Tag Archives: strategy

Three Alternatives to Strategic Popcorn

Summer has been over for a while, but I’m only now finding the time to do a post.  It’s going to be short – just an update to a couple of my previous posts on reading for strategists (like Geopolitics and Investing and How to Think Like an Intelligence Analyst).

Red, White, Red, White, Red:  Five Forces!

White & Red – Five Forces!

The not-so-subtle idea underpinning those posts is that much of what is called business or investment strategy “literature” is intellectual popcorn:  fun to eat, temporarily satisfying, but with no long-term nutritional value.  Eat only popcorn, and you’ll starve to death.  (Here I could criticize business schools for serving mostly intellectual junk food to  their students, but that’s what happens when you let kids create the menu!)

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Our new Forbes piece: Snowden and the Challenge of Intelligence: The Practical Case Against the NSA’s Big Data

Our latest Forbes piece discusses why the NSA’s PRISM surveillance program poses more than a moral problem. In fact, we argue that more data will not make America safer. Read it here.

Our new Forbes piece: Three reasons why Big Data doesn’t make you smarter — Lessons from the world of Intelligence

Our latest post on Forbes piece discusses why Big Data will not make you smarter and potentially can be dangerous. Read it here.

Our Latest Forbes Piece: What a Caveman Can Teach You About Strategy

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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The Fragility of the Future (and Your Strategy)

Today I was reminded of the perils of forecasting while reviewing  a Department of Defense document, the Joint Operating Environment 2010.

“JOE 2010” as it’s called, is designed to provide the various branches of the US Armed Forces a joint perspective on likely global trends, possible shocks and their future operating environment.  If you’re interested in geopolitics and strategy, I recommend that you take a look.

Apart from its inherent interest, JOE 2010 opens with a defense planning timeline that business and financial strategy practitioners – and anyone who consumes their work  – would do well to bear in mind.  I have reproduced it verbatim here:

1900 If you are a strategic analyst for the world’s leading power, you are British, looking warily at Britain’s Age-old enemy, France.

1910 You are now allied with France, and the enemy is now Germany.

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Gresham’s Law of Strategy: Why Bad Advice Drives out Good Advice

Near the end of a seminal essay on strategic surprise, Richard Betts writes, “The intelligence officer may perform most usefully by not offering the answers sought by authorities, but by offering questions, acting as a Socratic agnostic, nagging decision makers into awareness of the full range of uncertainty, and making authorities’ calculations harder rather than easier.”  I believe that the same should be true for corporate strategy consultants:  often their job is to make long-range calculations harder rather than easier.

Why then, is the opposite so often true?  In a world in which surprise, disruption and the unanticipated are rife, why do strategists who promise to make calculations easier rather than harder often succeed?  I think a phenomenon that I call of “Gresham’s Law of Strategic Advice” is at work.

E pluribus unum

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Why theory matters. Even to business and yes, even to you as well

It’s become commonplace to hear, including from my fellow academic colleagues, that we academics write articles in journals that nobody reads. Students and participants in executive programs, we are often told, want practical tools that they can apply immediately in their job, and they have no patience for theory. It often goes to the point where we are asked not so much to teach as to get participants to talk about their favorite topic, ie themselves, and lead a class discussion on this anecdotal basis supported by some multimedia slides while students are transfixed by their twitter account. Some schools have even acknowledged this and claim that they don’t teach, but develop what’s already inside participants. Put otherwise, bring your own food: we repackage what you know already and you pick up the bill. The idea that we as teachers may, at some point, introduce some theoretical content increasingly seems suspect and the sure sign of out of touch academia trying to influence a world they are said not to understand. What do eggheads know about business? The idea of teaching, that we could impart some knowledge, but also exert our professional judgment on what we should teach to whom seems preposterous and a sure sign of academic arrogance. I disagree. I teach, and I make no apologies for it.

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Three Videos on Forecasting and Strategic Surprise

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.

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Business and Intelligence Techniques: the Role of Competing Hypotheses

I get a lot of requests to discuss further the application of intelligence analysis to business, so today I’ll discuss the uses and limitations of a common analytic technique.

One tool that I teach at IE is the Analysis of Competing Hypotheses (ACH).  ACH is an analytic tool originally developed by Richards J. Heuer at the CIA, but it is remarkably useful in business as well.  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.  To illustrate this tendency, read the words in the three triangles below:

If you’re like most people, the phrases “written” in the triangles are familiar.  To find out what’s actually written in each triangle, refer to the bottom of this entry (or try the old proof-readers trick of reading them backwards).

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We have met the enemy and he is, er, forecasting

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.

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