Chain-Link Systems

If a chain must not fail, there is not point in strengthening only some of the links.

A system has a chain-link logic when its performance is limited by its weakest sub unit, or "link."  Where there is a weak link, a chain is not made stronger by strengthening the other links. 

For the space shuttle Challenger, the weakest link was a solid rubber O-ring.   On January 28, 1986, the O-ring in Challenger's booster engine failed.  Hot gas knifed through the structure; the rocket exploded.  Challenger and its crew, the "pride of our nation" President Reagan called them, tumbled out of the clear blue sky and shattered on the ocean sixty-five thousand feet below.

If a chain must not fail, there is not point in strengthening only some of the links.  Similarly, for Challenger, there could be no gain to making the booster engines stronger if the O-ring was weak.  There was little point in improving guidance, or communications, or increasing the quality of crew training, if the O-ring was weak.  

ACTION POINT: The logic of the chain is at work in situations ranging from mountain climbing to the space shuttle to aesthetic judgement--situations in which the quality of components or sub parts matters.

Hierarchies of Objectives III

This presents the skills of coordination as if they were rungs on a ladder, with higher rungs in reach only when lower rungs had been attained.

To concentrate on an objective--to make it a priority--necessarily assumes that many other important things will be take care of.  In the case of PJ, he was able to concentrate on the coordination between his helicopter and landing on a rescue vessel at sea because he already possessed layer upon layer of competences at flying that had become routine.

This presents the skills of coordination as if they were rungs on a ladder, with higher rungs in reach only when lower rungs had been attained.  Indeed, PJ's concept of layering of skills explains why some organizations can concentrate on issues that others cannot.  

ACTION POINT: Master the basics of "flying" your business and then pursue higher rungs.

Hierarchies of Objectives II

The obvious reason is differences in skills and accumulated resources.

What is proximate for one nation, one organizations, or even one person may be far out of reach to another.  The obvious reason is differences in skills and accumulated resources.  An understanding of this is sharpened from an illustration discussing helicopters.

PJ lives on the East Cape of Baja California.  He is now a surfer and a fisherman, but was once a helicopter pilot, first in Vietnam, and then in rescue work. The land in Baja California is unspoiled by shopping malls, industry, paved highways, or fences.  One day in a conversation PJ was asked if helicopters were safer than airplanes, since if the engine failed, a helicopter could be auto rotated to the ground, like having a parachute.

PJ snorted "If your engine fails you have to pull the collective all the way down, get off the left pedal and hit the right pedal hard to get some torque,  You have about one second to do this before you are dropping too fast."  He paused, "You can do it , but you better not have to think about it."

He continued, "To fly a helicopter you've got to constantly coordinate the controls: the collective, the cyclic, and the pedals, not to mention the throttle.  It is not easy to learn, but you've got to get on top of it.  You've got to make it automatic if you're going to do more than just take off and land.  After you can fly, then  you can learn to fly at night--but not before!  After you can fly at night with ease, maybe then  you're ready to learn to fly in formation, and then in combat."  "Master all that--make it automatic--and you can begin to think about landing on a mountain in high wind in the late evening, or landing on a rolling, pitching deck deck of a ship at sea."

ACTION POINT: Sharpen key skills and take advantage of accumulated resources to make them automatic so that larger objectives can be pursued.

Hierarchies of Objectives

Proximate objectives not only cascade down hierarchies; they cascade in time.

In organizations of any size, high-level proximate objectives create goals or lower-level units, which, in turn, create their own proximate objectives, and so on, in a cascade of problem solving at finer and finer levels of detail.

Proximate objectives not only cascade down hierarchies; they cascade in time.  For instance, when Nestle purchased British chocolate company Rowntree, top management made a judgement that Nestle's transnational food-marketing skills would be able to take Rowntree's Britain-centered brands and move them into many other countries.  The first steps in that directions were very successful, and the combined management's then developed more subtle and nuanced objectives.

ACTION POINT: Anytime a company enters a new business or market, there is necessarily this cascade of adjusting and elaborating proximate objectives.

Mary Did You Know?

Mary, did you know that your baby boy will one day walk on water?  Mary, did you know that your baby boy will save our sons and daughters?

Did you know that your baby boy has come to make you new?  The child that you've delivered will soon delivery you.

Mary, did you know that your baby boy will give sight to a blind man?  Mary, did you know that your baby boy will calm a storm with His hand?

Did you know that your baby boy has walked where angels trod?  When you kiss your little baby, you've kissed the face of God.

The blind will see, the deaf will hear, the dead will live again.  The lame will leap, the dumb will speak the praises of the Lamb!

Mary, did you know that your baby boy is Lord of all creation?  Mary, did you know that your baby boy will one day rule the nations?

Did you know that your baby boy is heaven's perfect Lamb?  This sleeping child you're holding is the Great I AM.

Merry Christmas!

Taking A Strong Position And Creating Options

Therefore, the more uncertain and dynamic the situation, the more proximate a strategic objective must be.

Many writers on strategy seem to suggest that the more dynamic the situation, the farther ahead a leader must look.  This is illogical.  The more dynamic the situation, the poorer your foresight will be.  Therefore, the more uncertain and dynamic the situation, the more proximate a strategic objective must be.

The proximate objective is guided by forecasts of the future, but the more uncertain the future, the more its essential logic is that of "taking a strong position and creating options", not of looking far ahead.   Herbert Goldhamer's description of play between two chess masters vividly describes this dynamic of taking positions, creating options, and building advantage:

"Two masters trying to defeat each other in a chess game are, during a large part of the game, likely to be making moves that have no immediate end other than to "improve my position."  One does not win a chess game by always selecting moves that are directly aimed at trying to mate the opponent or even at trying to win a particular piece.  For the most part, the aim of a move is to find positions for one's pieces that (a) increase their mobility, that is, increase the options open to them a decrease the freedom of operation of the opponent's pieces; and (b) impose certain relatively stable patterns on the board that induce enduring strength for oneself and enduring weakness for the opponent.  If and when sufficient positional advantages have been accumulated, they generally can be cashed in with greater or less ease by  tactical maneuvers (combinations) against specific targets that are no longer defensible or only at terrible cost.

ACTION POINT: Look for ways to take strong positions and create options.

Resolving Ambiguity

Many leaders fail badly at this responsibility, announcing ambitious goals without resolving a good chunk of ambiguity about the specific obstacles to overcome.  

A good proximate objectives feasibility does wonders for organizational energy and focus.  One of the most vexing problems facing the team considering putting man on the moon was not knowing what the lunar surface was made of.   The moon might be soft powdery residue from eons of meteoric bombardment or it might be a made of needle sharp crystals or a jumble of large boulders.  All of these possibilities created a difficult time for the engineers creating the design for the landing craft.

Phyllis Buwalda who directed Future Mission Studies described the surface as hard and grainy with slopes of no more than fifteen degrees based on her intuition that the smoother parts of the earth were like that, so it was a good guess that the moon would be similar.  Even though she really didn't know what the surface was like, she realized the engineers could not work without a specification.  Her specification was a strategically chosen proximate objective that helped the engineers move the project along.  Her specification helped absorb much of the ambiguity in the situation, passing on to the designers a simpler problem. 

Phyllis's insight that the engineers can't work without a specification applies to most organized human effort.  Every organization faces a situation where the full complexity and ambiguity of the situation is daunting.  An important duty of any leader is to absorb a large part of that complexity and ambiguity, passing on to the organization a simpler problem--one that is solvable.  Many leaders fail badly at this responsibility, announcing ambitious goals without resolving a good chunk of ambiguity about the specific obstacles to overcome.  

ACTION POINT: To take responsibility is more than a willingness to accept the blame.  It is setting proximate objectives and handing the organization a problem it can actually solve.

Un-Proximate Objectives

...it is not a proximate objective because it is not feasible within the present legal and law-enforcement frame work. 

Unfortunately, since Kennedy's time, there has been an increased penchant for defining goals that no one really knows how to achieve and pretending that they are feasible.  Take, for example, the War on Drugs.  

No matter how desirable it might be to stop the use of illegal drugs, it is not a proximate objective because it is not feasible within the present legal and law-enforcement frame work.   Indeed, the enormous efforts directed at this objective may only drive out the small-time smuggler, raise the street price, and make it even more profitable for the sophisticated drug cartels.

ACTION POINT: Avoid objectives that are not feasible within existing frameworks.

Proximate Objectives

The objective Kennedy set, seemingly audacious to the layman, was quite proximate.

Kennedy's 1961 speech on the issue remains a model of clarity.   In his speech, Kennedy diagnosed the problem as world opinion.   He said, "The dramatic achievements in space which occurred in recent weeks should have made clear to us all, as did the Sputnik in 1957, the impact of this adventure on  the minds of men everywhere."  He argued that the Soviet Union's strategy of focusing its much poorer technological resources on space was leveraging, to its advantage, the world's natural interest in these out-of-this-world accomplishments.  He argued that being first to land people on the moon would be a dramatic affirmation of American leadership.  

The United States had, ultimately, much greater resources to draw upon; it was a matter of allocating and coordinating them.  Importantly, the moon mission had been judged feasible.  Kennedy did much more than point at the objectives; he laid out the steps along the way--unmanned exploration, larger booster rockets, parallel development of liquid and solid fuel rockets, and the construction of a landing vehicle.

The objective was feasible because engineers knew how to design and build rockets and spacecraft.  Much of the technology had already been developed as part of the ballistic missile program.  And this objective was intensely strategic.  It grew directly out of Kennedy's question "How can we beat the Russians in space?"  The objective Kennedy set, seemingly audacious to the layman, was quite proximate. It was a matter marshaling the resources and political will. 

ACTION POINT: Pursue proximate objectives by marshaling resources and will.

Proximate Objectives

Folly is the direct pursuit of happiness and beauty. - George Bernard Shaw

One of a leader's most powerful tools is the creation of a good proximate objective--one that is close enough at hand to be feasible.  A proximate objective names a target that the organization can reasonably be expected to hit, even overwhelm.

For example, President Kennedy's call for the United States to place a man on the moon by the end of the 1960's is often held out as a bold push into the unknown.  Along with Martin Luther King Jr.'s "I have a Dream" speech, it has become almost a required reference in any of today's "how to be a charismatic leader" manuals extolling the magical virtues of vision and audacious goals.  Actually, however, landing on the moon was a carefully chosen proximate objective. 

ACTION POINT: Select targets that the organization can reasonably be expected to hit and overwhelm.

Concentration and Art

That is the power of concentration--of choosing an objective that can be decisively affected by the resources at hand. 

An example of concentrating on an effective objective was Harold William's strategy for the Getty Trust.  Williams got the worlds best job in 1983, managing the $1.4 billion trust that J. Paul Getty established for the Getty museum in Malibu after his death in 1976.  The trust was required by law to spend 4.5 percent of it's principle or about $65 million each year.

During Williams tenure, the Getty Foundation grew from a small elite collection to a major force in the art world.  In 2000, Williams explained his strategy:

"The Getty Trust was a very large amount of money, and we had to spend a considerable amount each year.  Our mandate was art, but I had to decide how to actually spend the funds.  We could have simply built a great collection--that would have been the obvious thing to do.  Buy art.  But I wasn't comfortable with that as a direction.  All we would really accomplish would be to drive up the price of art and move some of it from New York and Paris to Los Angeles.

It took some time, but I began to develop the idea that art could be, indeed, should be, a more serious subject than it was.  Art is not just pretty objects; it is a vital part of human activity.  In a university, people spend a great deal of effort studying languages and histories.  We know all about marriage contracts in remote tribes and the histories of many peoples.  But art has been treated as a sideshow.  I decided that the Getty could change this.  Instead of spending our income on buying art, we could transform the subject.

The Getty would begin to build a complete digital catalog of all art, including dance, song, and textiles. It would develop programs to educate art teachers and host advanced research on art and society.  The Getty would host the best conservation talent in the world and develop new methods of conserving and restoration.  In this way, I decided, we would have an impact far beyond simply putting art on display."

With $65 million to spend each year, Williams could have simply bought art or given money to schools and universities for their arts programs.  But by aiming to transform the study of art, Williams designed an objective that was novel and nicely scaled to the resources at his disposal.  Put simply, he invested where his resources would make a large and more visible difference.  That is the power of concentration--of choosing an objective that can be decisively affected by the resources at hand.  There is no way to know whether William's strategy created greater good than a simpler strategy of giving away money, but it did make a bigger bang and, thereby, attracted more energy and support from employees and outside organizations. 

ACTION POINT: Identify strategies that will attract the energy and support of your employees and outside organizations.

Momentum

the strategist can increase the perceived effectiveness of action by focusing effort on targets that will catch attention and sway opinion. 

From a psychological perspective, there can be returns to focus or concentration when people ignore signals below a certain threshold (called a "salience effect" in psychology) or when they believe in momentum-that success leads to success.  

In either case, the strategist can increase the perceived effectiveness of action by focusing effort on targets that will catch attention and sway opinion.  It may, for example, have more impact on public opinion to completely turn around two schools than to make a 2 percent improvement in two hundred schools.  In turn, peoples' perceptions of efficacy affect their willingness to support and take part in further actions.

ACTION POINT: Focus your efforts on targets that will sway opinion and catch attention.

Threshold Effect II

Just as an individual cannot solve five problems at once, most organizations concentrate on a few critical issues at any one time.

Due to similar forces, business strategists will often prefer to dominate a small market segment over having an equal number of customers who represent only a sliver of a larger market.  Politicians will often prefer a plan that delivers clear benefit to a recognizable group over one that provides larger benefits spread more thinly across the population.

Within organizations, some of the factors giving rise to concentration are the substantial threshold effects in effecting change and the cognitive and attention limits of the senior management group.  Just as an individual cannot solve five problems at once, most organizations concentrate on a few critical issues at any one time.

ACTION POINT: Recognize the "few" critical issues and focus on them.

Threshold Effect

One has to get over this hump, or threshold, to start getting a response...

A "threshold effect" exists when there is a critical level of effort necessary to affect the system.  Levels of effort below this threshold have little payoff.  When there are threshold effects, it is prudent to limit objectives to those that can be affected by the resources at the strategist's disposal.

For example, there seems to be a threshold effect in advertising.  That is, a very small amount of advertising will produce no result at all.  One has to get over this hump, or threshold, to start getting a response to advertising efforts.  This means it may pay companies to pulse their advertising, concentrating it into relatively short periods of time, rather than spreading it evenly.  It may also make sense for a company to roll out a new product region by region, concentrating its advertising where the product is new so as to spur adoption.

ACTION POINT: Apply the critical level of effort needed to achieve threshold.

Concentration

If resources were not limited, there would be no need to select one objective over another.  

Returns to concentration arise when focusing efforts on fewer, or more limited, objectives generates larger payoffs.  These gains flow from combinations of constraints and threshold effects.  If resources were not limited, there would be no need to select one objective over another.  

If rivals could easily see our moves and quickly mobilize responses, we would gain little from concentrating on temporary weaknesses.  If senior leadership did not have limited cognition, they would gain nothing from concentrating their attention on a few priorities.

ACTION POINT: What are the few priorities that should gain the most concentration?

Pivot Point III

Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!"

In direct rivalry, the pivot point may be an imbalance between a rival's position or disposition of forces and their underlying capabilities, or between pretension and reality.  On June 12 1987, President Reagan stood at the Brandenburg Gate in West Berlin and said: "General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization: Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!"

Of course, Reagan did not expect Gorbachev to do any such thing.  The speech was directed to Western Europeans, and its purpose was to highlight, and thereby exploit, the imbalance between a system of that allowed the free movement of people with one that had to restrain its citizens with barbed wire and concrete.  That imbalance had existed for decades.  Had Reagan given a similar challenge to Yuri Andropov in 1983, it would have had little effect.  It became a pivot point because of the extra imbalance between Mikhail Gorbachev's claim that the Soviet Union was liberalizing and the facts on the ground.

ACTION POINT:  Look for the imbalance in your competitors claims and their actual abilities.

Pivot Points II

A pivot point magnifies the effect of effort.

At the same time 7-Eleven was expanding its operations in China.  There, Murata explained, their outstanding advantage was cleanliness and service.  The Chinese consumers were used to being supplicants at a retail outlet and 7-Eleven Japan's tradition of spotless interiors and white-gloved service personnel who greeted customers with bows and smiles, as well as its good-tasting lunches, were producing twice as many sales per square foot than any competitor obtained. 

Murata's strategy focused organizational energy on decisive aspects of the situation.  It was not a profit plan or a set of financial goals.  It was an entrepreneurial insight into the situation that had the potential to actually create and extend advantage.

A pivot point magnifies the effect of effort.  It is a natural or created imbalance in a situation, a place where a relatively small adjustment can unleash much larger pent-up forces.  The business strategist senses such imbalances in pent-up demand that has yet to be fulfilled or in a robust competence developed in one context that can be applied to good effect in another.

ACTION POINT: Identify your natural or created imbalances and use them to magnify effect and effort.

Pivot Points

...a pivot point that will magnify the effects of focused energy and resources.

To achieve leverage, the strategist must have insight into a pivot point that will magnify the effects of focused energy and resources.  As an example of a pivotal objective in 2008 Noritoshi Murata, the president and chief operating officer of Seven & i Holdings was discussing competitive strategy.  This company owns all of the 7-Eleven convenience stores in the United States and Asia, as well as grocery superstores and department stores in Japan and other ventures.

Focusing on Japan, Murata explained that the company had come to the conclusion that Japanese customers were extremely sensitive to variations in local tastes and fond of both newness and variety.  "In Japan," he said, "consumers are easily bored.  In soft drinks for example, there are more than two hundred soft-drink brands and lots of new ones each week.  a 7-Eleven displays fifty varieties with a turnover of seventy percent each year.  The same holds true for food categories."

To create leverage around this patter, 7-Eleven Japan has developed a method of collecting information from store managers and employees about local tastes and forming quick-response merchandising teams to develop new product offerings.  To further leverage this information and team skills, the company has developed relationships with a number of second and third tier food manufacturers and found ways to quickly bring new offering to market under its own private-label brand, at low prices, using the food manufacturerss' excess capacity.

ACTION POINT: Look for the trends that will lead you to focus on pivot points for creating strategic advantage.

Anticipation IV

In many circumstances, anticipation simply means considering the habits, preferences, and policies of others, as well as various inertia's and constraints on change.  

Anticipation does not require psychic powers.  In many circumstances, anticipation simply means considering the habits, preferences, and policies of others, as well as various inertia's and constraints on change.  

Thus, do not expect California to balance its budget anytime soon, but you can expect a continued exodus of talent from the state.  We can expect another serious terrorist attack on the United States, but should not anticipate that the stultifying iron curtain between the CIA and the FBI will be removed short of all-out-war.  Google will continue to develop office-oriented applications that can be used online through a browser, but don't anticipate effective responses from Microsoft, who will be loath to cannibalize its PC-based Microsoft Office business.   The use of smart phones will grow rapidly and the infrastructure will probably end up being overtaxed so industry consolidation will be likely.

All of these are examples of anticipation based on considering the habits, preferences and policies of others.

ACTION POINT: Observe the habits, preferences and policies of others to develop anticipation.

Anticipation III

If there is a storm in the Himalayas, you can confidently predict that tomorrow, or the next day, there will be flooding in the Ganges plain.

Most strategic anticipation draws on the predictable "downstream" results of events that have already happened, from trends already at work, from predictable economic or social dynamics, or from the routines other agents follow that make aspects of their behavior predictable.

Some of the most striking anticipations made in any modern business were created by Pierre Wack and Ted Newland of Group Planning at Shell International.  In 1980 Wack said that "certain aspects of future events are predetermined: If there is a storm in the Himalayas, you can confidently predict that tomorrow, or the next day, there will be flooding in the Ganges plain."  The flood Wack and Newland had predicted back in 1970 was the rise of OPEC and ensuing energy crisis.  The storm creating this flood had been discerned in the pattern of incomes and populations of key oil-producing countries, In particular, Iran, Iraq, and Venezuela, all had high oil reserves, large growing populations, and ambitious development goals.  Wack and Newland predicted that such countries would be strongly motivated to seek price increases.  They saw that price increases would, in turn,  make countries such as Saudi Arabia and Kuwait realize that oil in the ground might appreciate faster than the dollars it bought once it was pumped and sold. 

ACTION POINT:  What are the storms in your industry and their likely downstream floods?

Anticipation II

The most critical anticipations are about the behaviors of others...

The most critical anticipations are about the behaviors of others, especially rivals.  It is now clear that U.S. military plans for the invasion of Iraq in the spring of 2003 failed to anticipate the rise of a vigorous insurgency.  As the army's own assessments states: "The difficulty in Iraq in April and May 2003 for the Army, and the other Services, was that the transition to a new campaign was not well thought out, planned for, and prepared for before it began.  Additionally, the assumptions about the nature of post-Saddam Iraq on which the transition was planned proved to be largely incorrect."

At the same time, the Iraqi insurgency was, at least in part, initiated by Iraqi ex-military officers who anticipated the media coverage of U.S.  casualties would tilt U.S. public opinion in favor of withdrawal, as it had in Vietnam and, more recently, in Mogadishu.  Indeed, according to Bob Woodward, "Saddam had commissioned an Arabic translation of Black Hawk Down issued copies to his senior offices."  So, in a deeper sense, U.S. planners failed to anticipate the Iraqis' anticipations.

ACTION POINT:  Consider the behaviors of your competitors.