How to Think Strategically. Greg Githens
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way to approach an ill-defined issue in a dynamic environment.
Best practices are not suitable for uncertain environments.
Instead, the best approach for crafting strategy is a sharp mind in touch with the situation. It echoes this book’s big idea about the importance of individual competency in strategic thinking.
How Does Dullness Arise?
Oakland’s Moneyball strategy was the result of a sharp mind in touch with the situation. Consider, though, that its rivals could have independently developed and tested the hypothesis that the market was inefficient. Stated differently, why were Oakland’s competitors dull, and what lessons does the answer offer?
The answer is that individual managers of Oakland’s competition were subject to their own minds’ predispositions for mental economy and ease. Oakland’s competitors had access to the same sabermetrics methods and data. They were lax, whereas Billy Beane felt the insight borne of creative desperation.
There are at least three tendencies that foster dull strategic thinking.
People are dulled by their routines. Karl Weick and Kathleen Sutcliffe’s excellent book, Managing the Unexpected, explains how organizational routine dulls people’s ability to notice warning signs and changes in context. They explain that people operate on mental autopilot. In this condition of mindlessness, they see the familiar rather than the unfamiliar, and they categorize events with old labels. They are out of touch with their situation, yet their intuition gives them a false sense of security. They become overconfident and lax.
People build stories out of events. Most people tend to interpret their experience as a series of events. Consider this daily-life example: You see a broken window, a ball lying on the ground below it, and a group of children playing nearby. Your mind naturally tends to associate things that are proximate with each other (broken window, ball, children) and construct a plausible story: The children threw the ball that broke the window. People easily generate explanations and have confidence in those explanations. They don’t need all the facts. The story can change with new information (the neighborhood has had a series of burglaries, or an earthquake recently struck the area). However, people are reluctant to alter already-developed stories.
Murphy’s Law is a call for alertness, not a dour expectation of dystopia.
Event-oriented thinking (or linear thinking) reflects the mind’s tendency to create simple stories of proximate causes and effects. When people pass around stories that are simple explanations of “who did what to whom” or “sales are down, so we lowered prices,” they are practicing event-oriented thinking.
People, managers included, tend to react superficially to events instead of having a more subtle, nuanced understanding of systems behaviors over long periods of time. Most people remember the famous Murphy’s law this way: If it can go wrong, it will. The source is Edward A. Murphy, an engineer tasked with improving airplane cockpits. Many people tend to see Murphy’s Law in a pessimistic way.
In systems language, an airplane cockpit is a loosely-coupled system with multiple interactions between elements, such as the delay between cause and effect. It requires effort and expertise to understand complicated and non-linear systems. Murphy’s law is not a dour and cynical view of the future. Ed Murphy was advising us to be alert for the early, weak signals of discontinuities that might lead to threat or might lead to opportunity. The better lesson is that when you find yourself in a complex situation, mentally process it this way: If something can happen, sooner or later, it will.
Aspirations drive goal setting. Goal setting is typically a form of event-oriented thinking where a person’s aspirations become her most-salient mental anchors.
Imagine a typical, busy manager reviewing a forecast of the next month’s revenues. She concludes, quickly and without deep thought, that the organization can do better. Her quick mental comparison of the situation and aspirations yields her goal.
Figure 2-3 illustrates how event-oriented thinking guides goal setting. The manager feels the pressure of limited time. Her mind easily perceives two things: her readily available data and her aspirations. The mind prefers information that is readily available and then makes the best use of it that it can. (This mental action will be explained in more detail in Chapter 11 as the availability heuristic.)
For contrast, strategic thinkers practice broad framing, which is the search for and consideration of additional information. This can include general economic conditions, existing and emergent competition, social trends, technology, and natural events. Sometimes those signals increase in salience and contribute to disruption. Sometimes not. Certainly, the effort to broad frame can consume too much time for people who already feel the pressures of the day-to-day. On the other hand, to neglect weak signals is to risk increased exposure to an emerging threat or miss an emerging opportunity.
Figure 2-3. Many people tend to narrow frame and set goals.
Advice for Clarifying Goals and Strategy
A competent strategic thinker is curious and asks questions. She is alert for the mistaken substitution of goals for strategy. Here’s an example of how a more junior person could interact with a more senior person:
Top executive: “Our strategy is to launch 20 new products in the coming year.”
Project manager: “That’s a very interesting goal. What’s the thought process behind the establishment of that goal?”
The project manager’s response is subtle. She hasn’t compounded the mistake of substituting goals for strategy and has correctly recognized that a goal is another name for a target or end.
Her question avoids a confrontation over the semantics of definitions of goal and strategy. Also, it creates an opportunity for a more-productive discourse about the organization’s strategy. (Strategy-as-conversation is a topic for Chapter 12, and the courage to confront reality is a topic of Chapter 13.) That discourse might include discussing questions such as the following:
• Are the ends reasonable, given the means available?
• Given the means available to us, if we were clever, what ends might we be able to achieve?
• What are the tradeoffs?
• How might a competitor use cleverness to gain an advantage over us?
• Have our organizational interests changed?
• What issues are we trying to address?
Rather than focusing on goal setting, a competent strategic thinker looks more broadly and deeply for meaningful signals. Strategy, as defined in Chapter 1, is a broadly applicable construct that fits government, business, and charities. The search for good strategy encourages us to answer this question: What are the potential combinations of ends, means, and ways to advance our interests?
Adjectives tell you something important about strategy. I encourage you always to have an adjective to associate with the word strategy. For example, use the adjective clever to describe a configuration of ways and means of strategy (a clever strategy) that results in a relatively weak competitor gaining the advantage.
Another example is the use of the adjective good, which is explained in Richard Rumelt’s excellent book, Good Strategy, Bad Strategy: The Difference and Why it Matters. Good strategy has three distinguishing characteristics: a diagnosis of the situation, a set of essential choices (called guiding