Day / May 19, 2008

by Roger Dennis

HBR – excellent article on strategy as a complex problem

Over at HBR, there’s a great article entitled “Strategy as a wicked problem.” This month (May) is a good time to read it, because HBR has a limited time offer of free access this month.

The summary reads:


Many corporations […] have replaced the annual top-down planning ritual, based on macroeconomic forecasts, with more sophisticated processes. They crunch vast amounts of consumer data, hold planning sessions frequently, and use techniques such as competency modeling and real-options analysis to develop strategy. This type of approach is an improvement because it is customer- and capability-focused and enables companies to modify their strategies quickly, but it still misses the mark a lot of the time. Companies tend to ignore one complication along the way: They can’t develop models of the increasingly complex environment in which they operate. As a result, contemporary strategic-planning processes don’t help enterprises cope with the big problems they face. Several CEOs admit that they are confronted with issues that cannot be resolved merely by gathering additional data, defining issues more clearly, or breaking them down into small problems. Their planning techniques don’t generate fresh ideas, and implementing the solutions those processes come up with is fraught with political peril. That’s because, […] many strategy issues aren’t just tough or persistent—they’re “wicked.”

The article goes on to explore the characteristics of a wicked problem, and how complexity is one of the key definers.

It also reinforces the need for constant scanning:

Companies must constantly scan the environment for weak signals rather than conduct periodic analyses of the business landscape. (See, for example, George S. Day and Paul J.H. Schoemaker, “Scanning the Periphery,” HBR November 2005.) It’s increasingly difficult to identify the boundaries of the arenas companies should watch. Changes in one industry or segment often affect companies in others. For instance, who could have imagined that changes brought about by the computer industry and the internet would affect the music industry so radically? Businesses should scan sources of regulatory and technological change in addition to monitoring suppliers, competitors, potential entrants, and customers all over the world.

Increasingly a lot of the work I am doing encompasses not only strategic innovation, but innovative ways of developing strategy. For example during a three day health sector strategy event last year for a multi-billion dollar organisation , I had the attendees examine a massive diversity of learning – from complex marine ecosystems to award winning hotels.

The resulting strategy map – one of the key outputs – delivered an entirely new level of understanding about the future direction of the organisation and the path it needed to take.

It’s interesting to see this sort of different approach to strategy development make it into HBR.

by Roger Dennis

Replies to comments on my Sydney presentation

On the Twitter stream during Interesting South last week, there were a couple of comments which I would like to reply to. While I’d much prefer to debate points of view in person, there was no time in the conference format for a Q&A session.  Secondly the people that made the comments didn’t come and chat during the breaks so I thought I’d answer them here to start an online conversation instead.

Firstly, Mark Pesce remarked on Twitter that I gave “the standard creative destruction talk. And no Marc did not invent the browser.”

In response:

  1. I agree that my presentation is in line with the underlying tenant of creative destruction.  However my point is that increasingly the innovations that lead to industry disruption do not come from within corporations – they come from people on the fringes.  And as organisations become increasingly digitalised they are more and more susceptible to being blindsided by one person working on their own, hence the examples I presented of Shawn Fanning (Napster) and Marc Andressen (the web browser)
  2. This leads me to Marks second point about who invented the web browser. When I refer to Marc Andressen as the inventor of the web browser, I am referring to the browser as we know it today.  This means that it has integrated graphics and text. There were text browsers around prior to Mosiac, but I’d argue that for the vast majority of people a web browser minus graphics isn’t a web browser at all.  I have been online since the early 90s, and I clearly recall downloading and running the first version of Mosaic. It was revolutionary. The fine details of this point could be debated for a long time, but for clarity see the Wikipedia entry.

Secondly Adrian Farouk commented “how on earth does roger know that there is a strain of corn that can sweat oil?? What books does he read?”

Apologies if you missed my commentary around this statement Adrian, but this did not come from a book.  It was a statement of fact by the Chief Scientific Officer of one of the worlds largest agricultural biotechnology companies.

The statement was made during a Shell Technology Futures session and as we run these events under Chatham House rule, I cannot give you his name or company.

Given that he runs a global team of a few hundred people whose scientific qualifications read like eye charts, I have a tendancy to belive that he’s quite credible when he talks about corn that sweats oil.

But Adrian is right about one thing –  you won’t read about this in any books.  Not yet anyway.