Strategy: Process, Content, Context (de Wit, Meyer, 2010)

xx Strategic thinking is in its very essence questioning, challenging, unconventional and innovative. These aspects of strategic thinking cannot be transferred through instruction... Students cannot be instructed to be strategists, but must learn the art of strategy by thinking and acting themselves... The role of the professor is to create the circumstances for this learning.

xxi Students are challenged to look at a strategic issue holistically, taking various aspects and perspectives into account, and to arrive at a proposed course of action. This type of decision-focus closely reflects what strategizing managers need to do in practice.

p.16 Most people are used to solving puzzles, resolving dilemmas and making trade-offs... They are based on the assumption that, by analysis, one or a number of logical solutions can be identified... However, most people are not used to, or inclined to, think of a problem as a paradox. A paradox has no answer or set of answers - it can only be coped with as best as possible... Paradoxes will always remain surrounded by uncertainty and disagreements on how to cope.

p.30-31 Most policy planning and strategy problems are wicked problems of organized complexity. These complex wicked problems also exhibit the following characteristics: 1. Interconnectedness... 2. Complicatedness... 3. uncertainty... 4. Ambiguity... 5. Conflict... 6. Societal constraints

p.31 Wicked problems have numerous important elements with relationships among them, including important 'feedback loops' through which a change tends to multiply itself or perhaps even cancel itself out. Generally, there are various leverage points where analysis and ideas for intervention might focus, as well as many possible approaches and plausible programs of action.

p.32 A critical dimension of wicked problems of organized complexity is that they must ultimately be dealt with in their totality. This calls for holistic thinking. Analysis is only an aid toward reaching a synthesis... systems thinking and methods can be used to gain better insight into the structural aspects of wicked problems.

p.33 Problems of organized complexity, as we have seen, are on-going, ill structured, and generally 'wicked.' The choice of individual courses of action is only a part of the manager's or policymaker's need. More important is the need to achieve insight into the nature of the complexity and to formulate concepts and world views for coping with it. It is the policymaker's thinking process and his or her mind that needs to be supported.

p.34 A more productive, though more difficult, approach is to focus on how a leader thinks... They have the predisposition and the capacity to hold in their heads two opposing ideas at once. And then, without panicking or simply settling for one alternative or the other, they're able to creatively resolve the tension between those two ideas by generating a new one that contains elements of the others but is superior to both. This process of consideration and synthesis can be termed integrative thinking. It is this discipline - not superior strategy or faultless execution - that is a defining characteristic of most exceptional businesses and the people who run them.

p.36 Human beings are distinguished from nearly every other creature by a physical feature: the opposable thumb. Thanks to the tension that we can create by opposing the thumb and fingers, we can do marvelous things... Analogously, we were born with opposable minds, which allow us to hold two conflicting ideas in constructive, almost dialectic tension... in rejecting one model out of hand, we miss out on all the value that we could have realized by considering the opposing two at the same time and finding in the tension clues to a superior model. By forcing a choice between the two, we disengage the opposable mind before it can seek a creative resolution... To take advantage of our opposable minds, we must resist our natural leaning toward simplicity and certainty.

p.36,38-39 So what does the process of integrative thinking look like? ...The steps themselves... Everyone goes through them while thinking through a decision... The first step is figuring out which factors to take into account... In the second step of decision-making, you analyse how the numerous salient factors relate to one another... With a good handle on the causal relationships between salient features, you're ready to turn to the decision itself... Integrative thinkers... see the entire architecture of the problem: how the various parts of it fit together, how one decision will affect another... A leader who embraces holistic... thinking can creatively resolve the tensions that launched the decision-making process... delays, sending the team back to examine things more deeply, generating new options at the 11th hour... When a satisfactory outcome does emerge, though, it is inevitably due to the leader's refusal to accept trade-offs and conventional options.

p.39 Integrative thinkers don't break down a problem into independent pieces and work on them separately or in a certain order. They see the entire architecture of the problem: how the various parts of it fit together, how one decision will affect another. Just as important, they hold all of those pieces suspended in their minds at once... A leader who embraces holistic rather than segmented thinking can creatively resolve the tensions that launched the decision-making process.

p.40 More than 100 years ago, [19th century American geologist and former president of the University of Wisconsin, Thomas C.] Chamberlain wrote an article in Science magazine proposing the idea of 'multiple working hypotheses' as an improvement over the most commonly employed scientific method of the time: testing the validity of a single hypothesis through trial and error... Chamberlain wrote that it 'develops a habit of thought analogous to the method itself... the mind appears to become possessed of the power of simultaneous vision from different standpoints'... I believe that integrative thinking is a 'habit of thought' that all of us can consciously develop to arrive at solutions that would otherwise not be evident.

p.53 what goes on in the mind of the strategist? ...strategists are engaged in the process of dealing with strategic problems... a strategic problem is a set of circumstances requiring a reconsideration of the current course of action, either to profit from observed opportunities or to respond to perceived threats. To deal with these strategic problems, managers must not simply think, but they must go through a strategic reasoning process, searching for ways to define and resolve the challenges at hand. Managers must structure their individual thinking steps into a reasoning process that will result in effective strategic behaviour. The question is how managers actually go about defining strategic problems (how do they identify and diagnose what is going on?) and how they go about solving strategic problems (how do they generate, evaluate and decide on potential answers?).

p.55 Before strategists can move to benefit from opportunities or to counter threats, they must be aware of these challenges and acknowledge their importance... To come to grips with a problem, strategists must try to understand the structure of the problem and its underlying causes... To deal with a strategic problem, strategists must come up with a potential solution. If more than one solution is available, strategists must select the most promising one... A strategic problem is only really solved once concrete actions are undertaken that achieve results.

p.56 Often, strategists do not wait for a problem to be precisely defined for a solution to be fully conceived before starting to act... To find a suitable solution it is often also necessary to test certain assumptions in practice and to experiment.

p.57 Knowledge that people have is stored in their minds in the form of 'cognitive maps'... These cognitive maps are representations in a person's mind of how the world works. A cognitive map of a certain situation reflects a person's belief about the importance of the issues and about the cause and effect relationships between them... A person's cognitive map will focus attention on particular phenomena, while blocking out other data as noise, and quickly make clear how a situation should be perceived... cognitive maps help to direct behaviour, by providing an existing repertoire of 'problem-solving' responses (also referred to as 'scripts' or 'recipes') from which as appropriate action can be derived.

p.57-58 knowledge gained through experiential learning is usually not codified into formal rules, principles, models or theories, but remains tacit... People formulate implicit models and draw conclusions, but do so largely unconsciously. In this way, cognitive maps evolve without people themselves being entirely aware of their own cognitive map... People are generally not inclined to change their minds... People tend to significantly overestimate the value of information that confirms their cognitive map, underestimate dis-confirming information, and they actively seek out evidence that supports their current beliefs

p.59 Strategic thinking is by its very nature focused on understanding and shaping the future, and therefore strategists must have the ability to challenge current beliefs and change their own mind. They must be able to come up with innovative, but feasible, new strategies that will fit with the unfolding reality.

p.69 it is essential for strategists to have a slightly contrarian... revolutionary predisposition... Strategists must enjoy the challenge of thinking 'out of the box', even when this disrupts the status quo and is not much appreciated by those with their two feet (stuck) on the ground. As Picasso once remarked, 'every act of creation is first of all an act of destruction' - strategists must enjoy the task of eroding old paradigms and confronting the defenders of those beliefs. [JLJ - guilty, as charged] ...strategic reasoning closely resembles the frame-breaking behaviour common in the arts... Consequently, the best preparation for strategic reasoning might actually be to be trained in the artistic tradition of iconoclastic [JLJ - one who attacks and seeks to overthrow traditional or popular ideas or institutions] creativity and mental flexibility.

p.70-71 So, how should managers engage in strategic reasoning processes and how should they encourage fruitful strategic reasoning within their organizations? Should managers view strategic reasoning primarily as a rational and deductive activity or as a more imaginative and generative process?

p.80 In strategic thinking, one first seeks a clear understanding of the particular character of each element of a situation and then makes the fullest possible use of human brainpower to restructure the elements in the most advantageous way... No matter how difficult or unprecedented the problem, a breakthrough to the best possible solution can come only from a combination of rational analysis, based on the real nature of things, and imaginative reintegration of all the different items into a new pattern, using nonlinear brainpower. This is always the most effective approach to devising strategies for dealing successfully with challenges and opportunities... The first stage in strategic thinking is to pinpoint the critical issue in the situation.

p.85, 86 The field of business strategy is in need of new metaphors... I attempt here to interest the reader in the resuscitation of an old metaphor of strategy as a process of design... Design's value lies in creating a 'virtual' world in which experiments (mental rather than physical) can be conducted on a less costly basis... [an] ability to create a virtual world in which hypotheses can be generated and tested in low cost ways.

p.90 Buchanan and Margolis (1995) situate design as a dialectic at the intersection of constraint, contingency, and possibility. Successful design remains ever mindful of the constraints imposed by the materials and situation at hand, as well as the changing, and contingent, preferences of the audience that it serves.

p.91 Strategic thinking is built on the foundation of a systems perspective. A strategic thinker has a mental model of the complete end-to-end system of value creation, and understands the interdependencies within it... Strategic intent provides the focus that allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal... Strategic thinking is hypothesis-driven... Strategic thinking is both creative and critical, in nature... Strategic thinking accommodates both creative and analytical thinking sequentially in its use of iterative cycles of hypothesis generation and testing.

p.97 But what happens when you don't see it and can't think it up? Just do it. That is how pragmatic people function when stymied: They get on with it, believing that if they do 'something', the necessary thinking could follow. It's experimentation - trying something so that you can learn... doing various things, finding out which among them works, making sense of that and repeating the successful behaviours while discarding the rest... We don't just think in order to act, we act in order to think.

p.114 Strategy has to do with the future. And the future is unknown. This makes strategy a fascinating, yet frustrating topic. Fascinating because the future can still be shaped and strategy can be used to achieve this aim. Frustrating because the future is unpredictable, undermining the best of intentions, thus demanding flexibility and adaptability. To managers, the idea of creating the future is highly appealing, yet the prospect of sailing for terra incognita without a compass is unsettling at best.

p.116 A strategy emerges when it comes into being along the way... the strategy is emergent - gradually shaped during an iterative process of 'thinking' and 'doing'... managers... can explore, learn and piece together a consistent set of behaviours over time.

p.116 Opportunism. As the future is unknown and therefore unpredictable, organizations must retain enough mental freedom to grab unforeseen opportunities as they emerge. Organizations must keep an open mind to sense where positive and negative circumstances are unfolding, so that they can respond rapidly to these new conditions

p.116 Flexibility. Not only must managers keep an open mind, they must keep their options open as well, by not unnecessarily committing themselves to irreversible actions and investments. Letting strategy emerge means not prematurely locking the organization into a preset course of action

p.116 Learning. Often, the best way to find out what works is to give it a try - to act before you know. Letting strategy emerge is based on the same principle, that to learn what will be successful in the market must be discovered by experimentation, pilot projects, trial runs and gradual steps... Learning is hard work, but it as an essential part of strategy formation.

p.120 At the other pole are those who strongly emphasize emergence over deliberateness, arguing that in reality most new strategies emerge over time and that organizations should facilitate this messy, fragmented, piecemeal strategy formation process.

p.125 As soon as an organization starts to implement a plan, its actions will induce counteractions... action by the organization will change the nature of the problem... incrementalists argue that action must always be swiftly followed by redefinition of the problem and reconsideration of the course of action being pursued. Over time, this iterative process of action-reaction-reconsideration will lead to the emergence of a pattern of action, which is the best possible result given the interactive nature of the wicked problems.

p.126 strategy has to do with the future and the future is inherently unknown... It makes much more sense in new and unpredictable circumstances to remain flexible and adaptive... An unknown future requires... the mentality... of an explorer - curious, probing, venturesome and entrepreneurial, yet moving cautiously, step-by-step, ready to shift course when needed... strategy formation is a process of innovation and organizational development in the face of wicked problems in an unknown future. Under these circumstances, strategies must be allowed to emerge

p.129 In his view [JLJ - Ian Wilson, From Scenario Thinking to Strategic Action] scenarios are a valuable means for creating strategic plans that avoid the pitfall of trying to predict the future. Working with various scenarios challenges managers to formulate strategies that are resilient (i.e. 'robust') - that fit a variety of future conditions.

p.141 Strategy deals with the unknowable, not the uncertain. It involves forces of such great number, strength, and combinatory powers that one cannot predict events in a probabilistic sense. Hence logic dictates that one proceeds flexibly and experimentally from broad concepts toward specific commitments, making the latter concrete as late as possible in order to narrow the bands of uncertainty and to benefit from the best available information.

p.152 formulation of alternative frames of reference and demonstration that different analysts, relying predominantly on different models, produce quite different explanations should encourage the analyst's self-consciousness about the nets he employs.

p.154 the ultimate purpose of the scenarios is not just to develop plausible descriptions of alternative futures - not even to redraw our mental maps of the future, important as that is - but rather to help executives make better, more resilient strategic decisions.

p.155 My point is, rather, that, before taking bold steps, the strategy should be tested against a variety of scenarios so that the management team is forewarned of potential vulnerabilities. Resilience can then be built into the strategy, not by reducing its force or boldness, but rather by 'hedging' or contingency planning.

p.156 By playing a company wide or business unit strategy against the scenarios it is possible to gain some insight into the strategy's effectiveness in a range of business conditions, and so to identify modifications and/or contingency planning that require attention.

p.157 I have chosen to emphasize this one aspect of scenario planning - moving from the scenarios themselves to strategy development to action - because, in my experience, it is perhaps the most critical phase of the scenario process. More scenario projects fail because they have no impact on strategy and management decisions rather than because they were unimaginative or poorly constructed.

p.190 At the heart of reengineering is the notion of discontinuous thinking - of recognizing and breaking away from the outdated rules and fundamental assumptions that underlie operations. Unless we change these rules, we are merely rearranging the deckchairs on the Titanic.

p.206 What about rapid changes...? Under these conditions, a reliance on gradual change was a one-way ticket to extinction. Instead of slow change, discontinuities required a different version of Darwinian theory - that of punctuated equilibria in which long periods of gradual change were interrupted periodically by massive discontinuities. What then? Under these conditions, survival or selection goes to those species with the characteristics needed to exploit the new environment. Evolution progresses through long periods of incremental change punctuated by brief periods of revolutionary or discontinuous change... Managers who try to adapt to discontinuities through incremental adjustment are unlikely to succeed.

p.264 Competition is at the core of the success or failure of firms. Competition determines the appropriateness of a firm's activities that can contribute to its performance... Competitive strategy is the search for a favourable competitive position in... the fundamental arena in which competition occurs. Competitive strategy aims to establish a... sustainable position against the forces that determine industry competition... Competitive strategy, then, not only responds to the environment but also attempts to shape that environment in a firm's favour.

p.265 The five-forces framework allows a firm to see through the complexity and pinpoint those factors that are critical to competition in an industry, as well as to identify those strategic innovations that would improve the industry's - and its own - profitability. The five-forces framework does not eliminate the need for creativity in finding ways of competing in an industry. Instead, it directs managers' creative strategies toward those aspects of industry structure that are most important to long-run profitability.

p.313 Responsiveness is defined as the ability to respond to the competitive demands of a specific business area in a timely and adequate manner. A business unit is responsive if it has the capability to tightly match its strategic behaviour to the competitive dynamics in its business. If a business unit does not focus its strategy on the conditions in its direct environment and does not organize its value-adding activities and management systems to fit with the business characteristics, it will soon be at a competitive disadvantage compared to more responsive rivals.

p.405 In place of 'industry', I suggest an alternative, more appropriate term: business ecosystem. The term circumscribes the microeconomics of intense coevolution coalescing around innovative ideas... A second new term is 'opportunity environment,' a space of business possibility characterized by... untapped resources... Thus, shaping cohesive strategy in the new order starts by defining an opportunity environment. Strategy-making revolves around devising novel ways to seize opportunities and create viable networks with other business ecosystems.

p.450 If it understands the significance of structural change for its position, the firm can seek to influence industry change in ways favourable to it, either through the way it reacts to strategic changes of competitors or in the strategic changes it initiates.

Another way a company can influence structural change is to be very sensitive to external forces that can cause the industry to evolve... Industry evolution should not be greeted as a fait accompli [JLJ - a thing that has already happened or been decided] to be reacted to, but as an opportunity.

p.506-507 In open-ended strategic situations, change is typically the result of many small events and actions that are unclear, ambiguous, and confusing, with consequences that are unknowable. The key difficulty is to identify what the real issues, problems, or opportunities are, and the challenge is to find an appropriate and creative aspiration or objective.

p.512 Generative learning [JLJ - a style of learning that incorporates existing knowledge with new ideas based on experimentation and open-mindedness. This style of learning encourages individual and team creativity, resulting in a new way of viewing old methods.] requires seeing the systems that control events. When we fail to grasp the systemic source of problems, we are left to 'push on' symptoms rather than eliminate underlying causes.

p.512 Creative tension comes from seeing clearly where we want to be, our 'vision', and telling the truth about where we are, our 'current reality'. The gap between the two generates a natural tension... Without vision there is no creative tension... All the analysis in the world will not generate a vision... the natural energy for changing reality comes from holding a picture of what might be that is more important to people than what is.

p.512 The principle of creative tension teaches that an accurate picture of current reality is just as important as a compelling picture of a desired future... With creative tension, the energy for change comes from the vision, from what we want to create, juxtaposed with current reality.

p.514 Leader as teacher... is about helping everyone in the organization, oneself included, to gain more insightful views of current reality... Leaders as teachers help people restructure their views of reality to see beyond the superficial conditions and events into the underlying causes of problems and therefore to see new possibilities for shaping the future.

p.516 In my experience, successful leaders often are 'systems thinkers' to a considerable extent. They focus less on day-to-day events and more on underlying trends and forces of change. But they do this almost completely intuitively.

p.516 Dynamic complexity arises when cause and effect are distant in time and space, and when the consequences over time of interventions are subtle and not obvious to many participants in the system. The leverage in most management situations lies in understanding dynamic complexity, not detail complexity.

p.516 Some have called systems thinking the 'new dismal science' because it teaches that most obvious solutions don't work - at best, they improve matters in the short run, only to make things worse in the long run. But there is another side to the story. Systems thinking also shows that small, well-focused actions can produce significant, enduring improvements, if they are in the right place. Systems thinkers refer to this idea as the principle of leverage. Tackling a difficult problem is often a matter of seeing where the high leverage lies, where a change - with a minimum of effort - would lead to lasting, significant improvement.

p.520 research demonstrates that the success of most interventions designed to improve organizational performance depends largely on implementing what is already known, rather than from adopting new or previously unknown ways of doing things.

p.526 learning is best done by trying a lot of things, learning from what works and what does not, thinking about what was learned, and trying again... IDEO... CEO David Kelley likes to say that 'enlightened trial and error outperforms the planning of flawless intellects'

p.529 Measure what matters and what can help turn knowledge into action... A few measures that are directly related to the basic business model are better than a plethora of measures that produce a lack of focus and confusion about what is important and what is not... Organizations tend to measure outcomes instead of processes.

p.598-599 This enduring set of fundamental principles, that forms the base of a firm's identity and guides its strategic decision-making, is referred to as the corporate mission... Why does the firm exist? ...What are driving ideas and assumption? ...Where does the firm operate? ...What is of fundamental importance? ...vision provides a business aim, while mission provides business principles... strategic vision can play a similar role as corporate mission, pointing the firm in a particular direction