What it looks like when you come up with a diagnosis that is necessary for strategy.
Originally published 24 August 2023, last updated 24 August 2023.
Cedric, do you know Wardley Maps? It might be a part of an answer for your thinking.
Iâve heard a lot about Wardley maps, and I actually have Simon Wardleyâs book loaded into my iPad ⌠but I havenât started. Could you say more about how it might help? Thanks in advance!
Whole purpose of wardley mapping is to increase situational awareness = talk about shape of the game with your colleagues.
I would NOT start with the book (its great⌠ok maybe start with first five chapters) but with https://learnwardleymapping.com/ or maybe Pragmatic Wardley Mapping | Learn Wardley Mapping
I like the distinction you make that the diagnosis or insight allows you to focus by discarding things that seem important but arenât relevant to the situation/strategy. Thatâs also what I liked about Rumeltâs description of strategy - I always had a knack for seeing the essential issue and couldnât describe what I did until I read that book. Ironically, I could also be described well by your aside at the end as somebody who talks loftily about strategy as a junior person without the necessary credibility on the subject, at least until my Google chief of staff experience.
As an executive coach, Iâll also point out that leaders need that personal clarity to understand the shape of their game. Thereâs no one right way to be a leader, and until people understand their strengths and weaknesses, they canât shape their leadership to be most effective. This is why Jerry Colonna, the coach known as the âCEO Whispererâ, starts with radical self-inquiry. Until you understand your own game, you canât know where to focus your attention and efforts as a leader.
Iâm a big fan of the Wardley mapping concepts. Havenât convinced anyone at my orgs to use it but they are good for my own situational awareness building as @janrezac describes.
Found a good example of a wardley mapping process after a google image search.
Iâve studied quite a bit of Wardley Maps and he does talk a lot about the concept of âgameplayâ and explains how many industries for in this giant map. The idea is that you first draw the map and then you figure out what plays to make.
I donât think it maps to what Cedric is talking about. There may however be a set of tools Iâve been exploring from Goldrattâs theory of constraints. Rumelt is correct in his analysis of what a good strategy looks like (diagnosis, policy, action) but he never gets into the weeds of figuring out how to get there. Heâs on the outside looking in.
This is where TOC comes in. By using the current reality tree and connecting the various problems (aka undesirable effects in TOC) through cause and effect linkages, you can often find the root cause. Iâve yet to get there, but I hope to see it first hand.
The Shape of the Game should tell you what to ignore
TOC is exactly about finding the root cause of the problems and when you do, you ignore everything else until you break the constraint.
I recommend his book Itâs Not Luck for this.
+1 to Goldrattâs TOC and Itâs Not Luck (itâs technically a sequel to The Goal, but it talks about its own things so it doesnât really matter).
Another area to study examples of finding âthe shape of the gameâ is in the economic policy decisions of developing countries. Noah Smith has a great series analyzing strategies of various developing countries from an economistâs perspective: The Developing Country Industrialization series
Iâve also been slow reading From Third World to First which tells the story of Singaporeâs development and itâs super fun and insightful. Countries canât always be cleanly mapped to businesses, but Iâve found they they do in my case nowadays, though I didnât find it as useful when I was a freelancer since my freelance business had too little âsurface areaâ to apply most concepts.
But as far as developing strategy, Iâve always internally thought of it as âmacro negotiationâ. This might be totally wrong, I donât have sophisticated vocabulary for it, but itâs the furthest Iâve been able to articulate what otherwise is just a gut feeling.
Best way I can explain is that an old mentor of mine once told me some quote he heard saying that negotiation is about âtrading things of unequal valueâ. So for an example of how Iâd use this: When selling freelance services, if a client thought my price was too high, I wouldnât just split the difference on price. Everything would have to be some sort of trade. Instead, I might lower my price in exchange for a higher minimum commitment (like promising X months minimum) or I might actually raise my prices further but give some sort of guarantee of results or their money back.
So making a deal was about a) figuring out what a clientâs real issue was, going deeper than âtoo expensiveâ, and b) knowing what levers I could pull in order to align tradeoffs in a way that didnât depress my value. Because I was good at sniffing out what a clientâs true objections were and understood all the many levers at my disposal, I could make creative offers that maintained my value. This would of course be decided on a client to client basis â scaling up to an agency meant picking a single ânegotiation loadoutâ and having it as my default, rather than having a bespoke deal for every individual client.
On a larger scale, Iâve sort of seen strategy for non-service companies as being a matter of reaching âtradeoff alignmentâ the market. Something like⌠positioning with velocity, but I donât know if that makes any sense outside of my own head.
Reading the stories of developing countries (both successful and unsuccessful) has a lot of examples of this. Generally, Imports = what a country decides to ignore, and exports = the activities they choose to focus on. I find these more interesting than business case studies sometimes just because the zoomed out nature seems to put a much greater emphasis on finding natural patterns by default.
A few thoughts that might further contribute to fleshing this out:
" Strong narratability has a particular effect on the as above, so below coupling between macro and micro. It allows us to correctly attribute certain features in our lives to broad macro circumstances, and other features to individual, micro circumstances.
Narrative technologies achieve useful separations of concerns because they encode coherent assumptions about the nature of reality and human agency relative to contemporary states of knowledge. So they are satisfying when used for sense-making contemporary realities and deciding what to do.
If we bring these bits together, is it oversimplifying to say that the following approach might be useful?
Whatâs missing?
ETA: Explicitly noting constraints as @SAY points out.
I think this is missing something on resources and resource constraints. Otherwise, you end up with a giant list of all the things you can possibly do with no focus or prioritization.
Good point - knowing your constraints is absolutely crucial (big fan of TOC as well). This should be an explicit part of the diagnosis and is part of describing what you control vs influence vs are subject to, but it is often ignored enough that it is worth making explicit.
The core is to have an accurate model of how your customers make purchasing decisions. Business is selling something to someone. In order to understand your priorities and what to ignore you must be able to understand the factors for your customers to actually buy.
Dell and Walker: They understood that their customers didnât mind purchasing computers without seeing them as long as they were confident that they are covered if anything goes wrong with the machines.
Jobs: He understood that in consumer electronics people will adopt a new product category if the product is high enough quality, regardless of existing market distributions. Also that people will pay a premium for this quality so less volume is needed if you sell at a higher margin.
Knowing the game youâre playing means picking the customers where you know why they purchase and making sure you serve them in the ways they care about.
A business who knows why their customers buy will be able to sell them and will be able to keep bringing money in, but without that it would be incredibly difficult to sustain business. This is not to say building this understanding is easy and probably requires taking action to evaluate your customers demonstrated behaviors, as asking them will probably give you an inaccurate model because they may not be able to give their true decision making process even if they wanted to.
Thereâs a surprisingly good throwaway paragraph in Capital Returns: Investing Through the Capital Cycle (emphasis mine):
When it comes to discussing a companyâs strategy, it is alarming how frequently one finds managers confused on the topic. Too often, the CEO mistakes a short-term target â say an earnings per share target or a return on capital threshold â with a strategy. âOur strategy is to deliver a 15 per cent return on capital,â they say. Real strategy, whether military or commercial, involves an assessment of the position one finds oneself in, the threats one faces, how one plans to overcome them, and how opponents might in turn respond. During his tenure at General Electric, Jack Welch required managers of GEâs divisions to prepare a few simple slides describing their operating environment in terms of: what does your global competitive environment look like? In the last three years, what have your competitors done to alter the competitive landscape? In the same period, what have you done to them? How might they attack you in the future? What are your plans to leapfrog them?
Two thoughts:
Those questions seem like a subset of Porterâs Five Forces strategy model, where you look at existing competitors, customers, suppliers, substitutes and new entrants. And, of course, the standard SWOT (strengths, weaknesses, opportunities, threats) model can also provide the insights that provide the foundation of a strategy. Regardless of what strategy model you start with, I think the key is looking for âHow can things be different than what they are today?â Without a clear vision of the future you are trying to create (or avoid), itâs hard to come up with a coherent set of actions to make it happen.
Hi @cedric , about a year ago we discussed âGood Strategy, Bad Strategyâ briefly on Twitter. I may have slightly warmed you to the book, though I was unable to be as precise in my reasons as you needed.
You talk in this post about Rumeltâs one good idea, but that itâs still a bad book. A bad book because it doesnât describe how to come up with a strategy.
I would quibble and say itâs four-ish good ideas and some useful cases, but that even one good idea can make a book worthwhile.
The good ideas that Rumelt unpacks, and which the cases help bring to life, are:
Design is the key word there. Design being about taste and feeling developed over time and much exposure to the domain and its occupants. You do talk about developing strategies through experience, over time, and ultimately by feeling. I think thatâs maybe the way it has to be, at least for the good strategies.
The book helped me improve my feel for things that are strategic and non-strategic, though I am only really confident about the shape of the very specialized game that I work in. (For closely related fields, I can make some passable judgements, but for fields outside of that, I can only really identify some bad strategies. Not come up with anything good myself.)
Despite exposure to quite a few strategy consultants, Iâve never encountered an external company that could do much more than make business school-level recommendations. I believe they exist, maybe mostly in the form of extremely experienced and expensive individuals. I suspect that Rumelt would be good at tackling various kinds of problems through consulting, though he hasnât described an exact recipe for doing so. (His more recent book, The Crux, does get closer but itâs still not what youâd be looking for ideally.)
There are a couple of good frameworks recommended in this thread. I do like Theory of Constraints, and Iâve had various exposures to Wardley Maps though they never quite gelled with me. Also, I suppose Iâm not alone in having done my own ad-hoc mapping and visualization to tease out certain aspects of strategy for a product. I read your summary of the 7 Powers, and they certainly seem comprehensive. I believe that each of these frameworks can help prime people towards strategic thinking, at least if combined with a lot of real-life or highly realistic cases to reflect on.
But it sounds like youâre looking for something that will reliably get people to a truly effective strategy. I think that such recipes are more likely to get you âoperational hygieneâ than to arrive at the kinds of breakthrough strategic designs that Rumelt talks about, and that seem to work best when a business is up against big challenges. In my opinion, there is no recipe for that.
And so because I have low expectations in that regard, I do think the book is useful in helping to recognize things that might or might not be strategic. At least as a lens with which to evaluate real-life cases.
What I donât like about Rumelt is the same thing I donât like about many books produced by academics.
The output of their analysis is usually the properties / attributes of the thing they study which they then try to coax into a âhow toâ The problem with this approach is that you expect an algorithm for searching but instead you get filtering criteria.
The algorithm then usually is âgenerate ideas however you do it then filter by these criteria Iâve discoveredâ
I see the parallel to those typical business-books-by-academics. âThe Cruxâ is better for how-to information but ultimately this isnât really what Rumeltâs about, indeed! He describes, post-hoc, things that have worked strategically.
Still, I donât feel he fits the typical academic mould. Some of the best bits of his two books come either from his consulting examples, (data-driven or gut-feel), or his engineering background (the moon lander example). From that engineering background, the concept of âdesignâ is crucial. He sees strategy as design, and you wonât find many great designers (of any kind) providing formulaic how-tos. They tend to be maddenly vague about how design insights actually come about. Yes, thereâs lots of listening, lots of data collection, quant and qual, lots of testing and trying things out. But ultimately there is some kind of creative jump that happens that evades bottling.
I donât think itâs quite as you put it though â âgenerate ideas however you do it then filter by these criteriaâ. At least, the filters are useful enough to guide the generation of the ideas themselves. But Rumeltâs books so far are not the place to go for rigour or a pre-set process. Because ultimately that is not how he defines strategy anyway! We could say heâs wrong of course. But I think he is internally consistent.
And I do feel Good Strategy, Bad Strategy helped me towards a few plans/initiatives/directions that worked out well, though mostly in that sense of knowing I was on the right track, not setting me in the right direction in the first place.
This reminds me of a section from Zen and the Art of Motorcycle Maintenance by Robert Pirsig, where he delves into the scientific method and starts to question where hypotheses come from. Once you have a hypothesis, you test it and learn but how do you start? And itâs undefined. Itâs creative. It comes from your brain making connections based on your experiences, but it seems facile to say âgo have more experiences to become a scientist who can create better hypothesesâ.
So, while you seem to mean it as a critique to âgenerate ideas however you do itâ, I think itâs actually an astute observation. Ideas that can be generated algorithmically are probably not creative or disruptive; they generally come from somebodyâs personal experience colliding with a problem they are facing (e.g. Steve Jobsâs calligraphy class leading to the Mac being the preferred computers for designers).
Filters to evaluate ideas is helpful because most people donât even know how to do that, which is why there are so many bad strategies out there. Weeding out bad strategies is I think the point of Rumeltâs book, more so than telling you how to create good strategies, and that alone is a great service.
For what itâs worth, I reread whole chunks of Good Strategy, Bad Strategy when writing this essay (with the thought that perhaps I should summarise it, so I never have to revisit it again) and I still canât bring myself to recommend the book â at least beyond the kernel.
@joepairman, I take your point about not being able to come up with a formula for strategy, but I disagree strongly that you canât come up with useful guideposts during the generative process. As a writer, I constantly struggle to provide guideposts, even for a non deterministic process (like in this essay!) â so I know itâs possible. Itâs just hard.
(Fwiw, what youâve said about the book being helpful to you has been weighing on my mind, so itâs not as if Iâve forgotten! Iâm at least more open to the possibility of the book being useful, more, at least, than I was a year ago.)
That said, I continue to take issue with Rumeltâs desire to generalise strategy around both military and business domains. He might think it makes his theories more powerful, because generality is power, but I also think it makes it less useful.
And, finally, Iâve been thinking about @mgoodrumâs review of the book on Goodreads â in which he says
The dealbreaker for me: I could not find a framework for judging the quality of a strategy beforehand, or any guidance on how to choose between competing strategies. The discussion of the âkernelâ was good insofar as it made clear what strategy is, but it went no further.
