VIRGINIA COMMONWEALTH UNIVERSITY SCHOOL OF BUSINESS MBA PROGRAM BUSINESS POLICY Module 2 Strategic Thinking

If everybody is thinking alike, then someone isnt thinking. General George S. Patton

Understanding Michael Porter

What is the right mind-set for thinking about strategy? What is the problem with a competition-to-be-the-best mindset?

VCU School of Business Mgmt 642 - Session 2

Understanding Michael Porter

Ensuring that a firm has Sustainable Competitive Advantage means that a great deal of strategic thinking (and maybe some luck) has been going on Recent decisions (experiments) impacting well known brands
McDonalds

goes all vegetarian in India Chipotle experiments with catering Apple considers cheaper iPhone model Dell considers going private

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Duggans Definitions of Intuition

Ordinary Intuition Vague hunch; gut feeling; form of emotion; not thinking.
Expert Intuition Drawing rapid conclusions based on education, knowledge, and experience. Strategic Intuition Requires that you recognize when a situation is new. Turn off your expert intuition. It is about the future. It is the way strategic innovation is created

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Strategic Intuition begins with How the Brain Works

Every advance in society is based on a new idea. Since (most) everything we sense, feel (emotion), think and do is biologically based in the brain, to understand how ideas are created, we must understand how the brain works.

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Strategic Intuition

The art of strategy depends on the ability to think both critically and creatively, to use all parts of the brain interactively to generate Flashes of Insight.

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von Clausewitz Strategic Intuition (1832)

The Four Steps of coup doeil a strike of the eye What is? 1.Intelligent memory 2.Presence of mind 3.The Flash of Insight 4.Resolution

Steve Job's Speech

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Presence Of Mind

It is in the highest importance in the art of detection to be able to recognize out of a number of facts which are incidental and which are vital. Otherwise your energy and attention will be dissipated instead of being concentrated.

Sherlock Holmes

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What does Strategic Intuition say about the Left Brain and Right Brain and Flashes of Insight?

Collection of hard data (the scientific skills)

The Rational Accumulation of facts and evaluation of probabilities Use of analytical models to define the opportunities

Collection of soft data (the perceptual skills)

The Intuitive Accumulation of uncertainties and ambiguities Use of intuition to define the opportunities

Science

Unique interpretation Of the opportunity

Art

Logic without emotion is a chilly, Spock-like existence Emotion without logic is a weepy hysterical world A Whole New Mind
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Strategic Intuition
Strategic Intuition:
What

is the distinction between analysis (the Jomini model) and intuition (the von Clausewitz model)? Describe how ones personal experiences sets the stage for strategic intuitive thinking. What does presence of mind mean? Have you ever had a flash of insight? If so, describe it. Summarize the Gates and Allen story about the start-up of Microsoft as it illustrates Duggans view of strategic intuition.

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Presence of Mind
Five Discovery Skills - The Innovators DNA (HBR, Dec 2009)
1.

2.

3.

4. 5.

Associating Ability connect seemingly unrelated questions, problems or ideas from different fields. Questioning Dont look for the right answers, ask the right questions Why? Why Not? What if? Observing Scrutinize common phenomena, esp. behavior of customers and others messing around in your space. Experimenting Try out new ideas by creating prototypes and pilots learning experientially Networking Networking with diverse set of individuals provides different perspectives and new ideas.

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Presence of Mind Discovering the Meaning of Data

Data with meaning and relevance becomes information which is collected through experience and learning.
Information that is understood, and enhanced by identification of patterns and trends (often built on statistical analysis) becomes Intelligent Memory or knowledge.

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How Do We Think?

Decision Making:

A manager constantly makes decisions The question: How do we make these decisions? In short, How do we think? Do we use passion or reason? Are we creative or analytical? Can We be both?

http://www.nytimes.com/2012/02/19/magazine/shoppinghabits.html?_r=2&pagewanted=all%3Fsrc%3Dtp&smid=fb-share

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How Do We Think?

Decision Making:
Targets Guest Marketing Analytics department crunches data to develop insights that help target marketing and advertising campaigns. Target analysts managed to develop a pregnancy prediction score based on a customer's purchasing history of 25 products; they also manage to estimate a woman's due date "within a small window" and can send women advertising that aligns very well with the stage of their pregnancy.

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Presence of Mind
The Paradigm

Paradigms are our maps of reality, based in part on facts we have learned, and in part on opinions or assumptions we have developed. Like any map, they have limitations. They may be incomplete or inaccurate.

Need to learn to recognize them, in ourselves and in others

Then need to be willing to question their validity

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Presence of Mind
The Paradigm

Thinking in the box Dogmatic paradigms that are not open to question Thinking often needs to be outside the box Dont be too sure; keep looking If you do not expect it, you will not find the unexpected

Dr. Loren Eisley The Unexpected Universe

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The Flash of Insight

Not a Leap but a

Past

A Bend in the Road

A Change in direction The elements: Begin with existing knowledge, theories or models + Add new data or information + Your own reason = An Insight The Bend
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Future

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Resolution

There is a creative process: The Idea The Investigation The Flash of Insight Kairos: the moment to commit Experiential learning

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Critical Thinking

Critical thinking not negative criticism But, rational, disciplined, analytical, unbiased reasoning based upon an objective view of reality Confronts the brutal facts of reality Critical thinkers do not ignore their emotions but rather are aware of them, attempt to control them, and are not driven by them.

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Critical Thinking
What is at Play?

The context or situation Our personality and that of others who are involved Our morals, ethics and values Our paradigms Our intellectual honesty Our aptitudes, knowledge and experience

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Creative Thinking
Art or Science?

The pessimist sees difficulty in every opportunity. The optimist see the opportunity in every difficulty. -Winston Churchill

The Business artist is the entrepreneur. A definition:

The art of business requires the intuitive ability to grasp the essence of a unique market situation, the creative ability to devise a practical solution, and the strength of purpose and skill to execute the act.

Entrepreneurship is a highly intuitive and creative way of thinking critically Talent hits a target no one else can hit; Genius hits a target no one else can see. - Anonymous

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Creative Thinking
What Makes Entrepreneurs Entrepreneurial?

Entrepreneurs: Who they are traits, tastes, abilities, interests What they know - education, training, experience, expertise Who they know social and professional networks Who knows them - reputation

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Creative Thinking
What Makes Entrepreneurs Entrepreneurial?
Saras D. Sarasvathy

Entrepreneurs start with

Imagining what they can do with their means Some sense of what they want to do Whats closest at hand

Move almost directly into action without elaborate planning

Live and breathe execution exploring and learning

through experience as they react and change Eventually, emerging effects coalesce into clearly achievable and desirable goals

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Creative Thinking
What Makes Entrepreneurs Entrepreneurial?
Saras D. Sarasvathy

Innovation is the tool of the entrepreneur

Systematic innovation is to strategy as R&D is to invention - Drucker

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Critical Thinking
What tends to Inhibit Critical Thinking? Loss of objectivity.

Over optimism. Biased analysis/Agenda/Ideology. Escalating commitment. Stops analyzing, starts selling. Attitudes

Lack of expertise and relevant experience.

Well intentioned incompetence

Blind spots

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Why Do Successful Companies Fail?

Buddha What we think is what we become

Collins

and the Ancients:

Success or Arte: A reinforcing cycle of excellence and

ambition Hubris: Excessive pride, arrogance born of success, leads to overreaching Denial or Ate: Isolation from reason Denial or Nemesis: desperate self destruction

Strategic Intuition
Strategic Intuition:
What

is the distinction between analysis (the Jomini model) and intuition (the von Clausewitz model)? Describe how ones personal experiences sets the stage for strategic intuitive thinking. What does presence of mind mean? Have you ever had a flash of insight? If so, describe it. Summarize the Gates and Allen story about the start-up of Microsoft as it illustrates Duggans view of strategic intuition.

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Why Do Successful Companies Fail?

How the Mighty Fall: Jim Collins

Hubris born of Success : Excessive pride, arrogance born of success Undisciplined Pursuit of More: Overreaching capabilities and infrastructure Denial: Isolation from reason and the brutal facts Grasping for Salvation: Desperate self destruction Capitulation to Irrelevance or Death: Unable to rebound from significant set backs

Why Do Successful Companies Fail?

Know your limits
Never exceed your limits. You push the envelope, and you live for those moments when you are right on the edge, but you dont go overYou have to know your strengths and limitations and live within your means.The sooner a company tries to be what it is not, the sooner it tries to have it all, the sooner it will die.
Yvon Ghouinard, founder of Patagonia Let my people go surfing p74
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