about the future.  When done well, we could say that strategic thinking makes a person more “futures ready;” that is, having an attitude that is comfortable with change, anticipates change, and proactive with responses. Unfortunately, this futures-ready stance is not common. However, we can train people to be more futures ready. This article provides an approach that starts with the individual.

A Thought Experiment

Try out this exercise. Imagine yourself 15 years ago. The year is 1998.  Consider these questions:

  • In 1998 mobile phones were gaining widespread use. Could you have imagined how they would have taken over functions like time keeping, photography, and gaming?  Could you have imagined laws being promulgated to restrict texting while driving?
  • In 1998, would you have imagined that any of your friends or family would have died “before their time?” I can say – based on my own experience with a death of someone close to me – that it makes a lasting impression and causes a re-thinking of priorities.
  • In 1998, most babies in the US were born to parents married to each other.  Today, more are born to single women than to married parents. Would you have predicted that?
  • In 1998, could you have imagined these two economic slowdowns: the “dot com bust” and the “Great Recession?”
  • In 1998, would you have imagined a terrorist attack on US soil that would have changed the structure of government, airport security, and entry into sporting events? The scope and far-ranging impact of the 9/11 attacks has created all kinds of change to the daily life of Americans and others.

I have conducted the above thought experiment with many people, and note this pattern: the person realizes that the amount of change has been astounding.  One person called their experience with change, “jaw dropping.” These memories and reminiscences can be quite strong and stimulate some interesting conversations; but, the point is to get them to shift their thinking towards the future.

Now, some readers would answer the thought experiment with this response, “Sure, I could have imagined this.”  However, you probably didn’t. You were probably concerned with the joys and problems of your life at that moment in time. You were (and are) probably like most people: you the present time is your reality. It is concrete, whereas the future is an abstraction that gets little of your attention.

After looking 15 years into the past, I next ask them to imagine 15 years into the future. If I want to really stimulate their imagination (or aggravate them), I ask them to imagine as much “jaw dropping change” for the future as they recall for the past. This is difficult, and requires encouragement.

Most people think tomorrow will be more of today. They develop views of the future that linear extrapolations of the current condition.

Let’s put the 15-year span into perspective. Home mortgages are typically 15 or 30 years.  Some people own their cars for 15 years and are even wearing the same suits and shoes. Fifteen years is the lifespan of a family dog. Those examples show us that 15 is an understandable span of time.

One common pattern is that people — looking back in time –often refer to the passage of time as a “blink” or “time flies.” However, when looking into the future, people tend to discount how fast it will arrive.  This asymmetry tells us that it is tough to be “futures ready.”

Envisioning the Future – Start With Some Easy Questions

The following questions are about the future, and have answers that require only a bit of arithmetic and imagination. Write down your answers to these questions.

  1. What is your age in the year 2028?  Imagine your parents or grandparents at that age and their physical and mental health? How old will your children be?
  2. How many years has your organization (employer) been in business in 2028?

Expand your answers with some written words or images. Linger on this description, engaging your intuition; does it feel right? Then try to look at that future with a different perspective and consider other questions that might help you with envisioning.

Trends – Useful but Remember the Wildcard Scenario

Invariably, the discussion of the future brings in trends and forecasting, so go ahead and make note of the them. The typical list includes: climate change, wearable technology, population growth, nations that we now consider developing are fully developed, more weapons (international and domestic), and more globally-interconnected communications.

Futurists recommend that any futures-ready view include a “wild card scenario.”  Consult the above thought experiment placing you in the year 1998: terrorist attacks and the Great Recession might qualify as wildcards: extraordinary events that might be difficult to anticipate but have far-ranging effects.  Here are a two ideas for wildcards that could disrupt life as we now know it: pandemics and a large meteor strike.

Delight and Disaster Scenarios

Here is one more exercise for your imagination. Imagine two futures. One is optimistic and wonderful. It is the ideal world.  The second scenario is one that is more pessimistic.  Explore what that scenario is like for you personality, your organization, and your network of friends, family, and social organizations. Emphasize the impact of the scenario, rather than the probability of occurrence.

Recognize How Status Quo Becomes a  Barrier

Earlier I noted that people don’t do as well with future imaginings compared to past rememberings.

One reason is that  people tend to remember things that are recent, concrete, and salient. This is often referred to as the  anchoring bias.  A second reason is that the future is ambiguous and people tend to be ambiguity avoiders. People prefer to think and talk about things that they have evidence for, and avoid things that don’t.

What is most real? The present. This shows up as status quo thinking. Recognize it as a barrier, and apply both imagination and analysis to developing a view of the future.

Expanding the Future

These thought experiments add value to your strategic thinking because they place patterns and ideas into your memory. Your subconscious  works with these concepts by recognizing patterns and producing insights.

What other ideas do you have for helping individuals become more “futures ready?”

How Strategists Produce Strategic Insights

how strategist produce strategic insightsStrategic thinking produces inputs to be used in the strategic planning/management process. Put simply,

The purpose of strategic thinking is to produce insights

 Insight is,

A person’s realization of “the true nature of a thing” and/or its relationship to some contextual factor.

 Examples of Strategic Insights

The discovery and application of  insights is central to strategyThe process of thinking strategically is purposeful in that the strategist intends to create advantage in the future. A few examples of strategic business insights are:

  • A marketeer’s realization that a customer need is not being met adequately by existing products or functions
  • An employee’s realization that an impending piece of regulation or legislation will fundamentally alter the industry.
  • An auditor’s realization that a pattern of transactions show fraud
  • An engineer’s realization that they have created a novel invention

Strategic insights are those insights that are useful for developing organizational strategy.

Three Kinds of Insights Needed for Business Strategy

In the context of organizational strategy, the strategist is searching for three kinds of insight. They are:

  • Insights about the current situation. What are the problems and opportunities?  What are stakeholder aspirations and motivations?
  • Insights about the future. What will be different, and what is preferred? Since choice of customers tends to be one of the most strategic decisions, what customers might be best to serve?
  • Insights about how to bridge the gap between present and future. These insights involve problem solving: taking into account a full range of constraints: competitive response, political will, resources, and organization.

Insights are a Neurological Flash

Research into the functions of the brain reveal  the right hemisphere a region (more specifically in the right hippocampus) is the location responsible for  insights involving verbal information. As neuroscientists continue mapping the brain, we are sure to get a better understanding of those mechanisms responsible for the practice of thinking strategically.

How to Generate Insights: Balance Thinking Hard with Detachment

Individuals have their own style of doing things. Research has not shown one best practice for generating insights. Rather than give you a cookbook, let me encourage you to apply some energy to each of these five activities.  Be patient, and insights will emerge!

  • Preparation – identifying issues, collecting and categorizing information, assembling resources
  • Strategic Thinking DefinitionAnalysis – actively looking for relationships and patterns in data. Continually asking questions and reframing to find new perspectives. Searching for what is interesting. Validation and hypothesis testing.
  • Detachment – Getting away from the issues and allowing the subconscious to work on the issues.
  • Articulation – Explaining the crux of the situation to others. Trial and error solutions.
  • Refinement and iteration – Returning to earlier activities.

Strategic Insights Are Those That Are Relevant and Meaningful

Earlier in this article, I defined insight as  A person’s realization of “the true nature of a thing” and/or its relationship to some contextual factor.   I close out this article with exploring the final part of the definition, the “relationship to some contextual factor.”

When people hear the word “insight” they typically assume that it must be a brilliant new observation: an epiphany.  However, I find that kind of “aha” to be rare. Instead of brilliance, I keep it simple by testing it with this criteria of relevance and meaningfulness. Here’s a useful question:

Is the insight relevant and meaningful?

A relevant insight is one that is connected to current situation, future, and the bridge between the two (these were mentioned earlier in this article). Ideally, this creates some sense of alignment.

A meaningful insight is one that makes sense in a narrative. Here, I imagine myself in the future explaining how I created a successful strategy. If find that as I grapple with expressing the insight, I get a better sense of its worth and its motivational power.

Finally, a “contextual factor” is something that is external to the organization.  Examples include technological change, the economy, a social trend, etc. For example, Absolute Vodka had data that its products were purchased for drinking at home parties. But, why? It turns out that many people buy a particular brand of spirits because that they connect it to a personal anecdote; telling that anecdote to others is a way to be humorous or to relate an adventure. This insight gives the company a foundation for creating marketing and product development strategies.

Implications for Organizational Process

Because organizations do not share a single brain, strategic thinking can only be a capability of individuals. This has important implications for the process of strategy. Most importantly, a good strategy development processes should allow time for individual research, analysis, and reflection. Individuals acquire insights through conscious analysis mixed with unconscious (intuitive) cognition.

It is has been said that genius is 1% inspiration and 99% perspiration. Doesn’t it make sense that the perspiration is the act of thinking strategically to produce the insights?

Could Strategy Be As Simple As This?

Strategic thinking is purposeful, and one purpose is to spark strategic insights. These insights make it easier to make decisions.

This article’s proposition is that strategy involves three choices by the strategist: choice of scope, choice of objective,  and choice of advantage. These choices do not constitute strategy, but answering them puts you on the course to actually having a strategy and not just a list of goals and initiatives.

What is the scope of our venture?

Scope is a term used to mean what is “in” and “out” of consideration. In other words, what is the definition of the venture? It could refer to the firm, the program, the team, or the individual.

The following sub-questions can help the strategist in partitioning and defining the scope of strategy:

  • Are we thinking big, or small?
  • Where is our geographic domain? Local, regional, expatriate, or global?
  • When we think about the venture as a “solution provider,” to what extent do we want to produce the solution, sell the solution, and service the solution? Stated differently, what part of the value chain do we want to operate in? Are there unexploited or under-exploited opportunities to capture value?
  • Is there anything that the venture explicitly won’t do?

What objective(s) do we choose to pursue?

The strategist first considers the circumstances – diagnosis – and selects an objective that best fits her diagnosis of the situation. Next, they choose an objective that is most sensible for the stakeholders.

The following sub-questions can help the strategist in identifying strategic objectives:

  • How do we think about success?
  • If we commit to a stretch goal, can we acquire the resources that will get us to the goal?

Critical thinking is a component of strategic thinking. Activate the logic to see if the objective is sensible.

For example, I once worked for a CEO said, “We grew revenues 35% last year, so our goal for next year is 35%.” That probably qualifies as a BHAG: a Big Hairy Audacious Goal.  BHAGs can be be useful if they are based on a logic and commitment to apply resources. They can be discouraging if there is no underlying design.

Who or what are we trying to gain advantage over?

Most people have heard this joke.

Strategic thinkers outrun the bearTwo campers come upon an angry bear. The first says, “I’m glad I wore my running shoes.” The second says, “you can’t outrun the bear.” The first says, “I don’t have to outrun the bear, I just have to outrun you.”

Sometimes it is only a small advantage that allows our success. But nevertheless, it is an advantage. Strategy is about leveraging a small advantage – and combining it with other advantages – so as to gain a more significant advantage.

Here are three sub-questions that help to identify the areas where the strategist can find advantage:

  • Who are the competitors and where is their focus and power?
  • What alternatives are available (including the “do nothing” alternative)?
  • Is the identified advantage actually important to the customer (or other important stakeholders)?

As it pursues its objectives, the venture needs to provide something of value to its stakeholders. There are always competitive alternatives and substitutes available to these stakeholders; for customers, its other product/service offerings; for                            not-for-profits, it is a competition for attention for funding or policy.

Conclusion

These three decisions do not comprise a complete definition of strategy, but they do provide a useful framing perspective. Insights are often simple ideas that tell us about the essence of something.

As you consider your answers, consider how you would blend them together into a problem-solving or opportunity-capturing design.

Do you agree that this is a simple way to think about strategy? How can a strategist apply the questions?

How to Improve Strategic Planning with Strategic Thinking (and vice versa)

Strategic thinking v planningStrategic thinking is an individual activity that is a style of thinking. It is not an organizational process or activity for the basic reason that people do not share the same brain.

Many writers use the phrase strategic planning to describe the organizational process of setting strategy. One style of strategic planning is adaptive, starting with scanning the external environment. For example, a firm may notice a trend in its customers or in government policy that opens new market opportunities.  The strategic planning process then moves into developing responses, and those responses often constitute the “strategy.”

Another style of strategic planning is a straight-forward planning exercise to achieve a pre-determined goal. Here the emphasis is more on the word plan, with the adjective “strategic” suggesting that it is an “important plan.”

Strategic thinking and strategic planning are similar in that:

  • Both deal with strategic intent and strategy
  • Both involve collecting and logically-processing information

Strategic planning receives much criticism. In many organizations, strategic planning has become highly structured; a groan-inducing set of templates that yield an artifact called the “strategic plan.” Often the reason for that is that strategy becomes tied to budgeting, and the words that comprise the “strategy”  becomes the documented rationale for the proposed budget. In too many organizations, strategic planning exists solely as an annually-repeating bureaucratic process of creating artifacts, discussing them, and filing things away.

This bureaucratic approach is further magnified by use of pre-structured templates. A common response to the templates is that practitioners skip the analysis by writing down the first thing that comes to their mind. Analysis is mentally exhausting and they are busy, and no one really notices what they write.

Yet, strategic planning is also supported and lauded. It certainly receives important resources.

Strategic planning can be done well or it can be done poorly.  Strategic thinking can be done well or it can be done poorly.  We don’t need to replace strategic planning with strategic thinking, we need to focus on the unique value adds of each.

I have a modest proposal: mix the advantages of strategic thinking
with the advantages of strategic planning to maximize the contributions of both.

~~~

How Strategic Thinking Improves Strategic Planning

Strategic thinking is the source of insights.  Insights are important design elements in strategy formulation. Consider how these insights are generated and applied:

  • Strategic thinkers imagine the “what ifs” and the future state. They contrast  the desired future with the current state. This information can is often captured (recorded) in strategic artifacts as situational analysis and vision statements.
  • Strategic thinkers often generate imaginative and creative problem solutions. The solutions would probably be recorded in the documents as strategies, or guiding policies.
  • Strategic thinking is opportunistic, and SWOT-type analysis includes capturing and recording opportunities.

How Strategic Planning Improves Strategic Thinking

Experience with strategic planning can foster an individual’s competence in strategic thinking. Participation in the process of strategic planning processes forces individuals out of their comfort zone into their learning zone. Here are a few of the benefits:

  • They learn to recognize and tolerate ambiguity and abstraction
  • They learn that while processes reduce ambiguity, processes the status quo; this anchoring on the status quo can cause the organization to be slow to respond to threats or opportunities
  • They learn that there is seldom one right practice or vision
  • The learn to ask better questions
  • They learn some of the specialized jargon, and can better communicate with others about concepts associated with strategy

I saw the value when I worked with volunteer leaders of a Project Management Institute (PMI) component group. PMI Headquarters required strategic plans and measures. These volunteer leaders were primarily trained in science or engineering and were accustomed to being provided a “scope” to which the would develop execution plans. They thought of planning as an exercise create documents that answered explicit questions.

Strategy is ambiguous and working with ambiguity put the people out of their comfort zone. They struggled (and complained) but they learned.

In the post-activity lessons learned, the participants felt that they had matured some as strategic thinkers. Here are a few representative comments:

  • “I learned to look for data, and not make assumptions when I had little data to support my hunch”
  • “I started to ask some of the same questions about my own organization’s strategic position”
  • “I became much more focused on our customers, and how we create value for them; If we can’t develop a good value proposition, we won’t succeed”
  • “I feel much more comfortable with the ambiguity that characterizes strategic situations”

Manage the Interface Between Strategic Thinking and Strategic Planning

Because organizations are social entities that must act collectively, individuals often (and should) share their information and insights with others. Here are some suggestions:

  • Encourage individuals to reflect and think strategically, with the purpose of developing relevant and meaningful insights.  Allocate time and encourage people to work individually, at least for a while. Strategic thinking is a somewhat solitary and reflective activity.
  • Discourage the sole reliance on formal written documents and templates.
  • Encourage people to have conversations where they share insights with each other.
  • Encourage people at all levels of the organization to participate in contributing to strategy.

Do you agree that strategic thinking and strategic planning are complementary?