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Constantinos Markides contends that the essence of business strategy is to allow a company to create and exploit a unique strategic position in its industry. To do so, the company must make clear and explicit choices based on the answers to three difficult questions: Who should I target as customers? What products or services should I offer them? How should I do this in an efficient way? Any company engaged in strategy making must raise these questions, identify possible answers, and then choose what to do and ...
Constantinos Markides contends that the essence of business strategy is to allow a company to create and exploit a unique strategic position in its industry. To do so, the company must make clear and explicit choices based on the answers to three difficult questions: Who should I target as customers? What products or services should I offer them? How should I do this in an efficient way? Any company engaged in strategy making must raise these questions, identify possible answers, and then choose what to do and what not to do. The objective should be to come up with ideas that differentiate the firm from its competitors - and thus stake out a unique strategic position. In "All the Right Moves", a highly practical handbook on the fundamentals of strategy, Markides helps managers zero in on the critical choices that lie at the heart of all innovative strategies. More important, Markides argues that even the best of strategies have a limited life. It is not enough to develop a unique strategic position or to improve the existing one. Companies must continually create and colonize new strategic positions, a difficult if not impossible task for many established firms. Markides explains how to overcome the obstacles to innovation so that even well-established companies can innovate by breaking the rules of the game. "All the Right Moves" reveals how creative thinking leads to strategic innovation - the 'breakthroughs' that separate winning strategists from also-rans. Markides approaches strategic thinking as a creative process in which examining an issue from a variety of angles often proves more productive than merely gathering data, and experimenting with new ideas can be more effective than conducting much scientific analysis. He poses key questions for readers to ask as he guides them through a step-by-step framework for developing their strategic thinking skills. In a refreshingly clear and practical approach, "All the Right Moves" offers concrete advice for thinking through the tough choices that all business strategists must face. It distills the important elements of strategy into an easy-to-follow system for crafting today's -and tomorrow's- breakthrough business strategies.
At the end of the exercise, I went around the room and asked each student to tell me how many times they had been successful. Most replied two or three times. But a couple of students said a hundred times. This was greeted with loud laughter, as most students asked: "How is it possible to push your opponent's hand down one hundred times in just thirty seconds?" The students' assumption was that these two must have made a mistake. But there was no mistake. When asked how they did it, the two students explained that instead of competing, they had chosen to cooperate by offering no resistance to each other's pushing.
These students were the winners because they adopted a strategy of cooperation while everyone else was trying to compete their way toward the objective. The lesson here is not that cooperation always wins out over competition. That result is just a function of this particular game. Rather, the point is that so many of the participants overlooked such an "obvious" solution to the problem. The notion that they could cooperate to achieve their objective never even crossed their minds.' What can explain such a phenomenon? What is it that oftenseems to make people overlook the obvious?
Managing Mental Models
What makes us think "in a box" and miss the obvious is our mental models of how the world should work. A mental model is nothing more than a belief about any issue-whether it involves our family or our business or the world as a whole. Thus, when someone says, "I think everybody should go to church on Sunday," that person is simply expressing his or her mental model of the subject-that is, whether going to church is good or bad. The term mental model occurs in business literature under many guises. A recent survey of the academic literature alone identified eighty-one words-such as managerial frames, mindsets, sacred cows, blind spots, paradigms, assumptions, templates, cognitive maps, managerial lenses, and so on (see Exhibit 2-1)-that have been used to describe the same thing.
As individuals, we develop mental models over time, primarily through education and experience. Similarly, organizations develop mental models that are manifested in their culture, routines, and unwritten rules of behavior. Thus, we hear statements such as "This is how we do business in this industry" or "We never cut the price of our products," which are nothing more than the expression of that organization's mental models. Organizational mental models are also developed over time, primarily through company training programs, word of mouth, and experience.
What makes mental models interesting is their ability to shape our behavior. They do this by acting as "filters" through which all incoming information passes. Whatever we "see" or "hear" passes through these filters. Since we all have different filters, it is not unusual for two people to hear the same thing or see the same picture and yet interpret what they've heard or seen differently. Since it is the interpretation of the data that leads to behavior, people will behave differently even if they share the "same" information.
For example, in the arm-wrestling exercise above, all of my students were given identical instructions. But the words arm wrestling, winner, and opponent were interpreted differently by the various individuals, based on their particular mental models. For most, even the mention of words such as winner and opponent creates images of fighting and competition. From this "mental imaging" flows behavior. Most try to compete without even considering the strategy of cooperation as an option.
Mental models are important because they condition behavior. The behavior of every individual is conditioned by his or her mental model of the world. Similarly, the behavior of every organization is conditioned by its dominant mental model(s).
How Mental Models Condition Behavior
Mental models can be immensely helpful because they allow us to process information and make decisions quickly. For example, if you strongly believe that it is your moral duty to fight for your country if another country attacks, you will not spend too much time mulling over the question "Should I fight for my country?" Nor will you need to undertake an elaborate cost-benefit analysis to decide whether or not to fight. You will do it simply because you strongly believe that it is the right thing to do. Your behavior is thus governed by your mental model, which says: "It is the duty of every citizen to fight for and protect his or her country."
With mental models, there is no "right" or "wrong." Nobody can claim that his or her beliefs or values are superior to yours. However, mental models can create problems, for the following two reasons:
1. Mental models allow us to think "passively"-or perhaps not at all. This is what leads us to overlook the obvious. As an example of this problem, consider the following exercise. If you count between 1 and 100, how many times will you find a number that has a 9 in it? Please take thirty seconds to think through this problem before reading any further.
When I try this exercise with my students, more than 75 percent of them come back with the answer "Ten times." When I ask for a listing of these ten numbers, a volunteer says: "9, 19, 29, 39, and so on." From the moment you say "and so on," your mind has switched from active to passive thinking. That is because you have identified the "pattern"; you know what the answer is, so why spend more time considering it? It is this kind of passive thinking that prevents most people from "seeing" the other nine possibilities: 90, 91, 92, 93, 94, 95, 96, 97, 98. The correct answer is nineteen times. It seems so obvious, yet most people overlook it.
2. The second reason why strong mental models can be problematic is the fact that human beings tend to reject new information that contradicts what they already believe. If we have very strong mental models, we tend to hear or see whatever supports our existing beliefs and ways of operating. Any new information that does not support our beliefs is generally discarded as wrong or irrelevant. This is the number one killer of innovation in companies.
Thus, strong mental models make us think passively and keep us from adopting, or even considering, new ideas. As a final demonstration of the negative effects of strong mental models, try this exercise.
I have in mind an English word that has four letters. It's missing the first letter, but I know that it ends with the letters -any. Can you think of a word that fits this description? When given this task, most people come up very quickly with the answer many-in other words, the missing letter is m. But now consider this problem: Same principle. I have in my mind an English word that's missing the first letter but ends with -eny. Can you think of a word now? Please take thirty seconds to come up with one before reading further.
Most people cannot think of a word. They go through the alphabet, putting individual letters in front of the eny, trying to create a word they recognize. Most fail. Imagine their surprise when a volunteer shouts the answer: deny. Most people miss this obvious answer because they search for words that have the same vowel sound that's in many. The first answer in this exercise has biased our thinking and forced us to think in a very narrow way. But now think of this implication: If one word is enough to bias our thinking in such a way, imagine what twenty or thirty years in a given business can do...
|1||Put Innovation Back into Strategy||1|
|Pt. I||How to Create a Unique Strategic Position|
|2||Decide What Your Business Is||27|
|3||Decide Who Your Customers Are and What to Offer Them||49|
|4||Decide How You Will Play the Game||81|
|5||Identify and Secure Strategic Assets and Capabilities||113|
|6||Create the Right Organizational Environment||129|
|7||Develop a Superior Strategic Position||147|
|Pt. II||How to Prepare for Strategic Innovation|
|8||Understand How New Strategic Positions Develop||169|
|9||Evaluate and Respond to Strategic Innovation||179|
|10||Take a Dynamic View of Strategy||193|
|About the Author||219|
Posted January 28, 2005
Markides is a professor at the London Business School. The basic idea in this excellent strategy book is as follows: STRATEGIC POSITIONING is simply the sum of a company's answers to three questions: > WHO should I target as customers? > WHAT products or services should I offer them? > HOW can I best deliver these products and services to these customers? Strategy is all about making tough choices in these three dimensions (who, what, and how). Remember that deciding what NOT to do is just as important as deciding what to do... The next issue is then to construct the appropriate organizational environment that will support the choices made. Also in this area, Markides contributes with a refreshingly clear and practical approach. Markides argues that even the best of strategies will only have a limited life. Thus, companies must continually evaluate their performance and position in order to be able to quickly create and colonize new strategic positions. Strategy is a dynamic concept - not static. A very practical approach to innovate strategic thinking is to keep starting the process at different points: who/what/how, who/how/what, what/who/how, what/how/who, how/what/who, how/what/who, and finally how/who/what. Thus, The marketing philosophy always starts externally at the customer (who?) and works backwards towards solutions (what?), and finally adapts the firm's delivery system (how?). But a strong trend during the last decade has been on the internal perspective on core competences, such as procurement or production. This method means that we start with own unique capabilities in the delivery system (how?), which then is translated into solutions (what?) and finally customers (who?). Radical innovation often is created this way, e.g. the 'walkman'. In practice of business development, we usually have to work in both directions. This book is not a dry academic's dusty words. Markides uses a wealth of case stories on strategic positions. Being a Dane, I find it very nice indeed that the companies cited often are of European origin. Nirmalya Kumar's brilliant book 'Marketing as Strategy' (2004) expands on Markides' ideas in this book. They both are indebted to professor Derek Abell for the original concept presented in the landmark strategy book: 'Defining the business' (1980). Peter Leerskov, MSc in International Business (Marketing & Management) and Graduate Diploma in E-businessWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.