p.1 What is strategy?... Bruce Henderson [(1915 - 1992) was the founder of the Boston Consulting Group.
Henderson founded BCG in 1963 in Boston, Massachusetts.] captured it classically: "All competitors who persist over
time must maintain a unique advantage by differentiation over all others. Managing that differentiation is
the essence of long-term business strategy."
p.4 Natural competition must be completely understood. It is the foundation. It is the
system and pattern of interaction upon which any form of strategic competition must build and modify. Understanding
of natural competition is required in order to predict the effect on those relationships as a result of intervention in the
feedback loops of that system.
p.5 For any given competitor, there will be different competitors who will provide the constraints
for almost every combination of relevant factors. Therefore the frontiers or boundaries of competitive
parity will be constantly changing as any one of the competitors changes, adapts, grows, or redeploys.
p.101-102 information is the glue that holds together the structure of all businesses...
Not only does information define and constrain the relationship among the various players in a value chain, but in
many businesses it forms the basis for competitive advantage... information and the mechanisms for delivering it
stabilize corporate and industry structures and underlie competitive advantage.
p.174 Behind every successful innovation is an unexpected insight... Insight can be made to flourish.
p.176,179 Sometimes the best opportunities lie hidden in something that, at first glance, makes
no sense... One common response is to ignore them... It often takes someone one step removed - regularly scanning
the business for unexpected results - to notice and act on anomalies. It also takes an appreciation of differences, a lively
sense of curiosity, and a willingness to play with the taken-for-granted rules of the business.
p.231 There must be an explicit corporate strategy. To be useful, the strategy
must relate administrative behavior to the allocation of resources over time. Action must be relatable to a value
system that all members of management understand and accept.
p.239 Externally focused, process-oriented, and systemwide performance measurements are essential
for encouraging the actions that create competitive advantage today
p.240 The purpose of performance measurements is to focus the energy of the organization on its
strategic goals, to track progress toward the goals, and to provide feedback. If the performance measurements haven't
been realigned with the new priorities of the business, they will keep the organization from achieving advantage... What gets
measured gets done - for better or worse.
p.342 If the mind is to survive this constant battle with the unexpected, two qualities are indispensable:
first, an intellect that even in this moment of intense darkness retains some trace of the inner light that will lead to truth,
and second, the courage to go where that faint light leads. - Carl von Clausewitz
p.344-345 The intellectual imagination to embrace polarities, the personal courage to act decisively even
in the presence of imperfect information, a practical engagement with the details of execution that unleashes energy - these
three dimensions of leadership in a time of uncertainty are also three key dimensions of strategy. If war is the realm
of uncertainty, then uncertainty is the wellspring of strategy.
p.355 Conceptual thinking is the skeleton or the framework on which all the other choices are sorted
out. A concept is by its nature an oversimplification. Yet its fundamental relationships are so powerful and important
that they will tend to override all except the most extreme exceptions... A concept defines a system of interactions in terms
of the relative values that produce a stable equilibrium of the system... a concept defines the initial assumptions, the data
required, and the relationships between the data inputs. In this way it permits analysis of the consequences of change
p.355 Concepts... start with a generalization of an observed pattern of experience. They are stated first
as a hypothesis, then postulated as a theory, then defined as a decision rule. They are validated by their ability to predict.
Such decision rules are often crystallized as policies.
p.361 [Istvan, 1984] Profound parallels
exist between business and chess. Both are complex forms of competition. Both have been studied for centuries, and both depend
on strategy.
p.361-362 sophisticated chess computers depend
on rules of thumb and experienced-based policies and procedures to develop strategies and direct tactics.
These rules to simplify a complex world
are the parallels to the mental maps successful managers develop to determine a corporation's strategy and tactics... Making
maps explicit and continually reflective of reality separates grand masters from computer programs
p.364 Direct lessons from chess are applicable
in business... One device is recognizing patterns. This is the art of making useful abstractions... Patterns filter extraneous
information, reduce complexity, focus on the essential. Only key patterns of competitive behavior are evaluated... The other
device is guidelines, rules of thumb. Rules of thumb are guiding principles that, while never strictly true because
of oversimplification, point reliably to the probable direction of action. Experience builds rules by remembered
results of trial and error.
p.365 All good chess programs depend on rules
of thumb to simplify calculations... The effort to create successful chess programs parallels the effort of top management
to form successful business organizations. Strategic success requires:
- Appropriate pattern recognition. The organization must seek out all relevant information but not
be overwhelmed by trivial detail.
- Appropriate rules of thumb. Decision rules reflect competitive reality at several levels of complexity.
Too simple, and decisions will be erroneous; too elaborate, and they will be made late or never.
- Learning. No intelligence networks, reporting systems, filters, or decision rules can be
appropriate always, everywhere. Learning when rules do not apply, and when exceptions justify new ones, is the essence of
adaptive strategy.
p.366 [Probing, Isaacs 1985] The single most important word in strategy formulation is why.
Asking why is the basic act of probing... Asking why leads to new insights and innovations...
Probing slows things down, but often to good effect. It can yield revolutionary new thoughts in quite unexpected places.
p.366-367 Few new thoughts have been as revolutionary as the so-called Japanese manufacturing technique...
Central to this rethinking was tireless probing. In his book on the Toyota production system, Taiichi Ohno, vice president
of manufacturing for Toyota, cites the practice of "the five whys." He gives an example of how asking "why"
five times (or more) led him through all the explanations to find the most important root cause... To probe
to the limits is to simplify the problem to its essentials
p.368 Good strategy depends critically on knowing the root causes... Probing - asking why
- is the often intuitive search for the logic that heavy data analysis can miss or bury... These sorts of probes search for
bedrock reasons for value and advantages to test how enduring they may be. They ask whether the shape and character of the
business and its strategy make sense.
Asking why five times is easy in concept, but harder in practice. It can be very rewarding.
Why not do it?
p.371 The Air Force... studied why certain pilots consistently won dogfights in wartime. Their findings
were that winners complete the so-called O.O.D.A. loop - the cycle of observation, orientation, decision and then action -
faster than losers.
The outcome between comparable planes was decided by which pilot could size up the situation and read
opportunities in each encounter and then decide and act before the enemy.
p.372 Management's focus on O.O.D.A. loop improvement will heavily influence our concept of business
strategy. Competitive strategy has to be dynamic and recognize the systemlike nature of a company.
But the planning lexicon has become too reliant on static and positional notions. Our concept of competitive advantage
must shift to more of an operations and real-time orientation.
