The Art of Strategy: Situations

11. How to handle difficult situations

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Photo: zhan zhang on Unsplash

What is strategy? Why do you need it? How do you do it? And, how can you be more certain to succeed? The Art of Strategy provides timeless answers to these eternal questions. It is a modern reading of Sun Tzu’s Art of War using the lenses of strategists John Boyd and Simon Wardley (swardley). (All parts; other reading and viewing formats).

Sun Tzu

Situations can be divisive, liminal, contested, insecure, focal, critical, difficult, surrounded and deadly.

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場 (Chǎng) Situation. Calligraphy © Hisayo Oki

A situation is:
divisive when stakeholders engage among themselves;
liminal when entering shallowly into competitors’ areas;
contested when establishing in an area is advantageous for all;
insecure when enter and leaving an area is easy for all;
focal when an area is surrounded by competition and first establishment secures society’s support;
critical when entering deeply into competitors’ areas;
difficult when obstacles make it hard to move;
surrounded when the entrance is narrow, the exit circuitous, allowing competition to engage many with few;
deadly when engaging with full momentum succeeds and engaging with less than full momentum fails.

When a situation is:
divisive: avoid engaging, unite the organization in purpose;
liminal: avoid stopping, keep the organization connected;
contested: avoid engaging competition already present, get there first;
insecure: avoid dispersing, secure resilience;
focal: form and strengthen alliances;
critical: use competition’s ideas and equipment;
difficult: proceed along the path of least resistance;
surrounded: strategize, block the passages;
deadly: engage, demonstrate the desperateness.

People
resist when enclosed;
persevere when all seems lost;
follow when in danger.

While securing new areas,
when deep, focus;
when shallow, disperse.

Skilled leadership consider adaptations to the nine situations —
assessing human behaviors as well as movements.

Skilled leadership nurture communication, collaboration, spirit, trust, setup, purpose and doctrine, and, hinder this for competition.

Skilled leadership move when advantageous,
stop when disadvantageous.

If competition is large, well-ordered and advancing,
respond by seizing what they value
and they will do your will.

Speed is the essence of strategy deployment. Take advantage of competition’s lack of situational awareness by taking unexpected routes to engage where they are unprepared.

While securing new areas:
when deep into competition’s areas, keep the organization united for success;
use ideas from stakeholders and secure sufficient funding;
cherish the teams and avoid fatigue;
unite in purpose and build resilience;
strategize to be unpredictable when moving.

When there is no escape, with failure more likely than retreat,
having lost all hope, having lost all fear,
the organization engages with maximum momentum;
when there is no escape, the organization stands firm;
when entering deep, the organization unites;
when there is no choice, the organization engages.

People are without encouragement yet alert;
without requests yet devoted;
without promises yet loyal;
without instructions yet trusting.

Ban speculation, banish doubt, to reach success, and beyond.

People are poor without longing for wealth;
mortal without longing for eternity.
When engagement is communicated, there is fear and uncertainty;
still, when there is no escape the organization shows immortal courage.

The skillful organization is like a mountain snake:
striking its head, its tail lashes;
striking its tail, its head lashes;
striking the middle, both head and tail lashes.

Is it possible for the organization to move like a mountain snake?
Yes — think of how people who hate each other, when together in a boat adrift on the wind, help each other like right hand and left.

Use purpose and doctrine to unite the organization in courage.
Use landscape and climate to balance the organization’s strengths and weaknesses.

Leading the organization is like leading people by the hand;
they follow as a consequence of conditions.

Skilled leadership are
still and thus inscrutable,
impartial and thus predictable,
use tricks to secure surprise;
change methods and plans to secure unpredictability,
change locations and movements to avoid anticipation.

When engaging, leading the organization is like climbing high and throwing away the ladder.
Leading deep into new areas:
releasing the trigger and burning the ships;
herding sheep, this way and that, hiding the destination.

Skilled leadership sets up the organization and dare moving into the unknown.

Knowing intentions enables alliances;
knowing the landscape enables movement;
knowing local conditions enables advantageous positions;
knowing all these is skilled leadership.

When entering an area controlled by strong competition,
prevent them from focusing momentum,
overwhelm them and undermine their alliances.

Secure your alliances,
avoid relying solely on momentum,
pursue purpose and conceal intentions to overwhelm competition,
thus safely securing new areas.

Provide feedback, rewards and promotions
in positively surprising ways
to create trust
as if leading people by the hand.
Create trust
by actions, rather than words;
by appreciation, rather than control.

Setup the organization in divisive situations
and trust them to avoid failure;
try them in deadly situations
and trust them to succeed.
Only through experience,
the organization will learn how to turn failure into success.

Skilled leadership operate in accordance with stakeholders’ needs
and feign accordance with competition’s intentions.
Focus momentum in the right direction at the right moment
to secure success by surprise — even from large distances.

At the start of engagement,
secure existing areas and change communication with stakeholders.
Make final assessments to prepare for success.

If competition presents an opportunity, take advantage of it;
seize what they value;
move beyond the expected;
adapt to stakeholders’ needs to secure success.

At first, be cunning like a fox.
Once the door opens, be swift like a rabbit.
Taken by surprise, competition fails.

Boyd

Even if the situation is the same, do it differently.

From A Discourse on Winning and Losing.

The entire operational and tactical leadership method hinged upon . . . rapid, concise assessment of situations . . . quick decision and quick execution, on the principle: ‘each minute ahead of the enemy is an advantage.’

Wardley

From Wardley Maps.

The Importance of Situational Awareness
In a high situational awareness environment such as using a chess board, then navigation tends to be visual, learning is from context specific play and strategy is based upon position and movement. However, in my business then navigation was storytelling, learning was from copying others i.e. secrets of success and strategy was based upon magic frameworks e.g. SWOTs.

Without maps then situational awareness will be poor … Every company told me they had strategy but I was acutely aware that there existed different levels of situational awareness. I had been interviewing 160+ Silicon Valley companies looking for examples of open gameplay whether open source, open data or open standards. I plotted these companies against their level of strategic play based upon situational awareness (i.e. using their understanding of own and competitors value chains and how they were evolving) versus their propensity to take action (in this case to use an open approach to change a market). The result is shown in the figure below.

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Leading Edge Forum study on situational awareness versus action. Illustration: Simon Wardley (swardley, CC BY-SA 4.0)

The bigger the bubbles, the more companies at that point. This was Silicon Valley, supposedly the top end of competition and even here there were companies building strategic play based upon low levels of situational awareness and in some cases near blindness to their environment. Quite a few not only didn’t understand evolution, they didn’t know their value chains or even what their users needed.

Now, if execution rules then the companies on the right hand side of this graph with a high tendency towards taking action should probably on average perform better. Of course, if strategic play based upon situational awareness was important, then the companies at the top of the graph should perform better. Out of curiosity, I decided to examine market cap changes of those companies over the last 7 years. The results are shown in the figure below.

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Market capitalization impact: LEF study on situational awareness versus action. Illustration: Simon Wardley (swardley, CC BY-SA 4.0)

I can’t repeat what my first response was but let us just say that I was very surprised. What the data strongly suggests is those companies with high levels of strategic play based upon situational awareness and a propensity towards action perform better than those who don’t. Just having a focus on action is not enough.

In the case of companies having low levels of situational awareness (i.e. those in the bottom half) then action (and how well you execute on it) does matter. Those with poor situational awareness and low propensity for action performed negatively whilst those with poor awareness but a high tendency towards action were more neutral. In other words, if you’re blind to the environment then it’s better to shoot faster and with more impact just in case you do actually hit something. Hence if you’re competing against others with poor situational awareness then I can see how an argument that “execution matters more than strategy” can occur.

However, if you have poor situational awareness and are competing against someone with high situational awareness, then you might have a much higher propensity towards action and better execution of such but they will still tend to outperform you. I find myself strongly in agreement with Professor Martin that strategy and execution are part of the same thing but also I’ll add that situational awareness is a key part of this. This study however was in Silicon Valley and the levels of situational awareness tended to deteriorate outside that cauldron of creativity. It had taken me several years to discover some weak evidence to back up my initial suspicions that corporate blindness (i.e. very low levels of situational awareness) was a problem.

Maps
Maps are about awareness. You should always remember :-

  1. The map is constantly changing. These are living documents. With practice it should take a few hours to map a business from scratch and these have to adapt as you discover more. This is relatively simple if they become embedded as a means of communication.
  2. Maps are a means of learning about the environment and communicating this. It’s an iterative process and it will take you years to become good at it. The really important lesson about maps is not how accurate or perfect they are but how you use them to continuously learn. Maps are not the “truth” but a guide which an entire army can collaborate and communicate around.
  3. All models are wrong, some are merely useful. Someone will produce a more useful method of mapping, a better list of doctrine, a more insightful set of patterns. As there is no such thing as the “right” map, then feel free to alter the map in a way which makes it more useful to you.
  4. If you’re feeling that this is a lot to take in, well it is. Strategy is not a simple topic despite our attempts to dress it up as such.

Climate for Difficult Situations
Most competitors have poor situational awareness. Competitor actions are an important part of anticipation. In general however this is not something that you can directly control or even anticipate beyond aggregated effects. Fortunately in today’s climate then most competitors act as blind players in which case you do not need to dwell too much on their actions. When you make a move, they are unlikely to understand why or counter you. In the near future, given the potential interest in business algorithms, they maybe even become anticipatable blind automatons following coded secrets of success. In much the same way that Dan Mirvish noted that when Anne Hathaway was in the news, Warren Buffett’s Berkshire Hathaway’s shares went up due to suspected sentiment analysis run by robotic trading platforms. This could make the game even easier.

Doctrine for Difficult Situations
Focus on high situational awareness. There is a reasonably strong correlation between awareness and performance, so focus on this. Try to understand the landscape that you are competing in and understand any proposals in terms of this. Look before you leap.

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Different aspects of Situational Awareness in an Organization. Illustration: Simon Wardley (swardley, CC BY-SA 4.0)

Move fast. The speed at which you move around the strategy cycle is important. There is little point implementing FIRE (Fast, Inexpensive, Restrained, Elegant, previously called FIST: Fast, Inexpensive, Simple, Tiny) like principles in developing a system if it takes you a year to make decision to act. An imperfect plan executed today is better than a perfect plan executed tomorrow.

Listen to your ecosystems. There are many different forms of ecosystems and ways to exploit them. You can build powerful sensing engines (e.g. the ILC model, Innovate — Leverage — Commoditze) for future change, sources of co-operation with others, defensive and offensive alliances. But ecosystems need management, they need tending as a gardener tends a garden — sometimes you allow them to grow wild, sometime you harvest, sometimes you help direct or constrain them. These are particular skills that you can develop but most important is the principle — listen to them.

Gameplays for Difficult Situations
Ecosystem

Using others to help achieve your goals.

  • Alliances: working with other companies to drive evolution of a specific activity, practice or data set.
  • Co-creation: working with end users to drive evolution of a specific activity, practice or data set.
  • Sensing Engines (ILC, Innovate — Leverage — Commoditze): using consumption data to detect future success.
  • Tower and Moat: dominating a future position and prevent future competitors from creating any differential.
  • Two factor: bringing together consumers and producers and exploiting the relationship between them.
  • Co-opting: copying competitors move and undermining any ecosystem advantage by interrupting data flows.
  • Embrace & Extend: capturing an existing ecosystem.

Competitor
Dealing with the opposition if you can’t work with them.

  • Tech Drops: creating a ‘follow me’ situation and dropping large technology changes onto the market.
  • Fragmentation: exploiting pricing effects, constraints and co-opting to fragment a competitor’s market.
  • Reinforcing inertia: identifying inertia within a competitor and forcing market changes that reinforce this.
  • Sapping: opening up multiple fronts on a competitor to weaken their ability to react.
  • Misdirection: sending false signals to competitors or future competitors including investment focused on the wrong direction.
  • Restriction: limiting a competitors ability to adapt.
  • Talent Raid: removing core talent from a competitor either directly or indirectly.

The Art of Strategy: All Parts

Contents: A very short summary of each part
Introduction: What is strategy and why do you need it?

  1. Assessments: How to assess, prepare and shape
  2. Challenges: How to use and reduce inertia, entropy and friction
  3. Success: How to succeed together with stakeholders
  4. Setup: How to create resilience
  5. Momentum: How to use creativity focus and timing
  6. Shaping: How to shape and avoid being shaped
  7. Engagement: How to engage using surprise
  8. Adaptations: How to adapt to shifting situations
  9. Movements: How to move to optimize momentum
  10. Landscape: How to approach difficult areas
  11. Situations: How to handle difficult situations
  12. Disruption: How to disrupt and avoid being disrupted
  13. Intelligence: How to use intelligence to create foreknowledge

Annex: Wardley Mapping Examples
Glossary: Explanation of key terms and symbols
Acknowledgements: Standing on the shoulders of giants
Sources: Where to learn more
Other reading and viewing formats

This is provided as Creative Commons Attribution-ShareAlike 4.0 International by the author, Erik Schön.

Written by

Executive and strategist who has successfully developed and deployed strategy for over 20 years in small, medium and large organizations.

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