I have a strategy lesson for you
Read our latest piece on Forbes here.
In it, we argue that how an organization perceives competition or reacts to a disruption in its environment depends on its identity. Hence, before you start trying to understand them, try to understand yourself first.
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Time to address the culture, Tim
Read our latest piece on Forbes here.
In it, we argue that bank crashes are not random accident or bad luck, but that they are systemic. They are the result of a banking culture. Unless this culture is changed, crashes will continue.
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Posted in Our work featured
Tagged banking, Barclays, crash, culture, Forbes, JPMorgan, leadership, LIBOR scandal, Risk
Milo will be talking at the upcoming Family Office Wealth Conference on Predictable Unpredictability. The conference is organized by the Institutional Investor Forums. “Predictable Unpredictability: Issues, Options, Views and Roadmaps for Affluent Families”, will bring together representatives from some of the nation’s wealthiest families to explore the latest trends and issues related to managing family assets. It will take place on September 12-14, 2012, at the Montage Resort & Spa, Laguna Beach, CA.
Milo will argue that what appears in the news media, as well as what much of what is reported about the macroeconomic scene, represents the “weather” of business: transient or cyclical phenomena that strategists can safely ignore. The “climate” of business, recurring patterns of activity to deep systemic factors, is geopolitical and to a far greater degree determines the ability to create value over the long-term. Milo will outline how families with the assumed knowledge of current events and common business strategies can harness a diverse range of disciplines, especially methods of basic intelligence analysis, to become better informed about the world and the forces at play in the 21st Century that will have a continuing impact on business and business formation.
More information on the conference here. For regular updates, why not subscribe to our blog?
Posted in Our work featured
As Milo and I have argued before, the environments and issues businesses deal with are more complex than traditional strategy models admit. Business issues today display high levels of uncertainty, they can behave non-linearly, and they can be vulnerable to “Black swans”, i.e. low-probability but high impact events that disrupt even the best formulated strategies. The added difficulty for strategists and managers is that nonlinear environments often appear linear for an extended time period (think US house prices). As a result, some conclude that what seems to be an essentially linear pattern (prices fluctuate a bit around a ‘long term trend’ but always rise), are linear in reality – before a radical change occurs that completely disrupts previously assumed patterns (e.g. prices fall dramatically). In short, people often assume an environment is linear and predictable when in fact the continuity we observe is only a particular case of limited duration. To make matters worse, with many nonlinear systems change is not nicely spread over the years: most of the cumulative change occurs in one, single – often dramatic – occurrence. In the language of engineering, some things don’t “fail gracefully” (e.g. a bridge that breaks suddenly instead of bending slowly).
Not a “graceful failure”.
Read our latest piece on Forbes here. Our previous piece was on how the lack of diversity can cripple your company. Read it here.
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A control expert preparing for the eventual collapse.
Posted in Case study, Our work featured
Tagged decline of organizations, disruption, Forbes, Microsoft, organizational decline
Milo and I organize a workshop on Tuesday, May 29 on ACH (Analysis of Competing Hypotheses). ACH is a tool originally developed by Richards Heuer at the CIA to analyze complex and uncertain situations. It is widely used in intelligence and international politics, but Milo and I think it applies equally well to business for strategic decision making. ACH uses a deceptively simple framework to use ideas from the scientific method, cognitive psychology and decision analysis to overcome a common but immensely important bias: the fact that we tend to perceive what we expect to perceive rather than what actually exists.
Recently I had a discussion with a friend who is a colonel in the Army about the culture of risk among senior officers and, by extension, in management. The culture of risk is an important question for any organization.
To understand the culture of risk, we must first distinguish between two types of risks. Type One risk is where you do something that leads to an error or a bad result. It’s a reasonable assumption that the majority of our time in school and in higher education is designed to teach us how to reduce such risks.
Type Two risk is the opposite, it is the risk of not doing something that could be valuable. Of course, the two are linked: the more one reduces the risk of doing something, the more one increases the risk of not doing something valuable. The trick, unfortunately, is that we tend to focus more on the Type One than Type Two risks. On one level, this makes sense: after all, failure is very visible – a disaster, a lost war, a failed product launch, etc. In contrast, forfeited opportunity is invisible: we do not see what valuable things our caution has prevented us from doing, and no one is punished for not having invented something. Our education, liability laws and corporate governance structure push us towards a culture of Type One risk avoidance, i.e. to reduce the risk of failure (Sarbanes-Oxley anyone?). This obviously is a problem for innovation in the long term, but it doesn’t even reliably protect us. If it did nothing else, the financial crisis that began in 2008 has demonstrated that those institutions entrusted to manage risk failed to do so properly. In short, we focus on risk avoidance at the expense of opportunity creation, and we don’t avoid even risk very well!
I will be a host on the Financial Time’s “Ask the Expert: Entrepreneurship 2012” today at 2:00PM GMT.
If you want to know what business can learn from entrepreneurs in the management of uncertainty, post your question now!
More info on the FT’s Web site here.
Read our guest post on Forbes here.
The most recent Forbes piece is about the coming demise of Microsoft. Read it here.
Posted in Case study, Our work featured, Theory
Tagged CIA, diversity, Forbes, Social construction, strategic surprise
The difficulty of anticipating strategic surprises is often ascribed to a ‘signal-to-noise’ problem, i.e. to the inability to pick up so-called ‘weak signals’ that foretell such surprises. In fact, monitoring of weak signals has become a staple of competitive intelligence. This is all the more so since the development of information technology that allows the accumulation and quasi-automatic processing of massive amount of data. The idea is that the identification of weak signals will enable an organization to detect a problem (or an opportunity) early and, hence, to react more quickly and more appropriately. For instance, a firm can detect a change in attitude of consumer behavior by spending time with the most advanced of them, as Nokia did in the early 1990s, a move that enabled the firm to realize that the mobile phone was becoming a fashion item.
Silberzahn & Jones 