Strategy is about how to turn goals into reality. Strategy is fundamentally about change and transformation. Change is adaptive, usually resulting in incremental adjustments over time, but preserving the foundation with which one started. Transformation is the creation of something new or a profound shift in being. Strategists are often called upon to be the creators, objects and vehicles of change and transformation.
Change is hard as evidenced by a recent survey showing that roughly 70% of change efforts fail or are derailed. Transformation is even harder. Change and transformation require a more sophisticated type of thinking than that with which most people are familiar. Reality is a transformational open system, comprised of parts that often form constitutive and interactive relationships. Many properties of open transformational systems stymie people who lack the requisite cognitive skills. Relational causality, where the outcome or effect is due to a constitutive relationship between parts of the system is such an example, since searching for the part that causes the effect will always be futile.
Cognition depends heavily on mental models, which are used to organize knowledge. Mental models are created through a process called sensemaking, which involves building a structure or pattern from diverse elements with the objective of creating new meaning. This is largely an unconscious process. Mental models frame the challenges we confront and affect in our thoughts, feelings and actions.
Most cognitive growth in adults involves learning new facts, skills and ways of doing things. This is horizontal development. A person’s mental models of how the world works remain basically the same, however. Vertical development is less common and refers to how we change our interpretation of experience and transform our views of reality into ones that are more differentiated and comprehensive than the old. Studies have shown that the ability of an individual to manage complexity is a function of their cognitive development, with vertical development having the greater impact.
Cognitive development is believed to be the defining factor of performance. Several studies have shown that a type of learning, called transformational learning, facilitates cognitive development. Ultimately, whether or not transformational learning takes place depends entirely on the individual.
A trigger is usually required to invoke transformational learning. Frequently, it is a personal experience that elicits a strong feeling that a new perspective is required. A profound external event that provides the opportunity for a wider range of experiences or a planned cognitive developmental intervention that is designed to supply the necessary impetus can also trigger transformational learning.
Transformation generally requires six things: 1) a realization that old views of reality are no longer productive; 2) critical reflection – becoming aware of how and why our assumptions and beliefs have come to constrain how we deal with reality; 3) a vision for a desired future; 4) intention – the motivation to act; 5) learning – a transformation of ones mental models; 6) action – the application of new learning.
"Be the change you want to see in the world."
Mahatma Gandhi
Strategic Transformation Begins With You℠ is more than a slogan. It captures the essence of what The Strategy Praxis™ Institute is all about. We strive to provide an environment that will facilitate not just informational, but transformational learning – exactly what is required to become a competent strategist. It all begins with you.
Wednesday, December 30, 2009
Monday, December 28, 2009
Effectual Reasoning
There are many different types of reasoning. Causal and effectual reasoning initially appear as polar opposites. Causal reasoning begins with a pre-determined goal and a given set of means, and seeks to identify the optimal methodology for achieving the desired goal.
Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge over time through the imagination and diverse aspirations of the thinker. Means include the capabilities of the thinker, their education, experience, expertise, social and professional contacts among other assets.
Effectual reasoning and causal reasoning rests on fundamentally different assumptions about the future. Causal reasoning believes that to the extent we can predict the future, we can control it. That is why those who exercise causal reasoning spend enormous resources on developing predictive models. Effectual reasoning, however, believes that to the extent we can control the future, we do not need to predict it. Consequently, causal reasoning comes to life through careful planning (thought) whereas effectual reasoning comes to life through execution (action).
There are other differences between causal reasoning and effectual reasoning specifically relating uncertainty to opportunity. Causal reasoning focuses on expected returns, whereas effectual reasoning focuses on affordable loss. Causal reasoning focuses on competitive analysis, whereas effectual reasoning focuses on building strategic partnerships. Causal reasoning focuses on exploitation of assets, whereas effectual reasoning focuses on leveraging of contingencies.
From our previous post on Thought, Action, Praxis one should conclude that causal and effectual reasoning, while initially appearing as polar opposites, are in fact dialectically related. The dichotomy appears most pronounced regarding goals. Strategy begins with goals, since strategy is fundamentally how to turn your goals into reality. However, goals should influence how we appraise a particular situation, but what we learn about a situation may change the nature of our goals. Goals can affect the way we evaluate potential courses of action, but this evaluation can also provide us with information that can help us set better goals. Similar analysis can be conducted on the other differences between causal and effectual reasoning.
Studies have shown that entrepreneurs are particularly prone to use effectual reasoning, whereas most managers use causal reasoning. Effectual reasoning has advantages over causal reasoning in the early stages of a new venture or in chaotic environments, whereas causal reasoning is better suited to established firms or in controlled environments. The best entrepreneurs ought to be capable of using both and so should the best strategists.
Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge over time through the imagination and diverse aspirations of the thinker. Means include the capabilities of the thinker, their education, experience, expertise, social and professional contacts among other assets.
Effectual reasoning and causal reasoning rests on fundamentally different assumptions about the future. Causal reasoning believes that to the extent we can predict the future, we can control it. That is why those who exercise causal reasoning spend enormous resources on developing predictive models. Effectual reasoning, however, believes that to the extent we can control the future, we do not need to predict it. Consequently, causal reasoning comes to life through careful planning (thought) whereas effectual reasoning comes to life through execution (action).
There are other differences between causal reasoning and effectual reasoning specifically relating uncertainty to opportunity. Causal reasoning focuses on expected returns, whereas effectual reasoning focuses on affordable loss. Causal reasoning focuses on competitive analysis, whereas effectual reasoning focuses on building strategic partnerships. Causal reasoning focuses on exploitation of assets, whereas effectual reasoning focuses on leveraging of contingencies.
From our previous post on Thought, Action, Praxis one should conclude that causal and effectual reasoning, while initially appearing as polar opposites, are in fact dialectically related. The dichotomy appears most pronounced regarding goals. Strategy begins with goals, since strategy is fundamentally how to turn your goals into reality. However, goals should influence how we appraise a particular situation, but what we learn about a situation may change the nature of our goals. Goals can affect the way we evaluate potential courses of action, but this evaluation can also provide us with information that can help us set better goals. Similar analysis can be conducted on the other differences between causal and effectual reasoning.
Studies have shown that entrepreneurs are particularly prone to use effectual reasoning, whereas most managers use causal reasoning. Effectual reasoning has advantages over causal reasoning in the early stages of a new venture or in chaotic environments, whereas causal reasoning is better suited to established firms or in controlled environments. The best entrepreneurs ought to be capable of using both and so should the best strategists.
Friday, December 25, 2009
Changing System Behavior
It seems almost logical for people who don’t understand systems, that if participants in a system exhibit highly undesirable behavior even after considerable warnings, you will get better results if you replace the individuals that are responsible for the “bad” behavior. Unfortunately, it often doesn’t work out that way. We’d like to understand why.
People generally do their best to further their own interests in a rational way. The difficulty arises because people can only act on what they know, rarely see the full range of possibilities and often fail to foresee the impacts of their actions on the whole system. People also fail to interpret the information they do have access to and frequently misperceive risk. Given the complexities of most systems today, people are often content just to meet their most important needs well enough to get by.
When a new person is placed within a system in a role that is subjected to information flows, incentives and disincentives, conflicting goals and the constraints of that position, they begin to feel the pressures of that role and frequently respond in exactly the same manner as others have in identical situations. There are numerous examples that justify that assertion. One of the most famous is the Standard prison experiment.
From Wikipedia:
“The Stanford prison experiment was a study of the psychological effects of becoming a prisoner or prison guard. The experiment was conducted in 1971 by a team of researchers led by Psychology Professor Philip Zimbardo at Stanford University. Twenty-four undergraduates were selected out of 70 to play the roles of both guards and prisoners and live in a mock prison in the basement of the Stanford psychology building. Roles were assigned at random. They adapted to their roles well beyond that expected, leading the guards to display to authoritarian and even draconian measures. Two of the prisoners were upset enough by the process to quit the experiment early, and the entire experiment was abruptly stopped after only six days. The experimental process and the results remain controversial. The entire experiment was filmed, with excerpts soon made publicly available, leaving some disturbed by the resulting film…
In psychology, the results of the experiment are said to support situational attribution of behaviour rather than dispositional attribution. In other words, it seemed the situation caused the participants' behaviour, rather than anything inherent in their individual personalities. In this way, it is compatible with the results of the also-famous Milgram experiment, in which ordinary people fulfilled orders to administer what appeared to be damaging electric shocks to a confederate of the experimenter.”
So in very complex systems with strict incentives and disincentives, conflicting goals and other constraints, undesirable behavior rarely changes when individuals are replaced unless the underlying structure of the system is altered. This result is often very surprising to those who don't understand the intricacies of how systems work.
People generally do their best to further their own interests in a rational way. The difficulty arises because people can only act on what they know, rarely see the full range of possibilities and often fail to foresee the impacts of their actions on the whole system. People also fail to interpret the information they do have access to and frequently misperceive risk. Given the complexities of most systems today, people are often content just to meet their most important needs well enough to get by.
When a new person is placed within a system in a role that is subjected to information flows, incentives and disincentives, conflicting goals and the constraints of that position, they begin to feel the pressures of that role and frequently respond in exactly the same manner as others have in identical situations. There are numerous examples that justify that assertion. One of the most famous is the Standard prison experiment.
From Wikipedia:
“The Stanford prison experiment was a study of the psychological effects of becoming a prisoner or prison guard. The experiment was conducted in 1971 by a team of researchers led by Psychology Professor Philip Zimbardo at Stanford University. Twenty-four undergraduates were selected out of 70 to play the roles of both guards and prisoners and live in a mock prison in the basement of the Stanford psychology building. Roles were assigned at random. They adapted to their roles well beyond that expected, leading the guards to display to authoritarian and even draconian measures. Two of the prisoners were upset enough by the process to quit the experiment early, and the entire experiment was abruptly stopped after only six days. The experimental process and the results remain controversial. The entire experiment was filmed, with excerpts soon made publicly available, leaving some disturbed by the resulting film…
In psychology, the results of the experiment are said to support situational attribution of behaviour rather than dispositional attribution. In other words, it seemed the situation caused the participants' behaviour, rather than anything inherent in their individual personalities. In this way, it is compatible with the results of the also-famous Milgram experiment, in which ordinary people fulfilled orders to administer what appeared to be damaging electric shocks to a confederate of the experimenter.”
So in very complex systems with strict incentives and disincentives, conflicting goals and other constraints, undesirable behavior rarely changes when individuals are replaced unless the underlying structure of the system is altered. This result is often very surprising to those who don't understand the intricacies of how systems work.
Sunday, December 20, 2009
Fundamental Attribution Error
“Don't judge a man until you've walked a mile in his shoes.”
We’d all like to know a person’s intent for behaving as they do. In fact, it is a goal of social psychology to explain and draw inferences from observations of people’s behavior. Extensive research now points to the existence of a systematic bias in this process. This bias, first uncovered decades ago by psychologist Lee Ross, is now referred to as the fundamental attribution error. This bias shows a pervasive tendency on the part of observers to overestimate personality or dispositional causes of behavior and to underestimate the influence of situational constraints on the behavior of others.
This bias occurs partly because of how human perception operates. When we look at a situation, we immediately notice individuals acting and making decisions. The context in which this happens is less obvious. Consequently, we often overattribute actions and consequences to individuals rather than to the constraints under which they operate. The bias is not generally extended to ones self, however. In other words, we attribute the actions of others to the kind of person they are, while framing our own behavior against situational variables.
A person’s actions may or may not be deliberate or they may not even be aware of what they are doing. Finally, a person’s actions may have unintended consequences. We ought not to judge others based on behavior while we judge ourselves based on intent.
One way to minimize the fundamental attribution error is to discern whether most people behave the same way when put in the same situation. In this case, the situation is more likely to be the cause of the behavior than the person’s disposition. Another technique is to ask oneself how one would behave in the same situation.
We’d all like to know a person’s intent for behaving as they do. In fact, it is a goal of social psychology to explain and draw inferences from observations of people’s behavior. Extensive research now points to the existence of a systematic bias in this process. This bias, first uncovered decades ago by psychologist Lee Ross, is now referred to as the fundamental attribution error. This bias shows a pervasive tendency on the part of observers to overestimate personality or dispositional causes of behavior and to underestimate the influence of situational constraints on the behavior of others.
This bias occurs partly because of how human perception operates. When we look at a situation, we immediately notice individuals acting and making decisions. The context in which this happens is less obvious. Consequently, we often overattribute actions and consequences to individuals rather than to the constraints under which they operate. The bias is not generally extended to ones self, however. In other words, we attribute the actions of others to the kind of person they are, while framing our own behavior against situational variables.
A person’s actions may or may not be deliberate or they may not even be aware of what they are doing. Finally, a person’s actions may have unintended consequences. We ought not to judge others based on behavior while we judge ourselves based on intent.
One way to minimize the fundamental attribution error is to discern whether most people behave the same way when put in the same situation. In this case, the situation is more likely to be the cause of the behavior than the person’s disposition. Another technique is to ask oneself how one would behave in the same situation.
Tuesday, December 15, 2009
Tragedy Of The Commons
The Tragedy of the Commons is a term coined by scientist Garrett Hardin in 1968 in order to describe what can happen in groups when individuals act in their own self interests and ignore what’s best for the group as a whole.
The commons usually refers to a resource that is simultaneously made available to multiple people. As each person claims their share of the commons, they regard the commons as being available for their own purposes. From a systems perspective, the Tragedy of the Commons provides unique insights into how the behavior of an individual can have a profound effect on the overall, long-term performance of the system.
The figure below represents the system archetype for the Tragedy of the Commons. The behavior that is shown can be summarized as rational actions by individuals to improve individual performance at the expense of a common resource which results in destroying the ability of the whole system to perform and eventually the ability of the individual to perform.
In the diagram, an increase of activity of either A or B initially results in an increase in gain for A or B, respectively. However, as the total activity pushes the resource limit, the gain for either A or B eventually decreases with increasing activity.
There are numerous examples of the Tragedy of the Commons. Overfishing, for example, depletes the fish stock and the ability of fish to reproduce. This does not stop individual fishermen from overfishing, however, since scarcity of fish initially results in increased prices leading to even more fishing. Eventually the fish stock is so severely depleted that all fishermen suffer.
The commons usually refers to a resource that is simultaneously made available to multiple people. As each person claims their share of the commons, they regard the commons as being available for their own purposes. From a systems perspective, the Tragedy of the Commons provides unique insights into how the behavior of an individual can have a profound effect on the overall, long-term performance of the system.
The figure below represents the system archetype for the Tragedy of the Commons. The behavior that is shown can be summarized as rational actions by individuals to improve individual performance at the expense of a common resource which results in destroying the ability of the whole system to perform and eventually the ability of the individual to perform.
In the diagram, an increase of activity of either A or B initially results in an increase in gain for A or B, respectively. However, as the total activity pushes the resource limit, the gain for either A or B eventually decreases with increasing activity.
There are numerous examples of the Tragedy of the Commons. Overfishing, for example, depletes the fish stock and the ability of fish to reproduce. This does not stop individual fishermen from overfishing, however, since scarcity of fish initially results in increased prices leading to even more fishing. Eventually the fish stock is so severely depleted that all fishermen suffer.
Thursday, December 10, 2009
Stratagems
A stratagem is an artifice or trick for deceiving and outwitting a competitor or opponent. A stratagem can only be considered a strategy if the ruse or trick is used to attain a goal; otherwise the two are different concepts.
A collection of some of the most cunning stratagems ever devised is contained in an old Chinese manuscript, entitled: The Thirty-Six Stratagems (Sānshíliù Jì). The Swiss scholar Harro von Senger first published this manuscript in the Western world. The stratagems were used primarily in politics and war to achieve goals often through unorthodox or deceptive means.
One particularly devious stratagem is:
Shàng wū chōu tī
Invite Your Enemy Onto The Roof - Then Remove The Ladder
The classical description of this warfare stratagem is: “With baits and deceptions, lure your enemy into treacherous terrain. Then cut off his lines of communication and avenue of escape. To save himself, he must fight both your own forces and the elements of nature.”
The roof in this stratagem symbolizes an area you control or hold an advantage. The ladder in this stratagem symbolizes an escape from a dangerous situation. When the ladder is removed, the opponent has no options but to fight for survival.
This stratagem can easily be adapted to business and there are numerous well-known examples. In 1988, Microsoft decided to enter the encyclopedia business. This business was dominated by Encyclopedia Britannica that had over 200 years of encyclopedia publishing experience. Britannica offered authoritative and exhaustive content. The only weak point was the price – consumers had to pony up over $1,000 for a complete set.
Microsoft spent five years doing what it does best – creating software, specifically software to provide unmatched searchability, cross-linking and multimedia to content mostly licensed from Funk & Wagnall’s Encyclopedia. The product Microsoft created was named Encarta. A few years later, Microsoft bought Collier's Encyclopedia and New Merit Scholar's Encyclopedia from Macmillan and incorporated them into Encarta. Since it costs only about $1 to produce a CD, Microsoft priced Encarta very aggressively at $300 for the entire encyclopedia. If Microsoft had priced its product along the lines of Encyclopedia Britannica, the two could likely have coexisted peacefully. By pricing Encarta at $300, Microsoft essentially declared war on Britannica.
The goal was to capture market share from Britannica through aggressive pricing. If Britannica didn’t respond, it would gradually have its market share eroded as the quality of Encarta got better. In order to compete on price, Britannica had to go electronic. This is Microsoft’s area of expertise – this is the roof in this stratagem. Britannica initially kept its price at $1,000 when it introduced its CD product since Britannica believed that its superior brand and content depth would compensate for inferior software. That would have been true if they were priced comparably. Microsoft’s aggressive pricing, however, eventually forced Britannica to lower its price, which removed the ladder on Britannica. There was now no escape; Britannica had to compete head on with Microsoft in an area where it held the clear advantage. Britannica's revenue would suffer along with sales of the print version. This was a brilliant application of the stratagem on the part of Microsoft.
A collection of some of the most cunning stratagems ever devised is contained in an old Chinese manuscript, entitled: The Thirty-Six Stratagems (Sānshíliù Jì). The Swiss scholar Harro von Senger first published this manuscript in the Western world. The stratagems were used primarily in politics and war to achieve goals often through unorthodox or deceptive means.
One particularly devious stratagem is:
Shàng wū chōu tī
Invite Your Enemy Onto The Roof - Then Remove The Ladder
The classical description of this warfare stratagem is: “With baits and deceptions, lure your enemy into treacherous terrain. Then cut off his lines of communication and avenue of escape. To save himself, he must fight both your own forces and the elements of nature.”
The roof in this stratagem symbolizes an area you control or hold an advantage. The ladder in this stratagem symbolizes an escape from a dangerous situation. When the ladder is removed, the opponent has no options but to fight for survival.
This stratagem can easily be adapted to business and there are numerous well-known examples. In 1988, Microsoft decided to enter the encyclopedia business. This business was dominated by Encyclopedia Britannica that had over 200 years of encyclopedia publishing experience. Britannica offered authoritative and exhaustive content. The only weak point was the price – consumers had to pony up over $1,000 for a complete set.
Microsoft spent five years doing what it does best – creating software, specifically software to provide unmatched searchability, cross-linking and multimedia to content mostly licensed from Funk & Wagnall’s Encyclopedia. The product Microsoft created was named Encarta. A few years later, Microsoft bought Collier's Encyclopedia and New Merit Scholar's Encyclopedia from Macmillan and incorporated them into Encarta. Since it costs only about $1 to produce a CD, Microsoft priced Encarta very aggressively at $300 for the entire encyclopedia. If Microsoft had priced its product along the lines of Encyclopedia Britannica, the two could likely have coexisted peacefully. By pricing Encarta at $300, Microsoft essentially declared war on Britannica.
The goal was to capture market share from Britannica through aggressive pricing. If Britannica didn’t respond, it would gradually have its market share eroded as the quality of Encarta got better. In order to compete on price, Britannica had to go electronic. This is Microsoft’s area of expertise – this is the roof in this stratagem. Britannica initially kept its price at $1,000 when it introduced its CD product since Britannica believed that its superior brand and content depth would compensate for inferior software. That would have been true if they were priced comparably. Microsoft’s aggressive pricing, however, eventually forced Britannica to lower its price, which removed the ladder on Britannica. There was now no escape; Britannica had to compete head on with Microsoft in an area where it held the clear advantage. Britannica's revenue would suffer along with sales of the print version. This was a brilliant application of the stratagem on the part of Microsoft.
Wednesday, December 9, 2009
Strategy Fingerprints
Here are two warfare strategies:
In June 1941, Germany invaded Ukraine with 3,000,000 troops. Joseph Stalin ordered retreating Ukrainians to destroy everything that could be of value to the advancing German army, including grains and fuel.
After Iraq invaded Kuwait in August of 1990, Saddam Hussein ordered the destruction of Kuwaiti oil wells and the dumping of millions of gallons of oil into the Persian Gulf after the United States launched an attack against Iraq.
Let’s dissect these two strategies. There is a common situation.
The Ukrainians were going to lose valuable resources to the Germans and Hussein was going to lose valuable resources to the Americans. The rationale behind the actions of both men was to make sure the enemy could not profit from resources, which they knew they were going to lose control of.
Actor: Stalin/ Hussein
Opponent: Germans / Americans
Situation: inevitable loss of valuable resource to opponent
There also appears to be a common goal: Prevent the enemy from making use of the valuable resources left behind.
The strategy: Destroy the resources.
The rationale is to make sure the enemy cannot profit from the resources, which you know you are going to lose.
While the details of these two situations are obviously different, the deep structure is identical and so is the strategy. In fact, this strategy is so common, it is called a scorched earth strategy.
The “how to”, however, makes little sense unless you know the goal and the situation that triggered the goal. After collecting and reviewing over 5,000 different strategies in business, politics and several other fields we have found that these three elements are present without exception in every single strategy. We assert that it is these three things that make a strategy a strategy. The deep structure or blueprint serves as a fingerprint for identifying any particular strategy.
In June 1941, Germany invaded Ukraine with 3,000,000 troops. Joseph Stalin ordered retreating Ukrainians to destroy everything that could be of value to the advancing German army, including grains and fuel.
After Iraq invaded Kuwait in August of 1990, Saddam Hussein ordered the destruction of Kuwaiti oil wells and the dumping of millions of gallons of oil into the Persian Gulf after the United States launched an attack against Iraq.
Let’s dissect these two strategies. There is a common situation.
The Ukrainians were going to lose valuable resources to the Germans and Hussein was going to lose valuable resources to the Americans. The rationale behind the actions of both men was to make sure the enemy could not profit from resources, which they knew they were going to lose control of.
Actor: Stalin/ Hussein
Opponent: Germans / Americans
Situation: inevitable loss of valuable resource to opponent
There also appears to be a common goal: Prevent the enemy from making use of the valuable resources left behind.
The strategy: Destroy the resources.
The rationale is to make sure the enemy cannot profit from the resources, which you know you are going to lose.
While the details of these two situations are obviously different, the deep structure is identical and so is the strategy. In fact, this strategy is so common, it is called a scorched earth strategy.
The “how to”, however, makes little sense unless you know the goal and the situation that triggered the goal. After collecting and reviewing over 5,000 different strategies in business, politics and several other fields we have found that these three elements are present without exception in every single strategy. We assert that it is these three things that make a strategy a strategy. The deep structure or blueprint serves as a fingerprint for identifying any particular strategy.
Tuesday, December 8, 2009
Success To The Successful
Systems archetypes are a class of systems thinking tools that model common system challenges. System archetypes are highly effective tools for gaining insight into patterns of behavior, themselves reflective of the underlying structure of the system being studied.
One of the fundamental ideas of system thinking is that every action triggers a reaction, typically referred to as feedback. There are two types of feedback - reinforcing feedback and balancing feedback. Sometimes feedback does not happen immediately and the process contains delays. Systems archetypes attempt to visually display feedback loops and patterns of behavior to facilitate understanding.
One common system archetype is called Success To The Successful. I’m sure you’ve heard the saying: "The rich get richer and the poor get poorer." Why is this generally true?
If you examine two entities which are part of a system competing for resources where one entity starts out ahead of the other, you will find that the entity that is ahead will have an easier time getting farther ahead because better performance usually generates more resources which usually generate a greater capacity to improve performance. You have what is called a positive feedback loop.
For example, if you have two businesses that are competing for a loan or a new contract, the business that has a better track record is more likely to get the loan or contact, which further increases their capacity for improving their performance.
In the diagram above A has more resources than B contributing to the success of A. When new resources are allocated, there is a greater chance they will go to A instead of B which contributes to the success of A and takes away from the success of B.
Systems thinking and strategy are related. One of the first things a strategist must do is analyze the situation they are faced with in order to make sense of what is really going on. An important question is whether the observed behavior is naturally expected from the current system, is a result of some unexpected event or is a result of a deliberate strategy. In actuality, most effects have multiple causes and most causes exhibit multiple effects. Outcomes are generally a product of mutual, multiple and reciprocal interactions.
One of the fundamental ideas of system thinking is that every action triggers a reaction, typically referred to as feedback. There are two types of feedback - reinforcing feedback and balancing feedback. Sometimes feedback does not happen immediately and the process contains delays. Systems archetypes attempt to visually display feedback loops and patterns of behavior to facilitate understanding.
One common system archetype is called Success To The Successful. I’m sure you’ve heard the saying: "The rich get richer and the poor get poorer." Why is this generally true?
If you examine two entities which are part of a system competing for resources where one entity starts out ahead of the other, you will find that the entity that is ahead will have an easier time getting farther ahead because better performance usually generates more resources which usually generate a greater capacity to improve performance. You have what is called a positive feedback loop.
For example, if you have two businesses that are competing for a loan or a new contract, the business that has a better track record is more likely to get the loan or contact, which further increases their capacity for improving their performance.
In the diagram above A has more resources than B contributing to the success of A. When new resources are allocated, there is a greater chance they will go to A instead of B which contributes to the success of A and takes away from the success of B.
Systems thinking and strategy are related. One of the first things a strategist must do is analyze the situation they are faced with in order to make sense of what is really going on. An important question is whether the observed behavior is naturally expected from the current system, is a result of some unexpected event or is a result of a deliberate strategy. In actuality, most effects have multiple causes and most causes exhibit multiple effects. Outcomes are generally a product of mutual, multiple and reciprocal interactions.
Monday, December 7, 2009
Feeling Of Knowing
Studies have shown that the amount of information we can retrieve at any point in time is only a tiny fraction of what we actually know. What is particularly fascinating is that people are quite accurate about their metacognitive judgements, that is what they believe to know about their own knowledge. Most people have had a "tip-of-the-tongue" experience that occurs when we try to recall a forgotten piece of information, like a name. We have a subjective conviction that we "know" the information, but we are unable to actually retrieve it. If wrong information is proposed, we immediately reject it, even though we still can’t retrieve the forgotten data. This experience provides a good example of the separation of the content of knowledge from the feeling of knowing.
Did you ever try to change a person’s mind about a particular issue? It can be a considerable challenge. There is mounting evidence that most people don't change their minds just by learning new facts; they change their minds by realizing that what they know no longer feels true. People who emphatically resist any effort to change their minds do not do so on the basis of rationality, but emotionality. Overtly, the conversation may appear to involve rational arguments, but the root of what is governing the conversation is the feeling of knowing.
This feeling of knowing is a sensation, much like touch or sight. In fact, this feeling of knowing can be elicited directly through electrical stimulation of a very specific area of the brain. This feeling happens to us and is usually not something that we can consciously control. Moreover, while it may seem like this feeling is a confirmation of knowledge based on critical reasoning – evidence suggests otherwise.
This feeling of knowing has typically been associated with the concept of "intuition". Studies have shown that highly creative people often have the intuitive feeling that they are on the right track to solving a problem, and can even sense that they are about to reach the solution before they actually do so. This is very similar to the feeling of knowing that a person has about some piece of information before they can actually retrieve it. These metacognitive feelings serve to interface or provide a link between our implicit-unconscious-automatic mind on the one hand, and our explicit-conscious-controlled mind on the other.
Did you ever try to change a person’s mind about a particular issue? It can be a considerable challenge. There is mounting evidence that most people don't change their minds just by learning new facts; they change their minds by realizing that what they know no longer feels true. People who emphatically resist any effort to change their minds do not do so on the basis of rationality, but emotionality. Overtly, the conversation may appear to involve rational arguments, but the root of what is governing the conversation is the feeling of knowing.
This feeling of knowing is a sensation, much like touch or sight. In fact, this feeling of knowing can be elicited directly through electrical stimulation of a very specific area of the brain. This feeling happens to us and is usually not something that we can consciously control. Moreover, while it may seem like this feeling is a confirmation of knowledge based on critical reasoning – evidence suggests otherwise.
This feeling of knowing has typically been associated with the concept of "intuition". Studies have shown that highly creative people often have the intuitive feeling that they are on the right track to solving a problem, and can even sense that they are about to reach the solution before they actually do so. This is very similar to the feeling of knowing that a person has about some piece of information before they can actually retrieve it. These metacognitive feelings serve to interface or provide a link between our implicit-unconscious-automatic mind on the one hand, and our explicit-conscious-controlled mind on the other.
Sunday, December 6, 2009
Influencing Perception
We are influenced hundreds of times each day in ways so subtle that they frequently go unnoticed. This exercise demonstrates how easily our perceptions can be influenced. The image below was designed to be interpreted as either a young woman or an old woman. It was introduced into the psychological literature by Edwin G Boring in the 1930's, although it was published by the British cartoonist W. E. Hill in 1915. Study the figure and see if you can perceive both images. Once you perceive both images, see if you can get them to fluctuate back and forth between the two interpretations.
Figure 1:
In order to study the role of perceptual set, Robert Leeper had the image redrawn in two biased forms: one, which emphasized the young woman (Figure 2) and the other which emphasized the old woman (Figure 3). Refer to the images below.
Figure 2:
Figure 3:
A perceptual set is an individual's predisposition to respond to particular events or objects in a particular manner. Since we tend to perceive what we expect to perceive, this can also be called our perceptual expectations. Perceptual expectations can easily be influenced.
We have performed this experiment several times and get comparable results. We randomly assign participants into three groups. The first group is a control group that is shown only Figure 1. Somewhere between 55 and 60 percent of the people usually describe the image as that of a young woman. The next group was first shown Figure 2 for about ten seconds, followed immediately by Figure 1. Somewhere between 95 and 99 percent of the people usually describe Figure 1 as that of a young woman. The final group was first shown Figure 3 for about ten seconds, followed immediately by Figure 1. Somewhere between 90 and 95 percent of the people usually describe Figure 1 as that of an old woman.
For each of the primed groups, people’s interpretations were locked-in to the frame they were initially exposed to. It took less than ten seconds for this subtle influence to work its magic. What is most amusing is the conviction of the participants regarding their interpretation. If you pit a member of the second and third groups against one another, you often will have a heated exchange regarding how Figure 1 should be interpreted. If less than 10 seconds can have this effect, imagine the influence when we are repeated exposed to particular frames.
Figure 1:
In order to study the role of perceptual set, Robert Leeper had the image redrawn in two biased forms: one, which emphasized the young woman (Figure 2) and the other which emphasized the old woman (Figure 3). Refer to the images below.
Figure 2:
Figure 3:
A perceptual set is an individual's predisposition to respond to particular events or objects in a particular manner. Since we tend to perceive what we expect to perceive, this can also be called our perceptual expectations. Perceptual expectations can easily be influenced.
We have performed this experiment several times and get comparable results. We randomly assign participants into three groups. The first group is a control group that is shown only Figure 1. Somewhere between 55 and 60 percent of the people usually describe the image as that of a young woman. The next group was first shown Figure 2 for about ten seconds, followed immediately by Figure 1. Somewhere between 95 and 99 percent of the people usually describe Figure 1 as that of a young woman. The final group was first shown Figure 3 for about ten seconds, followed immediately by Figure 1. Somewhere between 90 and 95 percent of the people usually describe Figure 1 as that of an old woman.
For each of the primed groups, people’s interpretations were locked-in to the frame they were initially exposed to. It took less than ten seconds for this subtle influence to work its magic. What is most amusing is the conviction of the participants regarding their interpretation. If you pit a member of the second and third groups against one another, you often will have a heated exchange regarding how Figure 1 should be interpreted. If less than 10 seconds can have this effect, imagine the influence when we are repeated exposed to particular frames.
Saturday, December 5, 2009
Game Theory
Chess is often considered to be a game of strategy. Prior to making any move, a good chess player will try to anticipate their opponent’s possible counter-move and their own counter counter-move in response. How does one anticipate the reaction of your opponent or competitor? There are several tools available – game theory, behavioral psychology and history among others. Game theory attempts to model a contested situation and assumes that people will act strategically and reason logically. In other words, people are expected to logically analyze the best way to achieve their objectives, given that their competitors or opponents are doing the same. In the real world, people frequently do not respond rationally and behavioral psychology can often provide insight regarding anticipated outcomes. Finally, searching for an analogous situation that has happened in the past and studying the outcome is often useful for handling similar situations today.
Let’s see how game theory can be used in strategic thinking.
Suppose you have two business monthly’s in the same town competing for readers and suppose that the readership has a slight bias in favor of the first publication. When the two publications have the same cover story, 60% of the potential buyers who like that story will pick publication A and 40% will pick publication B. There are two prominent stories that could be run next month. The first is on a local success story, which would interest about 30% of the readers, and the second is about changing economic conditions that would interest about 70% of the readers. Which publication should run which story to attract the most readership? This is a problem suitable for game theory, since it is likely that both publications would reason logically and act in their own best interests.
Publication A has what is called a dominant strategy. A dominant strategy is one that makes a player better off than he would be if he used any other strategy, no matter what strategy his competitor uses. The editors of publication B should be able to figure out that publication A will go with the story on the economy and they will earn more readers if they run with the local story rather than compete for a portion of the economy readership.
We can understand this logic more easily with a simple table. We show two columns corresponding to publication’s B choices and two rows corresponding to publication’s A choices. This produces four boxes, each box corresponding to one combination of strategies.
Let’s look at sales for publication A, which are in red. Notice that it is irrelevant what story publication B runs with. Publication A always does better with the story on the economy. It has a dominant strategy. Examine the sales for publication B, which are in blue. If publication A chooses the economy story, publication B would be better off with the local interest story 30 to 28. If publication A chooses the local interest story, publication B would be better off with the economy story 70 to 12. Game theory involves looking forward and reasoning backward to formulate the best strategy. Since we know it is in the best interest of publication A to run with the economy story, we conclude that publication B should run the local interest story.
Let’s see how game theory can be used in strategic thinking.
Suppose you have two business monthly’s in the same town competing for readers and suppose that the readership has a slight bias in favor of the first publication. When the two publications have the same cover story, 60% of the potential buyers who like that story will pick publication A and 40% will pick publication B. There are two prominent stories that could be run next month. The first is on a local success story, which would interest about 30% of the readers, and the second is about changing economic conditions that would interest about 70% of the readers. Which publication should run which story to attract the most readership? This is a problem suitable for game theory, since it is likely that both publications would reason logically and act in their own best interests.
Publication A has what is called a dominant strategy. A dominant strategy is one that makes a player better off than he would be if he used any other strategy, no matter what strategy his competitor uses. The editors of publication B should be able to figure out that publication A will go with the story on the economy and they will earn more readers if they run with the local story rather than compete for a portion of the economy readership.
We can understand this logic more easily with a simple table. We show two columns corresponding to publication’s B choices and two rows corresponding to publication’s A choices. This produces four boxes, each box corresponding to one combination of strategies.
Let’s look at sales for publication A, which are in red. Notice that it is irrelevant what story publication B runs with. Publication A always does better with the story on the economy. It has a dominant strategy. Examine the sales for publication B, which are in blue. If publication A chooses the economy story, publication B would be better off with the local interest story 30 to 28. If publication A chooses the local interest story, publication B would be better off with the economy story 70 to 12. Game theory involves looking forward and reasoning backward to formulate the best strategy. Since we know it is in the best interest of publication A to run with the economy story, we conclude that publication B should run the local interest story.
Friday, December 4, 2009
Thought, Action, Praxis
What comes first – thought or action? Ask most people and the responses would indicate the primacy of thinking. Thinking is believed to come before action in a way similar to a cause determining its effect. After all, many times each day, we think about something and then we do it. It seems pretty straightforward, doesn’t it?
There are numerous examples, however, where people react to situations, especially threatening ones, without apparent feeling or thinking. When the survival instinct kicks in, speed is often more important than accuracy. Under these conditions, most people tend to act first, develop an emotional response next and think last. So there are just as many examples suggesting the primacy of action.
However, correlation does not prove causation. What happens if mental processes that are not consciously perceived cause both the thought about action and the action itself? There is clinical evidence from the experiments of Benjamin Libet that the experience of consciously willing an action begins after neurological events that set the action in motion. This suggests that parts of the unconscious create both the thought and action and we infer that our thoughts caused our actions. Does this mean that no conscious thought causes action? No, but it does indicate that a linear cause and effect relationship is an oversimplification.
Scientists believe that people make sense of their world through various cognitive structures, referred to as mental models. These mental models are believed to operate in the unconscious mind, so most of the time we don’t even realize they exist. Almost every aspect of our lives is shaped by our mental models, including all our thoughts and actions. In addition, there is substantial evidence that training and education can affect our mental models, although to a less extent than meaningful experience obtained through purposeful action. Consequently, our thoughts can affect our mental models, which can influence our actions, and our actions can affect our mental models, which can influence how we think. Neither thought nor action have primacy. Thought and action are dialectically related, mutually constitutive in a continual process of interaction.
This is the essence of the meaning of the word praxis. The etymology of the word can be traced to the Greek praxis, which unfortunately has no English equivalent, but which is usually translated as practice. Practice is often unreflective activity – doing what you’ve been taught to do under the circumstances, which is not the true meaning of praxis. Praxis is a transformational process resulting from a synthesis of thought and action where each constitutes and informs the other through the experience of reality.
We have adopted Strategy Praxis™ as our trademark reflecting our unique approach to strategy. Strategy Praxis™ is multidisciplinary, pulling knowledge not only from the field of strategy, but fields as diverse as economics or cognitive psychology when such knowledge can provide insight. Our approach emphasizes a systems perspective, attempts to transcend the current paradigms and bridge the ever-widening gap between strategy theory and practice. Strategy Praxis™ elevates the importance of the cognitive development of the strategist and adopts a very pragmatic view with the prime metric being success in action.
There are numerous examples, however, where people react to situations, especially threatening ones, without apparent feeling or thinking. When the survival instinct kicks in, speed is often more important than accuracy. Under these conditions, most people tend to act first, develop an emotional response next and think last. So there are just as many examples suggesting the primacy of action.
However, correlation does not prove causation. What happens if mental processes that are not consciously perceived cause both the thought about action and the action itself? There is clinical evidence from the experiments of Benjamin Libet that the experience of consciously willing an action begins after neurological events that set the action in motion. This suggests that parts of the unconscious create both the thought and action and we infer that our thoughts caused our actions. Does this mean that no conscious thought causes action? No, but it does indicate that a linear cause and effect relationship is an oversimplification.
Scientists believe that people make sense of their world through various cognitive structures, referred to as mental models. These mental models are believed to operate in the unconscious mind, so most of the time we don’t even realize they exist. Almost every aspect of our lives is shaped by our mental models, including all our thoughts and actions. In addition, there is substantial evidence that training and education can affect our mental models, although to a less extent than meaningful experience obtained through purposeful action. Consequently, our thoughts can affect our mental models, which can influence our actions, and our actions can affect our mental models, which can influence how we think. Neither thought nor action have primacy. Thought and action are dialectically related, mutually constitutive in a continual process of interaction.
This is the essence of the meaning of the word praxis. The etymology of the word can be traced to the Greek praxis, which unfortunately has no English equivalent, but which is usually translated as practice. Practice is often unreflective activity – doing what you’ve been taught to do under the circumstances, which is not the true meaning of praxis. Praxis is a transformational process resulting from a synthesis of thought and action where each constitutes and informs the other through the experience of reality.
We have adopted Strategy Praxis™ as our trademark reflecting our unique approach to strategy. Strategy Praxis™ is multidisciplinary, pulling knowledge not only from the field of strategy, but fields as diverse as economics or cognitive psychology when such knowledge can provide insight. Our approach emphasizes a systems perspective, attempts to transcend the current paradigms and bridge the ever-widening gap between strategy theory and practice. Strategy Praxis™ elevates the importance of the cognitive development of the strategist and adopts a very pragmatic view with the prime metric being success in action.
Thursday, December 3, 2009
Strategy Praxis™ Inaugural Webcast
Did you ever wonder why some businesses always seem to outmaneuver their competitors? Regardless of downturns in the economy or unexpected setbacks that would cripple most businesses, these companies consistently thrive. Businesses like these can be found in every industry from cottage to high tech and come in all sizes from home based to giant multinationals. They all share one thing in common – a capable strategy. In fact, a capable strategy is one of the best indicators of future success.
On a fundamental level, strategy teaches you how to compete. Since competitive forces shape almost every aspect of our lives and businesses, learning strategy can be one of the best investments you’ll ever make. Unfortunately, very few people understand strategy. The objective of this webcast is to introduce the discipline of strategy and demonstrate how knowledge of just a few aspects can address some of the challenging issues facing executives today. A detailed brochure of the webcast is available at:
http://www.strategypraxis.com/inauguralwebcast.pdf
In order to attend the webcast you must register in our system which automatically earns you membership in the Strategy Praxis™ Network. Regular membership is free and open to anyone with an interest in strategy. Benefits include a quarterly newsletter, periodic strategy webcasts and participation in our community forum.
This webcast will be recorded and broadcast at the times below. A live online discussion will follow each webcast. The webcast is approximately 3 hours in length.
(All times are GMT = Greenwich Mean Time)
• Monday, February 15th, 2010 at 12:00 AM, 1:00 PM and 6:00 PM
• Wednesday, February 17th, 2010 at 12:00 AM, 1:00 PM and 6:00 PM
• Friday, February 19th, 2010 at 12:00 AM, 1:00 PM and 6:00 PM
This presentation is conducted entirely online. You must have access to a computer with sound and internet connectivity. The webcast will be made available in five different formats: Flash (DWF), Windows Media (WMV), QuickTime (MOV), Real Media (RM) and Audio Video Interleave (AVI), making it compatible with 99.5% of all modern operating systems and browsers. Users will be able to select the format they prefer. All attendees will receive a PDF summary of the presentation.
The Strategy Praxis™ Institute copyrights all materials presented at this webcast and no portion of this webcast may be reproduced in any manner without prior written approval of The Strategy Praxis™ Institute.
If you have any questions, feel free to contact us at webcast@strategypraxis.com. We look forward to your presence at the webcast.
On a fundamental level, strategy teaches you how to compete. Since competitive forces shape almost every aspect of our lives and businesses, learning strategy can be one of the best investments you’ll ever make. Unfortunately, very few people understand strategy. The objective of this webcast is to introduce the discipline of strategy and demonstrate how knowledge of just a few aspects can address some of the challenging issues facing executives today. A detailed brochure of the webcast is available at:
http://www.strategypraxis.com/inauguralwebcast.pdf
In order to attend the webcast you must register in our system which automatically earns you membership in the Strategy Praxis™ Network. Regular membership is free and open to anyone with an interest in strategy. Benefits include a quarterly newsletter, periodic strategy webcasts and participation in our community forum.
This webcast will be recorded and broadcast at the times below. A live online discussion will follow each webcast. The webcast is approximately 3 hours in length.
(All times are GMT = Greenwich Mean Time)
• Monday, February 15th, 2010 at 12:00 AM, 1:00 PM and 6:00 PM
• Wednesday, February 17th, 2010 at 12:00 AM, 1:00 PM and 6:00 PM
• Friday, February 19th, 2010 at 12:00 AM, 1:00 PM and 6:00 PM
This presentation is conducted entirely online. You must have access to a computer with sound and internet connectivity. The webcast will be made available in five different formats: Flash (DWF), Windows Media (WMV), QuickTime (MOV), Real Media (RM) and Audio Video Interleave (AVI), making it compatible with 99.5% of all modern operating systems and browsers. Users will be able to select the format they prefer. All attendees will receive a PDF summary of the presentation.
The Strategy Praxis™ Institute copyrights all materials presented at this webcast and no portion of this webcast may be reproduced in any manner without prior written approval of The Strategy Praxis™ Institute.
If you have any questions, feel free to contact us at webcast@strategypraxis.com. We look forward to your presence at the webcast.
Wednesday, December 2, 2009
Strategy Praxis™ YouTube Channel
The Strategy Praxis™ Institute has started a channel on YouTube for posting educational videos on strategy. It is expected that there will be one or two videos added per month on a strategy topic that can be adequately addressed in ten minutes or less. The Strategy Praxis™ YouTube channel can be found at:
http://www.youtube.com/strategypraxis
The first video provides a brief introduction to strategy. The beginning section of the video discusses some of the hard evidence why strategy is an important indicator of future success. Prominent executives, multinational corporations and members of the media and business community have also heralded the importance of strategy and examples are given. The video briefly explains the concept of strategy and discusses some of the definitions of strategy that one is likely to encounter. There are many benefits to learning strategy and a couple of the most outstanding are mentioned. Strategy is clearly important and worth an investment of one’s time, but many people find strategy difficult. Five of the biggest challenges are discussed.
A pdf summary of this video can be found at:
http://www.strategypraxis.com/videosummary01.pdf
http://www.youtube.com/strategypraxis
The first video provides a brief introduction to strategy. The beginning section of the video discusses some of the hard evidence why strategy is an important indicator of future success. Prominent executives, multinational corporations and members of the media and business community have also heralded the importance of strategy and examples are given. The video briefly explains the concept of strategy and discusses some of the definitions of strategy that one is likely to encounter. There are many benefits to learning strategy and a couple of the most outstanding are mentioned. Strategy is clearly important and worth an investment of one’s time, but many people find strategy difficult. Five of the biggest challenges are discussed.
A pdf summary of this video can be found at:
http://www.strategypraxis.com/videosummary01.pdf
Tuesday, December 1, 2009
Strategy Praxis™ Blog
This is the official blog of the Strategy Praxis™ Institute. The blog will contain short posts on a variety of topics related to strategy. The posts will generally be educational in nature. The posts are not designed to follow any particular agenda and will likely jump from one issue to another. Comprehensive presentations are generally assigned to full articles or webcasts and not blog posts. The Strategy Praxis™ Blog is an example of one of the numerous fee-FREE resources offered by the Strategy Praxis™ Institute that provide a good introduction to the field of strategy.
Readers are encouraged to watch our short, approximately 10 minute, Introduction To Strategy video. This video will explain what strategy is, why it is so important and what benefits you can expect from an investment in learning strategy. This presentation can be viewed directly on our site:
http://www.strategypraxis.com/introduction.html
The only requirement is that your computer is capable of playing sound and video. Like our webcasts, this introduction is available in five different formats: Flash, AVI, WMV, MOV and RM making it compatible with 99.5% of all modern operating systems and browsers. Simply select the format that you prefer or try them all to find the one that works best with your computer, OS and browser.
Readers are also encouraged to register in our system so you can become a member of the Strategy Praxis™ Network. Regular membership is free and open to anyone with an interest in strategy. Benefits include a quarterly newsletter, periodic strategy webcasts and participation in our community forum. Simply click the Register menu item at the top right of any page of our website at:
http://www.strategypraxis.com
Once you become a member of the Strategy Praxis™ Network, you are able to watch our approximately 3 hour fee-free inaugural webcast. The webcast has been recorded in a variety of formats and is available exclusively to members of the Strategy Praxis™ Network. A live discussion is scheduled regularly and members can always post questions in our community forum. A detailed brochure of the webcast is available at:
http://www.strategypraxis.com/inauguralwebcast.pdf
Welcome to the blog!
Readers are encouraged to watch our short, approximately 10 minute, Introduction To Strategy video. This video will explain what strategy is, why it is so important and what benefits you can expect from an investment in learning strategy. This presentation can be viewed directly on our site:
http://www.strategypraxis.com/introduction.html
The only requirement is that your computer is capable of playing sound and video. Like our webcasts, this introduction is available in five different formats: Flash, AVI, WMV, MOV and RM making it compatible with 99.5% of all modern operating systems and browsers. Simply select the format that you prefer or try them all to find the one that works best with your computer, OS and browser.
Readers are also encouraged to register in our system so you can become a member of the Strategy Praxis™ Network. Regular membership is free and open to anyone with an interest in strategy. Benefits include a quarterly newsletter, periodic strategy webcasts and participation in our community forum. Simply click the Register menu item at the top right of any page of our website at:
http://www.strategypraxis.com
Once you become a member of the Strategy Praxis™ Network, you are able to watch our approximately 3 hour fee-free inaugural webcast. The webcast has been recorded in a variety of formats and is available exclusively to members of the Strategy Praxis™ Network. A live discussion is scheduled regularly and members can always post questions in our community forum. A detailed brochure of the webcast is available at:
http://www.strategypraxis.com/inauguralwebcast.pdf
Welcome to the blog!
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