I've just re-read a great 1997 paper by Roger Martin, "Strategic Choice Structuring". There's a lot in this, but it's worth reading just to be reminded that strategy is all about choice. And good strategy is all about good choices.
And, as Martin says in this paper, you need to make "genuine" choices for your strategy to be sound. A genuine choice entails not just what you will be doing, but also what you won't be doing. For example, a strategy that will "focus on the customer" is no strategy at all - because it is no choice at all. As Martin says "could the company really have decided otherwise? Could it ever truly choose to ignore the customer?"
Tuesday, December 4, 2007
Organisational design as the heart of strategy
I've just been reading a McKinsey Quarterly article ("Better strategy through organisational design", Lowell L Bryan and Claudia I Joyce, No. 2, 2007). Bryan and Joyce claim that a "golden opportunity" to generate competitive advantage can be gained by "making organisational design the heart of strategy".
The authors claim that we need to move away from the organisational structures of the 20th Century. These structures were designed to cope with the scarcity of capital. We need to move to new designs, designs aimed at "maximising the returns on people, not capital". (Amongst other things, this argues for new measures, including "profit per employee").
In the 21st Century the design of an organisation needs to reduce unproductive complexity, and maximise the opportunities for productive interactions amongst talented workers. How do we do this? The authors argue that you need both hierarchy and collaboration.
You still need hierarchy, because you need to be able to set aspirations and make decsions etc. But you also now need collaboration. The rest of the article starts to canvass how you might induce collaboration in a large scale organisation (while at the same time still getting the best out of hierarchy, without undue complexity). One of the great ideas for promoting collaboration is to borrow from basketball - where players are rewarded on their number of "assists" and not just on goals scored.
The authors claim that we need to move away from the organisational structures of the 20th Century. These structures were designed to cope with the scarcity of capital. We need to move to new designs, designs aimed at "maximising the returns on people, not capital". (Amongst other things, this argues for new measures, including "profit per employee").
In the 21st Century the design of an organisation needs to reduce unproductive complexity, and maximise the opportunities for productive interactions amongst talented workers. How do we do this? The authors argue that you need both hierarchy and collaboration.
You still need hierarchy, because you need to be able to set aspirations and make decsions etc. But you also now need collaboration. The rest of the article starts to canvass how you might induce collaboration in a large scale organisation (while at the same time still getting the best out of hierarchy, without undue complexity). One of the great ideas for promoting collaboration is to borrow from basketball - where players are rewarded on their number of "assists" and not just on goals scored.
Tuesday, November 20, 2007
The problem with most organisations' strategies
Our principal at 2nd Road, Tony Golsby-Smith, recently wrote an interesting article for the Journal of Business Strategy: "The second road of thought: how design offers strategy a new toolkit" (Vol 28, No. 4, 2007).
He claims that the only way you can do strategy well is to reconceive it as an exercise in "design". I'll get to this later. But what's clearly prompted him to make this claim is the state of strategy in most organisations we see. There is a clear disconnect between what strategy could, and should, do in most organisations, and what it actually ends up doing.
As Tony says, "strategy should be the process that enables organisations to create new futures and engage their people in that exciting task". But too often "it weighs an organisation down with more data and inputs". Too often, organisations' strategies miss the vital elements of "coherence", "energy" and excitement.
The solution? See strategy as a design exercise. Not an analytics exercise. But how do we start to get our heads around "design"? By looking at the first principles of design thinking. And they can be found in the realm of rhetoric. So to start this journey, we'd better talk about rhetoric and the "two roads" story.
He claims that the only way you can do strategy well is to reconceive it as an exercise in "design". I'll get to this later. But what's clearly prompted him to make this claim is the state of strategy in most organisations we see. There is a clear disconnect between what strategy could, and should, do in most organisations, and what it actually ends up doing.
As Tony says, "strategy should be the process that enables organisations to create new futures and engage their people in that exciting task". But too often "it weighs an organisation down with more data and inputs". Too often, organisations' strategies miss the vital elements of "coherence", "energy" and excitement.
The solution? See strategy as a design exercise. Not an analytics exercise. But how do we start to get our heads around "design"? By looking at the first principles of design thinking. And they can be found in the realm of rhetoric. So to start this journey, we'd better talk about rhetoric and the "two roads" story.
Wednesday, November 14, 2007
Monkey envy
Great piece in New Scientist about Capuchin monkeys and their sense of fairness (or of envy - depends which way you frame it).
Researchers trained some monkeys to pick up a rock and hand it over to the experimenter for a reward. They then sat two monkeys side by side and repeated the experiment. When each monkey received the same reward - a cucumber each - for handing over their rock - they performed the task within 5 second 90% of the time. But when one monkey got a much better reward (a grape instead of a cucumber - you've got to understand monkey economics here and not be put off by the comparative size of the grape - but rather look at its sweetness) the "ripped off" cucumber-receiving monkey started to slack off. That monkey only delivered the rock within 5 second 80% of the time.
A sense of fairness? Or monkey envy?
Researchers trained some monkeys to pick up a rock and hand it over to the experimenter for a reward. They then sat two monkeys side by side and repeated the experiment. When each monkey received the same reward - a cucumber each - for handing over their rock - they performed the task within 5 second 90% of the time. But when one monkey got a much better reward (a grape instead of a cucumber - you've got to understand monkey economics here and not be put off by the comparative size of the grape - but rather look at its sweetness) the "ripped off" cucumber-receiving monkey started to slack off. That monkey only delivered the rock within 5 second 80% of the time.
A sense of fairness? Or monkey envy?
Tuesday, November 13, 2007
"Expectancy bias" in the USS Vincennes shootdown
I've just started dipping into what looks like a great book: "Sources of Power - How people make decisions" (Gary Klein, MIT Press, 1999). It has a fascinating chapter on the shooting down of an Iranian commercial jetliner in 1988 by the USS Vincennes.
Klein says that some decision making experts see this terrible incident as an example of "expectancy bias" (pp 84ff). Specifically, the crew in the Vincennes' Combat Information Centre reported seeing the unidentified aircraft descending towards the ship - in a pattern they saw as being aggressive. In fact - the data shows that the aircraft was always ascending through all stages of its short flight (it was shot down only 7 minutes after take-off).
What explains this mis-reading of the flight of the airliner? The decision making experts mentioned by Klein think the Vincennes crew were already convinced that this was an enemy jet. Why? Just after take-off there had been a (later shown to be false) IFF reading that the airliner was an enemy jet - and not a civilian plane (the full account of the whole incident in this chapter is worth reading). Because of this belief, the experts claim, the crew then started to see the data they expected to see: the data that supported the scenario they had already decided was occurring. A classic case of "expectancy bias".
Klein is not so sure. He asks the question - what would have happened if the Vincennes had not shot down the unidentified aircraft and it turned out to be an enemy jet that then successfully attacked them? Well - over the preceding month there had been 150 challenges issued by US ships in the Gulf to presumed enemy aircraft. In over 80% of those cases the aircraft involved turned out to be Iranian military (and only 1.3% turned out to be commercial airliners). In other words, if the Vincennes had not acted, and it did turn out to be the wrong call (that is - the aircraft attacked them) - then this decision could also be explained by "expectancy bias". It's just that in this case the bias would have been different - a bias against the available data that these unidentified jets turn out to be Iranian 80% of the time.
This is a great insight from Klein. "Expectancy bias" explains why the Vincennes shot down the airliner. But "expectancy bias" would also have explained the opposite scenario - the failure to shoot down an enemy jet that then successfully attacked. In Klein's words expectancy bias "explains too much" (p85). A theory that explains too much is no theory at all.
So why did the Vincennes make such a tragically wrong decision? Well, it seems that after a terrible chain of events, it was at the end a simple failure of information design. On the Vincennes' computers, the altitude data for nearby aircraft was contained in a small display off to the side. And critically, it did not display a trend: crew-members had to remember the previous altitudes of the jet so as to see if it was going up or coming down. In a pressured situation - over a short period of time - this turned out to be too hard.
Klein says that some decision making experts see this terrible incident as an example of "expectancy bias" (pp 84ff). Specifically, the crew in the Vincennes' Combat Information Centre reported seeing the unidentified aircraft descending towards the ship - in a pattern they saw as being aggressive. In fact - the data shows that the aircraft was always ascending through all stages of its short flight (it was shot down only 7 minutes after take-off).
What explains this mis-reading of the flight of the airliner? The decision making experts mentioned by Klein think the Vincennes crew were already convinced that this was an enemy jet. Why? Just after take-off there had been a (later shown to be false) IFF reading that the airliner was an enemy jet - and not a civilian plane (the full account of the whole incident in this chapter is worth reading). Because of this belief, the experts claim, the crew then started to see the data they expected to see: the data that supported the scenario they had already decided was occurring. A classic case of "expectancy bias".
Klein is not so sure. He asks the question - what would have happened if the Vincennes had not shot down the unidentified aircraft and it turned out to be an enemy jet that then successfully attacked them? Well - over the preceding month there had been 150 challenges issued by US ships in the Gulf to presumed enemy aircraft. In over 80% of those cases the aircraft involved turned out to be Iranian military (and only 1.3% turned out to be commercial airliners). In other words, if the Vincennes had not acted, and it did turn out to be the wrong call (that is - the aircraft attacked them) - then this decision could also be explained by "expectancy bias". It's just that in this case the bias would have been different - a bias against the available data that these unidentified jets turn out to be Iranian 80% of the time.
This is a great insight from Klein. "Expectancy bias" explains why the Vincennes shot down the airliner. But "expectancy bias" would also have explained the opposite scenario - the failure to shoot down an enemy jet that then successfully attacked. In Klein's words expectancy bias "explains too much" (p85). A theory that explains too much is no theory at all.
So why did the Vincennes make such a tragically wrong decision? Well, it seems that after a terrible chain of events, it was at the end a simple failure of information design. On the Vincennes' computers, the altitude data for nearby aircraft was contained in a small display off to the side. And critically, it did not display a trend: crew-members had to remember the previous altitudes of the jet so as to see if it was going up or coming down. In a pressured situation - over a short period of time - this turned out to be too hard.
Friday, November 9, 2007
Emptiness
(The fifth in a series of posts on "Is your strategy a duck?". Starting post is here.)
Benedikt's fourth component of realism in architecture is that of "emptiness". The quality of a building that allows the user to make it their own: to "complete" it. To give it some of their own meaning.
A strategy should also allow this. Employees should be able to be involved in the "emergence" of the strategy. Liedtka points out that one of the critical roles of senior executives is to set the "boundaries" of the conversations that will allow employees to put meaning into the strategy that's relevant to them and their work.
Benedikt's fourth component of realism in architecture is that of "emptiness". The quality of a building that allows the user to make it their own: to "complete" it. To give it some of their own meaning.
A strategy should also allow this. Employees should be able to be involved in the "emergence" of the strategy. Liedtka points out that one of the critical roles of senior executives is to set the "boundaries" of the conversations that will allow employees to put meaning into the strategy that's relevant to them and their work.
Materiality
(The fourth in a series of posts on "Is your strategy a duck?". Starting post is here.)
Benedikt's third component of realism in architecture is that of "materiality". That is, for a building to be real "it ought to be made of stuff". A building needs to be made of materials that "look like what they are".
For a strategy to be material, Liedtka argues, it needs to clearly link to the reality of the system on the ground. It needs to take into account the details of what will be involved in implementing it. And it needs to do that credibly.
Benedikt's third component of realism in architecture is that of "materiality". That is, for a building to be real "it ought to be made of stuff". A building needs to be made of materials that "look like what they are".
For a strategy to be material, Liedtka argues, it needs to clearly link to the reality of the system on the ground. It needs to take into account the details of what will be involved in implementing it. And it needs to do that credibly.
Significance
(The third in a series of posts on "Is your strategy a duck?". Starting post is here.)
Benedikt's second component of realism in architecture is that of "significance". And what's important here is significance of the building to an individual - not the building being "symbolic of something".
Here Liedtka unpacks the idea that a strategy needs to engage at "the level of individual action". It needs to engage everyone in the organisation - including those on the shop floor.
According to Liedtka, strategies become significant when they help employees answer two questions:
Benedikt's second component of realism in architecture is that of "significance". And what's important here is significance of the building to an individual - not the building being "symbolic of something".
Here Liedtka unpacks the idea that a strategy needs to engage at "the level of individual action". It needs to engage everyone in the organisation - including those on the shop floor.
According to Liedtka, strategies become significant when they help employees answer two questions:
- "What does this mean to me in my role in the organisation?"
- "Why should I care?"
Presence
(The second in a series of posts on "Is your strategy a duck?". Starting post is here.)
Benedikt's first component of realism in architecture is that of "presence". There is something about the building that commands attention.
How does a strategy command attention? Liedtka makes clear that to grab attention a strategy must be interesting. How so? To be interesting a strategy must:
Benedikt's first component of realism in architecture is that of "presence". There is something about the building that commands attention.
How does a strategy command attention? Liedtka makes clear that to grab attention a strategy must be interesting. How so? To be interesting a strategy must:
- Combine the familiar and the novel. Too familiar and we will ignore it as nothing new. Too novel and it will seem too way out to be credible.
- Be unified and simple. Avoiding needless complexity and jargon: and easily suggesting action.
- Be delivered by someone "we know and take seriously". Usually our line manager - which of course requires that our line manager is also engaged with this strategy. (This reminds me of Aristotle's ethos of the speaker - more on this another time).
"Is your strategy a duck?"
Jeanne Liedtka asks this question in a recent article in the Journal of Business Strategy (Vol 27, No. 5, 2006). Her presenting problem is the "Knowing-Doing Gap" - why is it that so many organisations fail to turn their strategies into outcomes? Liedtka's hypothesis: too many corporate strategies are "ducks".
Liedtka takes this idea of a "duck" from the architecture book "Learning from Las Vegas" (Robert Venturi, Denise Scott Brown, Steven Izenour, 1977, MIT Press). Here Venturi et al define a "duck" as a "building-becoming-sculpture". A building that has sacrificed so much for symbolism that it fails to be useful as a building. (You can read a good discussion of Venturi et al's book, as well as a picture of the original offending duck, at John Lumea's blog, here).
So, the question to ask, and Liedtka asks it well, is - can strategies be ducks too? The answer is clearly yes. As Liedtka shows, there are "strategies that function as symbols, not roadmaps." Strategies that are "high level abstractions" that leave most people in the organisation "clueless" as to what they mean.
The solution is to make strategies "real". And it's here that Liedtka returns to architecture for inspiration. Michael Benedikt's book "For an Architecture of Reality" (Lumen Books, NY, 1987) sets forth four components of a building "that contribute ... to a sense of realism":
Liedtka goes on to apply these ideas to strategy - in an attempt to answer the question: what can make a strategy real?
Liedtka takes this idea of a "duck" from the architecture book "Learning from Las Vegas" (Robert Venturi, Denise Scott Brown, Steven Izenour, 1977, MIT Press). Here Venturi et al define a "duck" as a "building-becoming-sculpture". A building that has sacrificed so much for symbolism that it fails to be useful as a building. (You can read a good discussion of Venturi et al's book, as well as a picture of the original offending duck, at John Lumea's blog, here).
So, the question to ask, and Liedtka asks it well, is - can strategies be ducks too? The answer is clearly yes. As Liedtka shows, there are "strategies that function as symbols, not roadmaps." Strategies that are "high level abstractions" that leave most people in the organisation "clueless" as to what they mean.
The solution is to make strategies "real". And it's here that Liedtka returns to architecture for inspiration. Michael Benedikt's book "For an Architecture of Reality" (Lumen Books, NY, 1987) sets forth four components of a building "that contribute ... to a sense of realism":
Liedtka goes on to apply these ideas to strategy - in an attempt to answer the question: what can make a strategy real?
Thursday, November 8, 2007
"The Magic of Dialogue" (2)
The first chapter of Yankelovich's book offers a definition of dialogue - straight from Webster's dictionary: "seeking mutual understanding and harmony". Although Yankelovich then goes on to downplay the harmony bit and says he'd be happy to settle just for understanding. Interestingly, he quotes Martin Buber ("I and Thou") who draws a distinction between "ordinary conversation" and dialogue. It seems the key thing with dialogue is the willingness to suspend judgement and just to listen to the other person. You don't have to agree - but you do have to listen so as to understand (pp14 - 15).
The chapter gets really interesting when Yankelovich quotes physicist David Bohm as saying that "world class" physicists get their best ideas in dialogue with other physicists and not sitting at their desks. He then extends this link between dialogue and thought by talking about how the American public does democracy. The American public doesn't reach decisions based on expert analysis - rather it reaches decisions using dialogue. And in so doing it is "harking back to prescientific ways of knowing" (p26).
To drive home this point - that dialogue is a "way of knowing" - a way of arriving at decisions - Yankelovich gives the example of ETS (p28). This is a non-profit organisation that administers the SAT and other college tests. Yankelovich's summary is worth quoting here:
"Plenty of information exists about the strengths and limitations of standardised tests. ETS's board takes these facts into account. But the facts do not reveal to the Board what its vision for the future should be or the best strategy for achieving it. Only high quality dialogue among its diverse members and professional staff can yield this kind of understanding and judgement." (p28)
Of course this reminds me of Aristotle's two roads to truth - logic and rhetoric. Both of which are strictly "prescientific". And of course, Cicero's observation that governing Carthage isn't going to be successful if all we do is take the "facts into account". How we decide to govern Carthage will only be worked out in "high quality dialogue".
The chapter gets really interesting when Yankelovich quotes physicist David Bohm as saying that "world class" physicists get their best ideas in dialogue with other physicists and not sitting at their desks. He then extends this link between dialogue and thought by talking about how the American public does democracy. The American public doesn't reach decisions based on expert analysis - rather it reaches decisions using dialogue. And in so doing it is "harking back to prescientific ways of knowing" (p26).
To drive home this point - that dialogue is a "way of knowing" - a way of arriving at decisions - Yankelovich gives the example of ETS (p28). This is a non-profit organisation that administers the SAT and other college tests. Yankelovich's summary is worth quoting here:
"Plenty of information exists about the strengths and limitations of standardised tests. ETS's board takes these facts into account. But the facts do not reveal to the Board what its vision for the future should be or the best strategy for achieving it. Only high quality dialogue among its diverse members and professional staff can yield this kind of understanding and judgement." (p28)
Of course this reminds me of Aristotle's two roads to truth - logic and rhetoric. Both of which are strictly "prescientific". And of course, Cicero's observation that governing Carthage isn't going to be successful if all we do is take the "facts into account". How we decide to govern Carthage will only be worked out in "high quality dialogue".
"The Magic of Dialogue" (1)
I've just started reading Daniel Yankelovich's "The Magic of Dialogue" (Simon and Schuster, New York, 2001). This book was recommended by a friend of mine with a keen interest in reconciliation and the uses of dialogue in those very difficult situations. However, this book aims to give "special attention" (p14) to the use of dialogue in businesses and organisations with similar structures to businesses.
Like Gaul, the book is divided into three parts:
Like Gaul, the book is divided into three parts:
- Why dialogue's necessary.
- How to do it.
- Where else to do it (including an intriguingly named final chapter about the "struggle for the soul of America").
Watch this space.
Leveraging design
Maureen Thurston, in a soon to be published article, attempts a definition of what it means for an organisation to "leverage design". The key idea is to lift design out of one particular product silo - where it typically plays a tactical, down-stream role, and position it as a peer of Marketing, Strategy, Finance and Operations. This allows design to play a broader role as well as to be held accountable and to be involved early on in key initiatives.
Thursday, October 18, 2007
Deconstructive criticism
Robert Kegan and Lisa Laskow Lahey coin the term "Deconstructive Criticism" in their 2001 book "Seven Languages for Transformation" (Josey Bass, Wiley, San Francisco).
They contrast the traditional modes of criticism of employees ("constructive" and "destructive") with this new mode of "deconstructive" by saying that traditional forms of criticism have an in-built assumption of holding the only true view of the situation (pp121ff). That is, the traditional forms of criticism, whether intended to tear down or build up, come from the perspective that there is one right view and that the supervisor holds it. They call this the "super-vision" assumption.
Deconstructive criticism allows that the supervisor's perspective may be legitimate, but also might not be. It allows for the possibility that the employee's view may also be valid (after all, she is closer to the situation).
They contrast the traditional modes of criticism of employees ("constructive" and "destructive") with this new mode of "deconstructive" by saying that traditional forms of criticism have an in-built assumption of holding the only true view of the situation (pp121ff). That is, the traditional forms of criticism, whether intended to tear down or build up, come from the perspective that there is one right view and that the supervisor holds it. They call this the "super-vision" assumption.
Deconstructive criticism allows that the supervisor's perspective may be legitimate, but also might not be. It allows for the possibility that the employee's view may also be valid (after all, she is closer to the situation).
Obliquity - a definition
This 1998 Financial Times article by John Kay is the first time I think the principle of "Obliquity" gets explicitly defined.
Obliquity is the idea that if you aim for something (usually self-interested like profit or happiness) you'll miss. But if you aim for something else, more "nobler", outside yourself, you'll get the first thing thrown in too. So, aim to be happy, and you'll likely end up dissatisfied. But aim to love others and seek their good - and you'll find happiness too. This article quotes John Stuart Mill:
“Those only are happy who have their minds tried on some object other than their own happiness – on the happiness of others, on the improvement of mankind, even on some art or pursuit, followed not as a means, but as itself an ideal end. Aiming thus at something else, they find happiness by the way.”
The principle also applies to profits. The article quotes "Built to Last" by Collins and Porras, where the most successful companies in their paired study were not the ones who pursued profit solely. Rather: “They have tended to pursue a cluster of objectives, of which making money is only one – and not necessarily the primary one”. (page 55)
Obliquity is the idea that if you aim for something (usually self-interested like profit or happiness) you'll miss. But if you aim for something else, more "nobler", outside yourself, you'll get the first thing thrown in too. So, aim to be happy, and you'll likely end up dissatisfied. But aim to love others and seek their good - and you'll find happiness too. This article quotes John Stuart Mill:
“Those only are happy who have their minds tried on some object other than their own happiness – on the happiness of others, on the improvement of mankind, even on some art or pursuit, followed not as a means, but as itself an ideal end. Aiming thus at something else, they find happiness by the way.”
The principle also applies to profits. The article quotes "Built to Last" by Collins and Porras, where the most successful companies in their paired study were not the ones who pursued profit solely. Rather: “They have tended to pursue a cluster of objectives, of which making money is only one – and not necessarily the primary one”. (page 55)
Lessons from 9/11: How conversations can galvanize others to act
This is an interesting piece from Knowledge@Emory about an article submitted to the journal Organisational Science , by Monica Worline and Ryan Quinn. The article describes how conversations can create a space for people to take courageous action - and even overcome the "Kitty Genovese effect". The key conclusion is: "people do things in conversations with others that create psychological resources that allow them to act in difficult situations".
The article looks at the behaviour of passengers aboard Flight 93, and what spurred them to take action. The authors point out that it was in fact unusual for the passengers to take any action at all - because up until then passengers in a hijacked aircraft were just seen as passive "pawns". The critical factor in the passengers taking action was their engagement in conversation beforehand. The article contends that one of the main ways conversation helped the passengers was to make the uncertainty of the situation manageable:
"In the end, it is not entirely clear that everyone knew or believed the plane was going down. There was debate aboard the plane about whether it was a suicide hijacking or not. The passengers ultimately decided that it was worth an attempt to take control of the plane and try to land it, despite the uncertainty, notes Worline. “In the Kitty Genovese case there also was uncertainty about what exactly was happening, which tended to paralyze people and stop them from taking action to address the situation. In our paper, we show that interpersonal dynamics and conversational resources made the uncertainty manageable enough so that the passengers could act.""
The article looks at the behaviour of passengers aboard Flight 93, and what spurred them to take action. The authors point out that it was in fact unusual for the passengers to take any action at all - because up until then passengers in a hijacked aircraft were just seen as passive "pawns". The critical factor in the passengers taking action was their engagement in conversation beforehand. The article contends that one of the main ways conversation helped the passengers was to make the uncertainty of the situation manageable:
"In the end, it is not entirely clear that everyone knew or believed the plane was going down. There was debate aboard the plane about whether it was a suicide hijacking or not. The passengers ultimately decided that it was worth an attempt to take control of the plane and try to land it, despite the uncertainty, notes Worline. “In the Kitty Genovese case there also was uncertainty about what exactly was happening, which tended to paralyze people and stop them from taking action to address the situation. In our paper, we show that interpersonal dynamics and conversational resources made the uncertainty manageable enough so that the passengers could act.""
Subscribe to:
Posts (Atom)
