Strategic thinking course (Core principles lecture 4: Assembly of…
Strategic thinking course
People throughout history have often looked for a hidden/secret strategy which will improve their chances of success, not realising that thinking strategically not a specific tactic is what will assure their success
As a general principle, strategy is a living evolving being. It is not a static object, not the enblematic checklist on paper that most people take for good planning
All plans are temporary
The most brilliant plans are those that spring into being in
the dynamic of action and response
Since we cannot predict what fortuna will hand to use we must nurture in ourselves those qualitites that allow us to deal with a changing physical, social, economic and proffessional environment in the best possible manner (i.e. flexibility, openmindedness, foresight, equanimity)
Origins and revelance of strategy
Power is paramount
Surprise innovations can turn the tide of an evenly matched struggle
Start with tactics
Plans must Change
Prepare, prepare, prepare
Know your opponents
Brute force is not most effective way to achieve a result
Training one of key principles in strategic thinking
A bias towardds action is imperative for strategic thinking, for mastering life really
Even the best laid plan/strategy could easily lead to our downfall if it is not flexible. If it is looked at as a checklist that must be followed to the dot then it will become outdated extremely quickly as reality is a changing, ever-evolving phenomenon. Therfore strategy too must be a changing, ever-evolving phenomenon.
Concentration of forces is a fundamental principle
Concentration means both in time and in space
Even if the enemy outnumbers us, if we can achieve a higher concentration of force at the point of battle then we will go a long way to balancing the numerical inequality
Always mystify, mislead, and surprise the enemy
Key points: lecture 3
Regardless of how chaotic a situation may be, there are principles that can give shape to your thinking about the situation
Immersion in such principles allows for intuitive flashes of insight
Core principles lecture 4:
Assembly of activities in new an innovative ways
Have a clear objective
Seize the initiative
Mass your efforts on a critical point
Use all available effort
Limit opponent's room to maneuver
Unity of effort and unity of command
Secure yourself against your opponent gaining unexpected advantages
Surprise your opponent
Keep it simple!
: This is vision, purpose all that I have heard Leo talk about. I can be carrying out my day to day tactics with great efficiency but if they are not aligned to an overarching purpose then they will not yield the results that I want. I guess this is maybe where life purpose comes into the whole equation.
"The attainment of intermediate concerns must, quickly, effectively and economically contribute to the achievement of the overall objective."
: offensive action is the most effective method to get to our goals. Offensive action is how we hold and seize the initiative while we maintain our freedom of action. The side that takes initiative forces competitors to react rather than act.
: This is to do with concentration of efforts. It is to do with the acceptance that you are undertaking a big objective and then proactively gathering up all your resources for the battle ahead.
Economy of force
: As our resources are limited we must also employ economy of force. We deploy and distribute our resources so that no part is left without a goal to accomplish. We don't want any of our energy to languish, no part of our force should be left without a purpose.
: The movement of forces in relation to the enemy to gain positional advantage. This is linked to flexibility, agility of thought, plans and organisation. This is the ever evolving strategy. It is how we make ourselves unpredictable, raising doubt and uncertainty in our enemies.
Unity of effort
: If we are to maneuver effectively then unity of command and unity of effort must be present.
: Active security means that we can carry out our tactics with an assurance that we will not be taken by surprise.
: some people consider the most important principle of strategy. By seeking surprise we can gain advantage way more than the effort expended. This reminds of Liverpool's cheeky corner goal against Barcelona.
: Complexity is the enemy of any good plan, the simpler the plan the easier it is to carry out correctly.
Lecture 5: Know your terrain
The unchanging characteristics of the physical world in which we live, condition human behaviour and interactions.
This has been criticised by some as geo-determinism
: seeks single-factor explanations of complex phenomena
A key insight is the realisation that as well as interacting with our opponents, we are also interacting with the ground we stand up. This ground could be physical, literal ground or it could be the social or proffessional ground or environment.
How does geography enhance or degrade our strategy?
An important principle is that if I can choose the battlefield then I most definitely should. If I can't, then I should get as much information about it as I can.
Lecture 6: Strategic Intent
: the articulation of a powerful, achievable, and motivating stretch goal
: all good goals must stretch me, they must make it so that I have to go out there to get new resources, master new skills that I don't already have so that I can achieve the goal. If a goal is always within my resource and skill set then it will be boring, it will not provide a strong enough vision
Strategic intent is about identifying the gap between our resources and our ambition and then developing a strategy to fulfil those ambitions
Perhaps the most famous example of Strategic Intent was JFK's - "We choose to go to the Moon this decade, not because it is easy, but because it is hard..."
Another famous example of Strategic Intent was Martin Luther King's "I have a dream"
A key part of strategic intent is that it has to be specific, there's something about concentration of forces here too
Just realising that the self-contracts I have been drawing up are a good way to mass and concentrate resources. If I only choose a few things carefully I make sure I am not spreading myself out too thinly and that I am following through on what I set to do
Strategic intent in and of itself is not enough. It is a necessary part for successful strategy but obviously not the only part. Sometimes the vision chosen is completely out of whack, the tactics may be amazing and leading to that vision but if the vision is the wrong one then it is all for nothing
"Levi's was a classic case of a leader with a vision, but the vision did not match reality, and the leader did not let that obstruct his actions."
An interesting insight from strategic intent is that by its very definition, by the fact that it has to specifically demonstrate our vision, it mandates that we leave other options by the wayside. This can be incredibly difficult to do as as humans we have tend to want to keep all our options on the table, we find it hard to tolerate loss (of even imagined possibilites), we want to have our cake, and eat it too.
In our personal life, strategic intent calls for us to set seemingly impossible goals, then come up with a strategy to require the necessary resources and attain those goals.
Lesson 7: The Core and the Rise of Strategic Planning
Strategic intent was about vision, the core is about who you are, where you've come from. It could be described as a sense of mission
Google core mission for example is "Organize the world's information and make it universally accessible and useful."
Another way to look at this is as values
A powerful founding myth can be a powerful motivator, especially if it displays the values that I am trying to embody
A founding myth should inform my personal mission statement
Difference could be seen as strategic intent being where you want to go and strategic core (aka mission) being about who you are, what matters to you
Values, values, values
Should always come back to the mission of the company
Pitfalls in early strategic planning
Fallacy of predetermination - we believe we can know the future, we then go for simple model to predict and prepare. This is of course false, the future is one of the most complex systems there are.
Fallacy of dettachment - tendency of planners to remove themselves from the scene of the action. In other words pure theory completely removed from practice
Fallacy of formalisation - this is when strategy becomes static, it is thought about once and then never changes, which inevitably makes it outdated and useless
The Strategic planning process (6 key parts of it)
Mission: the core and values that guide you (preferably in no more than a few sentences)
Objective: you set these with the view of fulfilling your mission. They should be SMART
Situation analysis (environmental scan): look at the environment in which we or our firm functions. We evaluate the values that impinge on us with respect to our objectives
We should gain knowledge about our strengths and resources and then evaluate them against the outside environment to see if we have what we need to meet our objectives. If we don't then we can make a plan to meet those objectives
Strategy formulation: we decide the practical steps that will get us from where we are to where we want to be. We decide the what, when, where and how of our plan, we allocate the right resources to the right place
Strategy implentation: constantly supervise and refine during the implementation phase. Plans CANNOT be static
Control: we develop a control mechanism to make sure our plan is actually working. An example of control mechanisms are exams in school and unis, qa testers for software etc
The Japanese movement of Kaizen, or continous improvement is a form of control
If our control mechanisms tell us that we are not achieving our objectives then we can circle back to the environmental scan to work out if environmental factors have changed and if we have to re-examine our strategic formulation
Strategic planning can only be effective over a long time horizon, it takes time to put things into place. Thinking a decade in advance is usually about right
One of the most important definitions of Strategy is "Doing things differently"
Cookie cutter solutions will not work, we have to bring creativity into the table
Lesson 8: Which business strategy? Fundamental choices
Business often have a choice between differentiation and low-cost
Differentiation is harder as you have to be more creative, however the return on investment is much much highre
Commodities like cement or oats have to go for low-cost as it is hard to differentiate them. Getting cement from one company is much the same as getting cement from another company. When searching for a job if we want people to hire us because we'll demand less and do longer hours then we are treating ourselves as a commodity
If you don't differentiate then you are obligated to charge exactly what everybody else charges
How does InFact differentiate itself?
What is our niche market?
How can we appeal more to these type of customers?
What is our competitive advantage?
All things to all people approach usually ends up with a race to the botoom
What is my own USP? This is a valuable thing to think about
Lecture 9: Your competitive advantage
What are the areas that InFact has to be involved in to succeed? i.e. technological knowhow, client relations, conflict resolution, financial knowhow
How can we combine all of these fields in the best possible balance to achieve our objectives?
Competitive advantage is NOT "doing the same thing as everybody else but better"
How can we differentiate ourselves in the FAC eco-system?
If we just imitate what everybody else is doing then we are going to end up in a race to the bottom for cheap prices
Four Actions framework - technique for helping you idenitfy uncontested market space
Elminate - Which of the factors that the industry takes for granted should be eliminated?
Reduce - Which factors should be reduced well below the industry standard?
Raise - Which factors should be raised wll abobe the indusrtry standard?
Create - Which factors should be created that the industry has never even offered?
A factor which we are not competing on at the moment but which we probably should is client communication. I think we are better than most at translating digital speak to normal speak, at saying what needs to be said and being transparent... a willingness to have the hard discussions
An important aspect of success is to take control of my brand, my persona, my public face and to make as differentiated as is possible from the norm
Lecture 10: Strength, weaknesses, opportunities, threats
PEST analysis is a way to look at our environment to unearth any factors that will affect our business
PEST - Political, Economic, Social and Technical
PEST analysis is useless without our mission and objective in mind
Five forces model - tool for analysing enviroment within specific industries
Buyer power: how much power do our customers have over us? Can they drop us at the drop of a hat? Is loyalty at play for customers or are they up for buying from anyone?
Supplier power: How much power do our suppliers have over us?
Intensity of competition: How often are we competing with rivals?
Threat of substitutes: can customers use different services to get exactly what we are providing? They can go to squarespace and do it themselves for example?
Threat of new entrants: how easy is it for people to enter our field? Will they take business away from us?
Value chain analysis
This is about splitting the company into individual components and analysing how each is performing. The business could be split out into marketing, technical, sales etc...
This could also be looked at at the individual level. What are the proficiencies that I need to achieve my objectives? How am I doing in each one of them?
Looking at these areas of proficiency, something to think about is which one of them would it be better for me to outsource? I cannot master everything in life, where can I free up energy for more value producing endeavours
This reminds of the 80/20 principle
It is important to identify core strenghts and focus our efforts and energies on these
Value chain is an internal analysis whereas Five Forces and PEST are external ones, we have to combine these to work out the best path forward
Do our strengths match the opportunities available?
Do our weaknesses make us vulnerable to the most salient threats?
The tool for bringing these together is called the SWOT
Strenghts, Weaknesses, Opportunities and Threats
How can we use our strengths in new and creative ways? How can we use what makes us different to take our competition by surprise?
Lecture 11: Avoid the pathologies of execution
If a strategy that everything goes exactly to plan then it is not a good one, it is too rigid and brittle. A good strategy needs to leave room for manoeuvre, needs to be flexible
Murphy's law is a good guide here - whatever could go wrong probably will go wrong
Here I am reminded of the principle that plans need to be kept simple, overcomplicated ones are doomed to failure
Overreach is one of the pathologies that can interfere with the implementation of strategy. It is what happens when our capabilities and our strategies do not match
5 main causes of strategic failure
This can happen when our capabilites does not match our intended goals. These can happen when our planning and strategy is not thought through, when we overestimate our capabilities and underestimate the competitions without having accurate intelligence.
Omission of responsibility
This is where there is a disconnect between planning and execution. Someone can be the most brilliant strategist but if they shirk the task of assigning responsibility and holding people accountable then the plans will fail. There will be no one pushing them along, overseeing that they are being executed correctly and on time
Breakdown of communication and coordination
Sometimes the people that come up with a strategy are not the people who implement it. This is why constant communication is so important. Even if the strategy has been brilliantly communicated at the beginning, the fluid nature of reality means that it wil lhave to be revised. This is why clear channels of communication are so important
This reminds me of the constantly changing nature of the work when developing a product. This is why standups are scheduled everyday and communication is planned into the strategy.
You could have the best strategic thinker in the world but if the strategy that they come up with is not based on sound intelligence then it will not work. I guess this points to the importance of patient research, of getting to know your domain, your environment and your competition. Withtout this any strategy will result in the blind leading the blind
The pathology of inertia (ie the tendency to want to preserve the status quo no matter how obviously ill fitting it may be to the objectives) (ie the sunk cost fallacy)
Once you have spent a long time coming up with a strategy then it is very difficult to acknowledge that your conclusions may be wrong and that you have to go back to the drawing board. This is especially true in professional situations where egos are involved and people's reputation depends on the following through of their ill-conceived plans (think Fyre festival, theranos)
A lot of the failures come from misunderstanding this truth -> Strategy is a process, not a single event or decision
Lecture 12: Tactics of combat as problem solving tools
It is important to remind ourselves of the difference between tactics and strategy. Strategy is the overarching plan whereas tactics are the concrete steps we take to get there. However when we first formulate a strategy, we will have a set of possible tactics and we will not know which ones will work and which ones won't. This is why it is important to notice the distinction that is
Intended strategy vs Emergent strategy
Emergent strategy comes out of intended strategy through the process of execution and reflection on that execution
Some of the greatest strategic victories in history were not the result of complex overarching plan, but the consistent, swift and flexible application of principles at the time and place demanded of the situation, in other words careful attention to
Exactly what it sounds like, there is no element of surprise here, you are meeting the enemy where they are and attacking with all your forces. This means that the enemy knows the territory which puts you at a disadvantage
There are times however where a frontal assault may be the best option. Because there is no element of surprise, this goes round full-circle as your enemy may expect that this is the last thing you would do. In this case, they may not be expecting this type of attach and it could work out to your advantage
An example of a frontal assault in business is a price war. This is where companies compete solely on the bottom line rather than on the quality of products or the promotion of a brand
Normally attacking a strong, well prepared opponent goes against every principle of strategic thinking. This reminds me of how people try to change themselves using willpower alone, it is simply not going to work
This is where you keep your opponents guessing, it could be building up your resources in an area that seems insignificant in the moment but that you have predicted will become a much bigger factor later on
An example of this is Swatch, they were first in the market as makers of watch parts not of watches so that initially they were not competing with big watch companies. However they became so good at making the parts, the industry came to rely heavily on them, so that when they decided to start making the watches themselves they left their competitors at an extreme disadvantage
Attack the flank
A maneuver that aims to displace the enemy by moving towards their flanks. It is a specific type of strategic approach that focuses on an opponent's sides. This requires a response from the enemy which ususally goes towards disrupting their own tactics
An example of turning the flank in business is finding a very specific niche in a crowded market. The 'specialty' service will outperform big competitors in that very specific niche. With our globalised work a small niche can still be a huge market
Rear area battle
This is where you focus your attack on an area that your opponent thinks is secure and will not have to worrry about. An example of this is armies sending a small number of special troops behind enemy lines to try to cut of supplies or attack less protected areas
One of the biggest benefits of this tactic is the psychological blow that it delivers to the enemy. Having to backtrack to protect something they had taken for granted as being secure can unsettle an opponent and leave them on the backfoot
"To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking that enemy's resistance without fighting" - Sun Tzu
Lecture 13: Shock of the New - Inflection Points
Inflection point is a dramatic change in our environment that makes us alter the way we do things, or risk extinction
In business these manifest as for example in the technological landscape changing
This is a major change that does not call for a simple change it tactics, it calls for rethinking everything about our strategy
Competitive advantage is conferred on companies and individuals who can do these 2 things well
Be first to recognise a major change in the environment
Be first to respond to that change correctly
Some well known examples of inflection points - apple changing how we listen to music with ipods, apple changing the mobile phone market with the iphone, airbnb changing the tourist industry etc etc
I guess the negative consequences that follow inflection points come in a large part due to paradigm lock. As with science, new developments in the revelant domain are dismissed as inconsequential first as it does not serve a succesful company to believe that the landscape is turning against them. Success makes for complacency so that a lot of the times these warnings are ignored, the reality of the shifting landscape is denied and not confronted head on
It's easy to understand why this happens. To be succesful you'll have had to put in a lot of effort into whatever you are doing, you will have gained a certain level of mastery. To start again will be psychologically extremely difficult, it will be hard to overcome this resistance, the sunk cost fallacy will probably have a huge effect here