Practicing the noble art of cheating (part VI)

Part I, Part II, Part III, Part IV and Part V.

On Part II I wrote:

"A typical SME in Portugal cannot start with a blank sheet, and start from scratch in a rational strategy development exercise.
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Stay with me and try to put on shoes of a SME in need of developing a strategy. Why do they need to do that? Normally, for one of two possible reasons:

• to seize an opportunity that it inadvertently discovered; or

• to stop a competitive bleeding that is weakening it, and find a way to recover."

Now, reading "What Sets Breakthrough Strategies Apart" I find this:

"We argue that strategic thinkers engage in an exercise that parallels that of scientists. Like scientists, they start with a significant problem to solve, and then use this problem as a prompt to compose a theory — in this case, a theory of value creation. This theory then becomes their unique perspective and point of view about the opportunity they see.
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One role of a theory is to shape sight and perception, to enable seeing — often from simple observations — what was previously unnoticed. As Albert Einstein observed, “whether you can observe a thing or not depends on the theory which you use.” Through a novel business theory, you see value in choices, in combinations, and in purchases that others cannot. And most importantly, like theories in science, your theory of value should lead to hypotheses and experiments that help realize opportunities unseen by others."

This "start with a significant problem to solve" instead of starting with a blank sheet and thinking "let us plan" is the difference between the PDCA cycle and the CAPD (better CASD) cycle:

• SDCA e PDCA (June 2017)
• Fazer a mudança acontecer (parte II) (June 2009)
• PDCA vs CAPD (October 2007)
• Puxar, não empurrar (September 2006)

Starting with a problem is a way that lead us to start with the end, by where we want to arrive with our work not with fancy ideas:

"Government likes to begin things—to declare grand new programs and causes and national objectives. But good beginnings are not the measure of success. What matters in the end is completion. Performance. Results. Not just making promises, but making good on promises."George Bush

Outra religião, a do big data

Ando mesmo interessado nos textos de Felin & Zenger

"No doubt bias and error are important concerns in strategic decision-making. Yet it seems quite a stretch to suggest that the original strategies developed by people like Apple’s Steve Jobs, Starbucks’ Howard Schultz, or even Walmart’s Sam Walton had much to do with error-free calculations based on big data. Their strategies, like most breakthrough strategies, emerged in settings with remarkably little data to process and little basis for calculation — situations in which the paths to value creation were highly uncertain and evidence was sparse. We are highly skeptical that debiasing decision making, eradicating errors, or ceding strategy to AI will improve strategizing, let alone lead to breakthrough strategies. [Moi ici: Pensamento bacteriologicamente puro, sem erros, totalmente justificável e matematizável é o da triade, dos encalhados. E perder o pé? E o optimismo não documentado? Valor não se calcula numa folha de cálculo, é um sentimento]
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Composing valuable strategies requires seeing the world in new and unique ways. It requires asking novel questions that prompt fresh insight. Even the most sophisticated, deep-learning-enhanced computers or algorithms simply cannot generate such an outlook. But where does the uniqueness and novelty so essential to innovative strategic thinking come from? It comes from contrarian, perhaps even “distorted,” perceptions and beliefs about reality and the “facts” that surround us.
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If everyone believes the same thing — or if everyone uses the same variables, information, and computational tools — the logical result is computational consistency, shared conclusions, and me-too strategies.
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In setting strategy, deviation in judgment is a feature, not a bug.
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It is tempting to believe that the right evidence and the right analysis will yield the right strategy. But just as customer surveys seldom lead to breakthrough products that capture the imagination of customers and markets, substantive strategy-making requires that we see well beyond the available data.
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We view the strategist’s task as akin to an inkblot test, where participants are presented with highly ambiguous evidence and signals that afford many possible realities, but offer no single correct answer. With such tests, the very same evidence — an ambiguous picture or set of marks — can be interpreted correctly in many different ways.
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Valuable strategizing demands this novel perception — an ability to see in ambiguous cues and data what others can’t see. Strategic thinking is fueled by the novelty of our observation, not its consistency. [Moi ici: Lembram-se do Serginho Centeno ou do André e as suas previsões do calçado, assentes em big data?] The object of strategic thinking is not to ensure that we all observe the same information and derive the same conclusion. It is precisely the opposite: If your desire is to be a value creator, you must aspire to see what others cannot."

Trechos retirados de "What Sets Breakthrough Strategies Apart".

O tempo é tudo

"There is no design that will generate all desired behaviors. Firms need to constantly monitor their current position relative to their corporate theory and the array of behaviors, goals, and investments it reveals. The need for change is frequently and ideally not a symptom of failure, but rather a symptom of success. It is the success of the old design that invites the new - that elevates the benefit of a new approach that invites a new set of complementary investments or accelerates a new set of complementary behaviors."

O que leva naturalmente a:

"Organizational design is a problem of dynamic optimization. The design question is not as simple as, What is the best organization design for my corporate theory? Rather, the critical question is, What is the appropriate organization design now? Different designs solve different problems; they invite different behaviors and investments. The leader’s task is to identify the problem that most needs solving today and design for it, recognizing that tomorrow’s problem and the design it needs will be different than today’s."

Assim:

"Timing is everything. Timing is the most important tool an organizational architect possesses. Like the sailor attempting to sail into the wind, your challenge is to not only put together the necessary change initiatives that will generate real velocity in the direction you select, but to impose them at the correct time. Bad timing dooms what may otherwise be great design."

Trechos retirados de "Beyond competitive advantage : how to solve the puzzle of sustaining growth while creating value" de Todd Zenger.

Porque falta a paciência estratégica

Há muitos anos que aqui no blogue escrevo sobre os gringos e a sua tradicional falta de paciência estratégica.

• O avatar
• Acerca da falta de paciência estratégica
• Mais produtividade não implica mais salário^
• Fazer o by-pass ao país

Agora, em "Beyond competitive advantage : how to solve the puzzle of sustaining growth while creating value" de Todd Zenger, encontro uma interessante justificação para isso:

"the primary path to value creation results from the creative, theory-building capacities of managers—those hired to see things investors often cannot.
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the CEO’s task is to make strategic choices that will maximize the firm’s long-run profitability, even if capital markets fail to see this value in the short run. After all, the CEO is hired to be smarter than investors. The challenge is convincing investors this is true—a task made all the more challenging because frequently it simply isn’t; sometimes managers’ theories are bad, aimed at building empires and not value.
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The quality of a corporate theory is massively difficult to assess—the product is a mere cognitive vision of a path to sustained value creation. A more difficult-to-evaluate product is hard to imagine; the true value is unknown even to the manager and is revealed only as “experiments” or strategic actions are pursued over a period of years. Accordingly, managers can all too easily disguise poor-quality theories as high-quality ones.
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managers are paid to know more than capital markets about the quality and future value of their theories, but they are often incapable of persuasively articulating that inherent future value. As a consequence, high-quality theories paradoxically may be discounted in capital markets, especially when they are difficult to evaluate.
The big problem with such discounting is that managers rely on capital markets for resources to pursue their corporate theories. Perceptions of low quality elevate financing costs. Moreover, managers’ compensation and continued employment typically depend on their capacity to generate market value in the present. Thus, this lemons problem leads to a strategic dilemma of massive significance. Managers may be tempted to pander to the beliefs and preferences of the capital markets rather than pursue the corporate theories that would maximize value for the firm.
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my experience suggests that managers generally do face a real dilemma as they craft and then sell their corporate theories to capital markets. They can choose simple, familiar strategies that are easy for capital markets to decipher or they can choose complex, unfamiliar, or unique ones based on theories that are difficult toevaluate. In the latter case, valuation is costly, prone to error, and likely leads to a discount in the market.
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four types of corporate theories that differ along two dimensions: quality and ease of evaluation. Type I theories—theories that are of high quality and easily evaluated—are clearly the preferred choice. However, such theories are unlikely to exist in great abundance since, as discussed, good theories are unique—and unique seldom means easy to evaluate. Type IV theories—theories that are of low quality and relatively opaque—are clearly to be avoided. The majority of options, however, are likely to be type II—theories that are lower in quality and therefore long-term value, but are easily evaluated and therefore may maximize investors’ current value— or type III—theories of high quality that maximize long-term value but are difficult to evaluate and are therefore discounted in the present. The correct choice is by no means obvious.
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In capital markets, there are securities analysts who specialize in assessing the merits of each firm’s theory. Their task is to assemble information, monitor performance, and evaluate the quality and likely future performance of the theories that managers propose, as these provide information to investors through earnings forecasts and buy and sell recommendations.
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Analysts, like all individuals, seek to allocate their effort in ways that generate the best return on their time invested. Covering more firms expands order flow and reduces the costs spent per firm in analysis. But to economize on the effort expended per firm, and thereby cover more, analysts prefer firms that are easy to analyze— in other words, those pursuing theories that are familiar and simple.
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firms tend to reshape themselves through divestitures and spinoffs to essentially “match” the “categories” covered by analysts.
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We examined the impact of a strategy’s uniqueness on the level of coverage and the premium or discount that it received in capital markets. We assumed that the most valuable corporate theories are built around uniqueness: either unique foresight about the value of a strategic bundle of assets, or the possession of unique assets that preclude others from enjoying similar value as they pursue complementary assets.
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The bottom line is that this uniqueness paradox is pervasive even in the market for publicly traded firms. Choosing unique theories, which may maximize long-term value, will likely receive a discount in the present."

Assim, é natural que os incentivos para estratégias intuitivas, as baseadas no preço/custo, sejam a opção de base.

"Competir e ter sucesso no negócio do preço mais baixo não tem segredos, é a estratégia mais fácil e intuitiva de implementar."(fonte)

Agora, recordar o título, "Por que as grandes estratégias têm de ser fora da caixa"

Por que as grandes estratégias têm de ser fora da caixa

"Great strategies always go against the grain of accepted wisdom. Markets and organizations have powerful immune systems that erect multiple barriers to implementing them. Leaders who own their strategies are more likely to persevere through such resistance, and prevail. Great strategies take leaders who believe enough in them — and the ideas they depend on — to be willing to fight their own organization and the broader market for however long it takes to realize the strategy."

Este trecho fez-me logo relacionar com estes outros:

"The real power of a well-crafted corporate theory [Moi ici: Outra forma de referir a estratégia] becomes evident as companies go shopping for the assets to test their theories. Value creation through markets always comes down to prices paid, and a good corporate theory enables the acquirer to spot bargains that are uniquely discerned or uniquely available to it.
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The mark of a well-crafted corporate theory is the uniqueness of the value creating opportunities it reveals. This uniqueness may stem from the uniqueness of the foresight the theory reveals or from the uniqueness of the assets and capabilities a company already possesses."

Ou seja, se uma estratégia não for ao arrepio do senso comum "toda a gente" verá a oportunidade e, assim, haverá muitos licitadores a quererem adquirir os meios para executar essa estratégia. Então, numa espécie de guerra de licitações num leilão, os meios serão adquiridos a um preço tal que dificilmente se ganhará dinheiro, uma espécie de "winner's curse" (aqui e aqui).
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Trecho inicial retirado de "Why Popular Strategies Always Fade"
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Trechos finais retirados de "Beyond competitive advantage : how to solve the puzzle of sustaining growth while creating value" de Todd Zenger.