Lou Gerstner once famously said that the last thing IBM needed at the moment was another strategy. So what is the point of strategy?
Lou Gerstner was a strategist. He fundamentally changed IBM’s strategy from product-focused to services-focused. But when he did that, he didn’t want anybody messing with his strategy, so that is why he said that. His turnaround of IBM illustrates exactly the point of strategy. No strategy lasts forever. When yours runs completely out of steam, you better stop ‘executing’ and get thinking about strategy.
In what ways is the future of strategy going to be different? How are leading companies changing their approaches to planning?
The wording of your question provides a window into the change that, I think, is coming in strategy. You use the words strategy and planning interchangeably. That is an important conflation that currently bedevils the practice of strategy. A strategy is an integrated set of choices that positions a firm in its industry with a competitive advantage that allows it to sustainably serve its customers better than its rivals. A plan is a document that describes the array of initiatives that the company intends to pursue in a specified timeframe.
The vast majority of companies engage in planning and not strategy. Planning as a complement to strategy is powerful. Planning as a substitute for strategy is largely worthless. Companies are slowly but surely figuring this out, and will engage in more strategy going forward. Leading companies such as P&G, Steelcase and Lego have figured out this distinction and are acting on it.
Share your views on what are the myths of strategy, and particularly what isn’t a good strategy?
The biggest myth is that a mission/vision statement is strategy. Most missions/visions aren’t worth the paper they are written on because there is not an integrated set of choices that brings that statement to life — as opposed to remaining a slogan. The next biggest myth is that strategy is an analytical or scientific exercise, and that to be a strategist, you have to be a first-class number-cruncher. Strategy is as much an art as a science and the best strategists are driven as much by imagination as by analysis. Good strategy is not reflected in long documents. If your strategy can’t be fully explained in less than five pages, it, probably, is not a strategy worth having. And one page is even better than five.
Most companies today have innovation envy. They yearn to come up with a game-changing innovation like Apple’s iPod, or create an entirely new category like Facebook. Many make genuine efforts to be innovative — they spend on R&D, bring in creative designers, hire innovation consultants. But they get disappointing results. Why?
It is because they do not recognise that no new idea in the history of the world was proven in advance analytically. So when new ideas come forward they say: “That idea sounds really promising. If you can just flesh out your analysis and prove that we have a winner here, we will launch your idea.” The executive mouthing those words does not realise that he/she just killed the idea; but he/she did. The only way ‘to prove’ that an innovative idea is a good one is to try it in the marketplace. Most companies are terrified to do that; so they can’t innovate.
You are one of the most prominent advocates for what ‘’design thinking’’ has to offer to business management. What is the essence of “design thinking”? How does it lead to better innovation?
Design thinking is the productive combination of inductive and deductive logic (the two foundations of analytical thought) with abductive logic, which is the form of thinking that imagines possibilities that do not currently exist. In this way, design thinking balances: analysis and intuition; exploitation of the current with exploration of the new; and the need for reliability (a consistent, replicable outcome) with the desire for validity (an outcome that we really want).
How can you tell when an organisation is practicing design thinking? Does this take a particular talent, or can you get there through processes and practices?
You can tell that an organisation is practicing design thinking when it banishes the admonition “prove it” from its innovation vocabulary. Design thinking takes a mindset and practice as opposed to a god-given talent. Just as we are made to practise deductive and inductive logic over and over in all sorts of contexts throughout our formal educational life, we need to practise our abductive logic outside the classroom. That means looking at the world around us and using that data to imagine what might be. No one is good at that without practice.
How does design thinking apply to larger systems, like corporations and societies? Where do you see design thinking going next?
Design thinking is simply the more thorough use of the entire array of our native thinking capacities. So it can and should be used across all organisations and societies. I believe that it isn’t used broadly because of the current fetish of scientific thinking as the solution to all problems. Even the world’s first scientist, Aristotle, argued for the limits of applicability of scientific to all forms of problems. But science is in the ascendency, so problems for which inductive and deductive logic alone is not the solution are still addressed solely by those forms of logic. It is sad, but true.
One of the longest running quests in the management field is the search for the ‘essence’ of outstanding leadership. For you, this quest led to ‘integrative thinking’. Can you illustrate how an integrative thinker’s approach differs from that of a conventional thinker?
The conventional approach to managerial problem-solving is to choose from among existing options even if no existing option is particularly wonderful or elegant. In particular, this is the case when a manager faces two (or more) conflicting options. They tend to think that their job is to ‘make the tough choice’ because ‘the buck stops here’.
When facing conflicting options, integrative thinking managers see their job as not choosing from among or between conflicting, unsatisfying options. Instead, they see their job as developing a creative resolution of the tension — a new model that contains elements of the existing models, but is superior to both. When Bob Young, the billionaire builder of Red Hat Software looked at the choice between proprietary software (for instance, Microsoft Windows 95 at the time) and ‘free software’ (for instance, Slackware Linux), he found both unsatisfactory. Proprietary software didn’t give the customers the capacity to customise their software. ‘Free software’ in its then current form was never going to grow out of the hacker community or enable the building of a profitable business.
Instead of choosing, he innovated an entirely new model. Rather than sell shrink-wrapped software compilations on disks through mail-order catalogues, he made Red Hat downloadable and offered it for free. That made Red Hat the dominant Linux product, which enabled him to earn revenues providing software management services to big corporate clients. That was integrative thinking.
You have written what makes leaders successful is that they think with their ‘opposable minds’. Why do you see this as important?
It is important because it creates new possibilities for the world. Without that integrative thought, Linux would still be a fringe product. Choosing from among unsatisfactory options just perpetuates a dreary status quo. Integrative thinking creates a more exciting and fulfilling future.