Insights Are the Secret Sauce of Strategy

Update to ST map graphicThe future is an essential navigational beacon of strategic thinking. The navigational beacon of insights is just as important.

The IBM turnaround is an excellent example of what one insight can do. Gerstner [IBM’s CEO] declared that the services strategy was a “powerful logic” that would undergird “IBM’s unique competitive advantage.”[i] From that quote you can extract this compelling question: Does your organization’s strategy have a logic that is unique and provides an advantage?

Insights, more specifically cues and anchors, are critical navigational beacons on the strategic thinking map. A strategic thinker is continually searching for cues in the data and paying attention to each cue. She applies sensemaking to that cue to test for the spark of an emotional response. It might be as simple as, “This request for X from a stakeholder is new, and it’s interesting. I wonder if there’s any further significance to it?”

When presented with a strategy, a good question is: What’s the insight behind this strategy?

 

.…The above is an excerpt from Chapter 9 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

This book unpacks strategy in an understandable way and clarifies the common misunderstandings of what it is, and what it is not. ‘Strategic thinking’ is a domain that can be accessed, learned and practiced by anyone. It makes strategy practical by providing relevant models, examples, and tools. I particularly liked the four X-factors of strategic thinking – drive, insight, chance, and emergence. The best part is the decomposition of micro-skills necessary to practice strategic thinking.
― JSD – customer review on Amazon

[i] “IBM’s unique:” Gerstner, 130.

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How a Strategic Decision Differs From a Tactical Decision

As I mentioned in the first chapter, people often use the adjective strategic rhetorically to signify importance. An example is that many people use the adjective strategic to contrast with tactical. The Parthenonbest explanation is that the strategic level is analogous to the brain and the tactical level is analogous to the hands. This results in a meaningless distinction between “choosers” and “doers,” because people in low levels of an organization’s hierarchy can and do make decisions.[i]

Sometimes those lower-level decisions are catastrophic, as in the case of James Liang, a Volkswagen engineer who found a way to fake reports on vehicle emissions testing – Volkswagen paid over $20 billion in fines.[ii] Clearly, it’s not only the CEO of an organization who makes consequential decisions.

I generally advise avoiding the use of the word strategic as a substitute for the word important. However, I make an exception for the phrase strategic decision if it’s used deliberately and coupled with the distinct phrase tactical decisions.

The application is in this rule: a strategic decision constrains a tactical decision.

An example of a strategic decision was Gerstner’s decision to keep IBM together. He revealed it to be “the most important decision I ever made – not just at IBM, but in my entire business career.”[iii]

The first essential characteristic of a strategic decision is stand-aloneness, which means that the decision is independent of other decisions. [iv] Gerstner’s decision to keep IBM together was stand-alone because Gerstner decided it on its own merits.

Gerstner’s decision arose out of his specific nuanced understanding of the situation and was influenced by his unique perspective. A standalone decision could also be called a subjective decision, in that is guided by a person’s perspective, personal values, and experiences. Throughout his book, Gerstner recollected his first-hand frustrations as an IBM customer.

The decision to reduce the price of mainframe computing systems was a tactical decision. It was not a standalone decision, because the pricing decision involved a considerable sacrifice of profits at a time when IBM was under extreme financial pressures. The pricing decision’s logic depended IBM’s commitment to large, global customers. IBM had no good reason to reduced prices if it was going to abandon those customers.

.…The above is an excerpt from Chapter 8 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Githens’ methodology is refreshingly effective in building a coherent path to learn and enhance specific capabilities to become an effective and influential strategic thinker. A must read for any leader wanting to enhance their strategic thinking skills.
 Bill Blackmore

Gregs new book available now~ ~ ~

[i] This is a meaningless distinction: See Roger L Martin, “The Execution Trap,” Harvard Business Review, July-August 2010.

[ii] Volkswagen engineer: See Bill Vlasic, “Volkswagen Engineer Gets Prison in Diesel Cheating Case,” New York Times, August 25, 2017. https://www.nytimes.com/2017/08/25/business/volkswagen-engineer-prison-diesel-cheating.html.

[iii] “the most important decision:” Louis V. Gerstner, Jr. Yes, Elephants Can Learn to Dance. page 61.

[iv] The first essential characteristic of a strategic decision: This section draws from the reasoning by Eric Van den Steen of Harvard. He defines strategy as the smallest set of choices sufficient to guide all other choices. Van den Steen says: “A strategy is not (1) a detailed plan of action or (2) a comprehensive set of choices and decisions; it is a plan of action boiled down to its most essential choices and decisions.” See Eric Van den Steen, A Theory of Explicitly Formulated Strategy, Harvard Business School Strategy Unit Working Paper No. 12-102 (May 3, 2012).


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Unlearning, learning, and a culture of strategic thinking

Organizational culture is relevant to both strategy and operations. Most agree that culture includes a set of shared values (about what is good and bad), beliefs (about the relationships of cause and effect), and assumptions (about the things that can be taken for granted).

As a simple working definition, culture means the shared learning of a group of people. Their shared learnings are about their originations, their strengths, and their future. Indeed, our families, churches, schools, and organizations go to great lengths to imbue members with shared values and beliefs.

Organizational culture imprints on new entrants and influences their behavior. Anyone who has spent time in a large organization has interacted with new hires and their enthusiasm and fresh ideas. Unfortunately, the drive and fresh ideas diminish over time as they become immersed in operational specializations, bureaucratic rules, and processes. Not to be overlooked are the erosive pressures of day-to-day problem solving and the energy-suck of political infighting. Jerry Weinberg explains that the individual is more likely to sop up the values and quirks of culture than a culture is to be changed by the actions of an individual: “The cucumber gets pickled more than the brine gets cucumbered.”

Organizations hold deeply embedded values for productivity, prediction, and perfection. The organization’s culture of operations is the brine that pickles a person’s inclination to think strategically.

Short stack of book
.…The above is an excerpt from Chapter 5 of 
How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“The entire book is outstanding for both newly-interested and accomplished strategists. The author recommends self-development to the reader through a routine practice of selecting one of the twenty microskills, such as “personal resilience” or “devalorization” for focus each week. Valuable insight is presented on culture with respect to strategic fit, transition and transformation. I found the easy flow of the book’s concepts and the weekly practice to be just that; a great fit boosting my skill as a competent strategic thinker at work and beyond.”
Mel – Amazon Verified Purchaser Customer Review
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How Mapping Can Improve Your Strategic Thinking

It’s an inconvenient truth that many executives are lost, unable to grasp the essential concepts of strategy, crafting it, or conveying it to others.[i] In addition to orientation, maps help you frame and answer questions like these:

·       Where could I go?

·       Where should I go?

I like to use the analogy of comparing conceptual maps with conventional (spatially organized) maps. Both can be used for orientation (knowing where you are) and navigation (knowing where you could go or where you should go). Any mental map can be normative (describing what should be) or descriptive (representing what is).

Landmarks are salient features, and the concept of landmarks-as-navigational-beacons is a fundamental message of this book. A landmark that gives you a broader reference, such as a lighthouse marking the entrance to a harbor, is a navigational beacon in the physical world. As I discuss in the next chapter, an operational thinking map has a set of landmarks (that is, navigational beacons) that are distinct from the landmarks of strategic thinking.

Besides navigational beacons, three other mapping concepts enhance the analogy of a physical map and conceptual map. They are the presence of orientation cues (helping you know where you are), associative cues (helping you know if there are other nearby points of interest), and boundaries (helping you recognize your frame of reference).[ii]

Individuals have multiple maps, and they organize their maps differently. Since organizations are collections of individuals, they likely have numerous individual mental maps. Organizational culture will encourage consistency in an individual’s mental map. However, the organization’s culture is also a force of conformity that suppresses weak signals of discontinuities.

With the idea of multiple maps, you can pose questions that inform your strategic thinking:

·       What are the boundaries of the map?

·       What are the salient features on the map?

·       What maps are others using?

·       How do I know when to change maps?

Strategic thinking benefits from collaboration. The practice of conceptual mapmaking can help generate better understandings of the situation and the logic for improving the organization.

.…The above is an excerpt from Chapter 4 of How to Think Strategically, available at all major booksellers. The book’s big idea is that strategic thinking is an individual competency that can be recognized and developed. As individuals steadily improve their capacity to think strategically, the organization gains potential to craft strategy that is good, powerful, effective, clever, and nuanced.

“Greg Githens’ approach to strategic thinking offers a wealth of practical advice for the most season strategy about how to reason more clearly and with greater self-awareness about the often murky and discontinuous world in which we live.” Amy Zalman

This article originally appeared on LinkedIn with the title, How Map Making and Map Reading Can Improve Your Strategic Thinking.

Gregs new book available now

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How to Measure Business Acumen

close up of white syringe

Photo by rawpixel.com on Pexels.com

The Society for Human Resource Management (SHRM) finds that business acumen trails only leadership and ethics as an essential executive quality. Unfortunately, it is a gauzy and subjective buzzword.

I propose a simple evaluation for business acumen. Imagine that an interview is taking place for an executive-level or Board of Directors position and that that of business acumen is an important criterion. Here are three revealing questions:

Your organization has just granted you a significant amount of money. How (and why) would you invest that money to best benefit your organization?

Name a thought leader in your industry or in your discipline. How has that person’s ideas shaped your perspective as a manager and a leader?

The theme of organizational agility is a hot topic in management magazines. What does that phrase mean to you and what are the tradeoffs involved in fostering organizational agility?

A person who has adequate business acumen could provide cogent answers.

A person with acumen is sharp minded.

A brief side trip into semantics is necessary to identify the gist of acumen. The word’s direct Latin ancestor is the verb acuere, which means “to sharpen,” and a related Latin noun is acus for “needle.” Sharp needles are very useful tools for tailors and physicians, and the analogy extends to strategic thinking. A person with acumen is sharp and able to penetrate a complicated system. Associate the word acumen with the word acupuncture and you’ll have a helpful analogy.

Acumen is a blending of fluid intelligence and crystallized intelligence. Fluid intelligence is the ability to work with novel information in real time whereas crystallized intelligence reflects the ability to retrieve and use information acquired through a lifetime. If you have lots of experience with many different business models, then you have crystallized intelligence about them, and you would find it easier to demonstrate acumen. However, if like many successful entrepreneurs, you can identify and exploit an emerging trend, you are also demonstrating business acumen.

The LAID framework for evaluating acumen

The LAID framework unpacks business acumen into four elements.

Literacy – Just as a literate person can distinguish fiction from non-fiction, a business-literate person knows the principles of accounting, finance, operations, human resources, and the like. Business literacy resembles book-learned knowledge. Business literacy is a baseline of understanding and it is not the same thing as acumen.

Analysis – A necessary step in showing acumen is to probe the situation. (The “acu-“ part of the word acumen relates to penetrating.) A skilled analyst can probe quickly and intuitively. A less-skilled person may require more time to identify the crux of the business issue. Regardless, the concept of acumen is basically one of achieving a better understanding of the situation and not accepting mediocre and conventional explanations.

Insight – Everyone has had an insight: a sudden realization of a better explanation of a situation or a resolution to a challenging issue. The activities of analysis and reframing naturally tend to generate insights.

Design – Design thinking is a practice of understanding the context and the needs of stakeholders. The insight sparks some initial design ideas. Those ideas are further refined into an improved solution to the identified business problem.

As you listen to answers, unpack each of the four LAID elements and score separately. If the answer shows little understanding of the situation, assign a 0 or 1 for literacy and analysis. If the understanding appears to be good, give a higher score say a 3 or 4.

As you listen to the answers, be on guard for a string of buzzwords: strategic, digital, disruption, execution, and the like. I’ve met many executives who are good at constructing elaborate riffs that really say very little. You must apply acumen to discover acumen. Some good follow-up questions are, “Why did you select this answer?” “What else is useful for me to understand about your answer?”

Example answers that show business acumen

Here is one way to answer the first question. As an icebreaker exercise in strategic thinking, I once tasked the Board of Directors of a Not-for-Profit association with this question:

An anonymous donor has provided a grant to the organization. What is the dollar size of the grant and what would you use it for?

An important element of this example is that this organization was floundering. If the Board couldn’t provide leadership, the organization would cease operations. Except for one person, the answers were narrow-framed, and uninspired. Their ideas would only result in incremental improvement of the status quo. The scoring was 0 or 1 for each of the LAID elements. The one good answer was this: ask for a grant of $100,000 and use it to hire a full-time President for the organization. It was a good answer because it addressed a large specific challenge for the organization: it was floundering under part-time, volunteer help. It was based on a good insight, and all the other LAID elements were strong.

Here is my answer to the second question, pointing to Jerry Harvey as an influencer. Harvey is author of the book, The Abilene Paradox, which provides the insight is that a fundamental challenge in organizations is managing agreement, rather than disagreement. Here are some common real-life situation where the paradox is in play. Managers agree that they should plan for the long term, but they don’t. They agree that they should avoid over-committing their organizations with projects, but they continue to say “yes” to every opportunity. They agree that they should be more creative and curious about their customers, but they instead rely on their own assumptions.

When organizations blunder into the Abilene paradox, they take actions in contradiction to what they really want to do and therefore defeat the very purposes they are trying to achieve. Harvey’s insights have helped me develop some essential ideas: individuals are often out of touch with their situation, individuals often do not make rational decisions in their own best interests, and group social dynamics often lead to mediocrity. My business acumen improves because I use empathy: and I ask more direct and meaningful questions to individuals. The importance of speaking truth to power is enhanced.

For the third question about organizational agility, I would expect the answer to understand that agility is not a methodology. Agility is a cluster of values about speed, flexibility, and attention to delivering value to the customer. Those values are long-standing qualities of excellent organizations. Anti-agility is often built up in a culture that emphasizes process and perfection. The tradeoffs of increasing organizational agility mean that strategic thinking needs to coexist with the more-comfortable and common practice of operational thinking.

A person with business acumen understands that each situation has relevant nuance. Regardless, they attempt to penetrate to gain deeper understanding and craft responses that are appropriate to the situation.

Has this article enhanced your understanding of business acumen?

Note: I originally published this article on LinkedIn.

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Strategy Execution as a Learning Process

Concept to ExecutionI’ve been teaching the idea that the strategic initiative leader (the program manager) functions in the role the Chief Learning Officer (CLO).

Here are three essences of the CLO role:

  • Establishing an attitude and culture that is friendly to learning. The CLO role regards the statement of “I don’t know” as an opportunity to discover useful information. Ignorance is not a weakness.
  • The leader leads by asking questions. One of the best is this: What don’t we know? When problem-solving, the question “How might we ___?” often opens up the conversation.
  • Use experiments and probes to increase the learning. In particular, in areas of complexity, watches for emergence. If an experiment is working out, the leader moves to amplify its positive effects. If the experiment is not delivering benefits, the negative effects are dampened.

When it comes to strategic initiatives, I find that a mindset of efficiency gets in the way of success. I recently found some support in an article by An Kramer. The following table summarizes some of the reasons that we think of strategy execution as a learning endeavor rather than one of efficient deployment.

  Execution as Efficiency Execution as Learning
Leaders Have a “fund of knowledge” that is selectively dispensed Establish general direction
Employees Valued because they follow directions Valued because they discover and adapt
Methodology Set in advance Tentative
Change in work flow Infrequent, seen as costly Continual, organic
Feedback Typically 1 way: boss to worker 2 way
Problem solving If unsure, the worker asks leader for information Constant problem solving. Info flows freely to workers
Fear Does not harm quality of execution and might even motivate those facing a dull task Inhibits learning, experimentation, discourages sharing, lowers awareness of options

I find that most people in my seminars greatly appreciate the idea of setting the climate for learning in the team. However, they struggle and often are held back by traditional mechanistic notions of organizations that are focused on efficient production.

References. The above table is an adaption (by me) of An Kramer’s article “Ready for the Future: The Four Principles of Nomadic Learning,” in the journal, On the Horizon (2013). Kramer  credits Amy C. Edmondson (2008) for the distinctions.

How have you practiced the idea of “execution as learning?”

Gregs new book available now

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Why I favor a mental stance of disorder

Disordered StanceThis article will be of particular interest for those readers who want improve their strategic thinking. The advice for you is straightforward: Assume you don’t understand the situation that you’re in.

The dangers of the K.I.S.S. Maxim.

For most, this is difficult advice to follow. The reason is that their own natural predisposition, magnified by the culture of operational thinking, draws to “Keep It Short & Simple.”

A stance of simplicity is inappropriate for most strategic initiatives. Here are two examples:

  1. A company wanted to improve its new product development capabilities. It hired a large training firm with an established “best practices” project management curriculum designed for information technology practitioners. The methods and skills taught were irrelevant to the company’s product development process, and everyone involved ended up frustrated and in a blame game.
  2. As a result of declining demand, a company went on an aggressive cost-cutting program. Any proposal that involved expense was met with an answer of “no.” The cost-cutting program didn’t address the organization’s core strategic challenge that it’s once strong strategy had been disrupted by competitors.  It needed to focus and invest, instead the managers found it easier to decentralized and tighten the belt. The organization never addressed its core challenges and the result was that the company became smaller and weaker. Because of simplicity, it was absorbed by a competitor.

Strategy is often oversimplified as vision, mission, and values

Many people equate the concept of “strategy” with “plan.” As a result, they misunderstand strategy as ordered and specific steps that get them to their desired outcome. They are ignoring the several pertinent facts:

  • No one can predict the future. Unexpected things emerge and cause adjustments.
  • It is hard work to get people to agree on the issues that face the organization
  • People spend more time arguing over proposed solutions and visions rather than understanding their strategic situation
  • Good strategy often hurts people’s feeling as causes difficult choices about where to invest scarce resources and where to disinvest

These oversimplifications (coming from a mental stance that values simplicity) explain why organizations flounder and resign themselves to bad strategy.

Your mental stance

When you are in your physical stance for a sport, your body is positioned to anticipate and react to the game. The mental stance is similar, how your mind is positioned to anticipate and react to information.  The mental stance is the way you filter or amplify signals coming from outside of yourself. To hold a disordered stance is to look at the data as a set of uncategorized signals.

Cynefin’s region of  disorder

I’ve been interested in Cynefin framework for years, but it wasn’t until I wrote this earlier article on VUCA that I really began to understand its genius. You can find out more on Cynefin elsewhere. For this article, I’ll simply point out that the framework is composed of five regions: simple, complicated, complex, chaotic, and disordered.

In the Cynefin framework, the disordered region is the condition where people do not know (or do not agree) on the whether their situation is simple, complicated, complex, or chaotic. To be clear, disorder means that any of these could be true (yet, when time has passed, only one of them was correct):

  • The person is unsure of the effectiveness of a so-called best practice or process
  • The person is unsure whether an expert can resolve the problem
  • The person is unsure whether some unanticipated (black swan) event might emerge
  • The person is unsure whether an experimental approach would help

A disordered stance is a better way

Instead of assuming simplicity, you should assume a disordered stance. Stated differently, embrace disorder as the entry point for analysis and decisions. Returning to the two examples above of the excesses of simplicity:

  • Don’t be captivated or convinced by the label of “best practice.” Don’t assume that a performance problem can be fixed by training.
  • Don’t rely on simple rules of cost cutting.

In both cases, a diagnosis of the situation is necessary. Moving past symptoms, what are the core challenges that the organization faces? This is the realm where good strategy is needed.

Some complicated problems are fixable, such as the example of new product development productivity.  The answer is to avail yourself of expertise. Keep in mind that “thinking outside the box” actually means looking in other boxes (ideally as far afield as possible), a process that’s as analytical as it is creative.

For more discussion on the domain of complexity, see this article: Complexity: Four Principles for Program Managers.

I like data

When you favor a stance of disorder, you do these things:

  • You research widely, looking deep inside other boxes
  • You search for interesting things
  • You expect the unexpected
  • You resist “ideal forms” like methodologies and best practices.
  • You dig deep to understand the fundamentals

Basically, you think in an unconventional way. Earlier I wrote that a stance of simplicity is appropriate for most strategic initiatives.  I’d like to clarify that (somewhat) with these words from Richard Rumelt’s excellent book, Good Strategy/Bad Strategy:

A hallmark of true expertise and insight is making a complex subject understandable. A hallmark of mediocrity and bad strategy is unnecessary complexity – a flurry of fluff making an absence of substance.

I tolerate complexity and ambiguity

This quote from Oliver Wendell Holmes, Jr. is one that reflects my advice:

“I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.”

 

Complexity and ambiguity are each a source of anxiety, and that the desire to avoid anxiety explains why many people don’t become competent strategic thinkers.

Do you agree that mental stance is an important leadership attribute for strategic initiatives?

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