Many people are either beginning their holidays or are already in the midst of them. If you’re the type of person who reads a blog like this, you probably already know what you’re hoping to read on your break.
Therefore, I thought I’d try a different approach and offer a summer watching list rather than summer reading list. This list recommends three videos that you might consider for your travels or during your “down time”. All address different aspects forecasting, uncertainty, strategic surprises and decision-making. When you feel like a break from reading, give them a try.
Posted in Methodology & Tools, Theory
Tagged forecasting, foxes and hedgehogs, Gavin, Geopolitics, intelligence, judgement, non-predictive strategy, Saffo, strategic surprise, strategy, Tetlock, Use of history
There is no doubt we are terribly bad at forecasting. Even the smartest among us are. Even the best and the brightest, whom we have tasked to save the world from financial annihilation, are. Take Ben Bernanke, Chairman of the Federal Reserve. In 2004, he declared, in a speech ominously titled “The Great Moderation”: “One of the most striking features of the economic landscape over the past twenty years or so has been a substantial decline in macroeconomic volatility. This […] makes me optimistic for the future.” You might want to read the full transcript of the “Great Moderation” talk here because it is for a fascinating reading on how wrong experts can be at forecasting. And it’s not just Ben. In fact, political, economic and business histories are littered by forecasts and predictions that turned out to be ridiculously wrong. From the commercial potential of the Xerox machine or of Nespresso, from the possibility of heavier than air flight to the market for mobile phones, from prosperity at the corner of the street to Japan as number One. Our hopelessness at forecasting is a confirmed fact.
The fog of war, a long 2003 interview of Robert S McNamara, shows that how one frames an issue has an influence on how a question can be solved. As soon as they got engaged in Vietnam, the US presented the conflict as a fight between freedom and communism. This happened in the late fifties, after China had become communist and right after the Korean war, in a context in which the communist world seemed to progress inexorably. The domino theory, introduced by the Republican US president Eisenhower in 1954, stated that once a country fell and became communist, neighboring countries also would. Hence it became crucial to defend any country facing a communist insurgency. As David Halberstam mentions in his book “The best and the brightest”, the US national context also played a role later in the Vietnam process: Harry Truman, Eisenhower’s Democratic predecessor, was accused during the cold war to have “lost” China in 1949 and to have been weak against the communists, particularly during the Mccarthyst period. A longstanding reputation of “Democratic weakness” persists to this day as a result. In the early 60s, the democrats were still traumatized by these accusations that were systematically used by their Republican adversaries. This is the initial cognitive frame with which the Vietnam question was analyzed by President Kennedy’s administration. Right from the beginning then, the administration was prisoner, without being aware of it, from a frame that was in effect imposed by their adversaries. Despite their doubts and mounting skepticism, they would remain unable, right until the very end, to get rid of it.
Posted in Theory
Tagged decision making, disruption, framing, GM, non-predictive strategy, Robert McNamara, Sarah Kaplan, sense making, strategy, turbulence, uncertainty, vietnam war
One of the features of our age is the idea that business suffers from a unique level of technological disruption, an attitude that I call Techno-Egotism. Businesspeople are told routinely that they operate in an era of “unprecedented” technological change; as a result, they feel very Modern (and rather sorry for themselves). They also, however, end up lacking perspective, and that can be a strategic liability.
I believe that if posterity registers our age’s Techno-Egotism at all, they will find it rather quaint. This thought struck me with great force last week as I drove across the George Washington Bridge, from New York to New Jersey, specifically in order to spit legally into a tube, and then mail that tube.
Posted in Case study, Theory
Tagged 23andMe, Burlington Northern Santa Fe Railway, disruption, disruptive technology, DNA, genetics, Gordon Moore, Lloyd's, moore's law, Navigenics, New York State Law, non-predictive strategy, Panama Canal, Panamax, Royal Mail, steamship, strategy, Suez Canal, Tactics, Techno-Egotism, technology, Warren Buffet
To follow up on Philippe’s post about Thinking in Time: at IE I teach a course called “Geopolitics” to Masters in Advanced Finance students, and “The Multinational Firm and Geostrategy” to Masters in Management students. Students in those classes sometimes ask me to recommend books to help them “think like an intelligence analyst” and apply intelligence methods to analyzing business decisions.
I provide extensive bibliographies as part of my course syllabi, but often students want me to boil my recommendations down to a few key texts. Call it a “getting started in intelligence for businesspeople” reading list.
Posted in Methodology & Tools
Tagged CIA, Cuban Missile Crisis, Ernest R May, Geopolitics, Geostrategy, Graham T. Allison, Hedge funds, Integrated Strategy, intelligence, Intelligence Analysis, Morgan D. Jones, non-predictive strategy, Philip D. Zelikow, Richard E Neustadt, strategy, Timothy Walton
In their 2010 article in the MIT Sloan Management Review, “What Every CEO Needs to Know About Nonmarket Strategy”, David Bach and David Bruce Allen contend that sustained competitive advantage arises from engaging with “social, political and environmental issues” as part of corporate strategy.
I completely agree, but would make the case more strongly: much of what passes for corporate “strategy” is actually tactics. The same goes for much of the advice dispensed by illustrious “strategy” consulting firms. “Strategy” sounds more important than “tactics,” so everybody calls whatever they’re talking about strategy, and then moves on to dispensing advice. But what sounds like a linguistic quibble matters, because the distinction between these words bears directly on building a sustained competitive advantage in business.