creative thinking in strategy development

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Creative Thinking inStrategy Development

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Strategy Development is creative process. However,creativity is not a natural process and, therefore, it

isn¶t easy for an organization to incorporate creative

thinking into its Strategy Development process. This

document details various ways to foster creative

thinking within Strategy Development.

Problem

Idea A Idea B

WeakSolution

Idea C

IdeaIdea

Idea

IdeaIdea

Idea

BreakthroughSolution

Idea

Idea

Reproductive thinking

Productive thinking



2 Questions & feedback? Email me ±d [email protected]

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Contents

� Introduction 4

Strategy Development

Creativity

� Creative Thinking 10

Obstructions to Creative Thinking

Opportunities for Creative Thinking

� Opportunity 1: Conditions 13

� Opportunity 2: Pushing Conventional Thinking 20

� Opportunity 3: Collaborative Thinking 33

� Summary 39



3Questions & feedback? Email me ±d [email protected]


Strategy Development is a creative process

Response developmentAlternative options evaluationInsights generation

Attractiveness/Strength Shape/Adapt What/How

� Marketdynamics

� Relative

performance� Core

capabilities

� Costof status quo

� Level of

uncertainty� Resource

availability

� Degreeof change

� Timing

� Level of readiness

� Making sense of incompletefacts

� Seeing beyond the facts,trends, etc.

� Generating unconventionalinsights

� Identifying alternative options

� Inventing new solutions

� Optimizing solutions

� Visioning compelling futurestates

� Connecting un-connecteddots

� Problem solving

If a spreadsheet could do the trick, there would not be much opportunities f or

di ff erentiating and winning in the market place.

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Creativity is about thinking productively²not reproductively

Problem

Idea A Idea B

WeakSolution

Idea C

IdeaIdeaIdea

IdeaIdea

Idea

BreakthroughSolution

Idea

Idea

Reproductive thinking

Productive thinking

� Looking at a problemfrom multiple angles.

� Generating as manyalternative approachesas one can.

� Exploring all approacheseven after a solutionis found.

Source: Adapted from µCracking Creativity¶

Productive thinking aimsat deviating f rom past experiences and procedures.







Creative thinking is not a natural process

E K 4 7

Source: William Poundstone, µHow would you move Mount Fuji¶ , Little Brown Ed.

Each card has a letter on one side and a number on the other.

How would you verify the following rule: ³if a card as a vowel on one side,then it has an even number on the other side´.

You are allowed to turn over a maximum of two cards in order to determinewhether the rule is correct as stated.







What are the obstructions to creative thinking?

Reliance on what we know Replicating past experiences

Discomfort with uncertainty Groupthink

1 2

3 4







There is no silver bullet for creativity, but at least three areas of opportunities

Ensuring the rightµconditions¶ are in place

Pushing the limits of µconventional¶ thinking

Leveraging the power of µcollaborative thinking¶

Enabling creative thinking

1 2 3THIS IS A PARTIAL PREVIEW






Timing is important²frequency, duration, and calendar all influencethe outcome of Strategy Development efforts

C onstraints I mplications

FREQUENCY

C reative processes do not respond well to routine(routine processes produce

routine results).

Developing a new strategy every year is rather unproductive ±conduct a full ground-up strategy development every3-5 yearsdepending on environment volatility

Alternate with strategic conversations on specific themes or

related to new events (including scenario planning) as part of strategic review process

TIMEALLOCATION

S trategy development is aided by good conversations.

Quality of conversationsimprove when people havetime to prepare in advanceand incubate af terwards.

Ensure sufficient time allocated by senior executive teamthroughout the process

Spread senior executive level conversations out over a period of months

CALENDAR

F inancial planning and budgeting process tend todominate conversations and increase f ocus on short term priorities

Disconnect strategy development effort from financial planningand planning activities in general







A diverse team bringing complementary vantage points will deliver better results

K ey Roles within I nnovation SWAT T eam

Activity Prof ile Role

LEARNING Anthropologist Bring new learning and insights by observing humanbehavior and developing a deep understanding of howpeople interact physically and emotionally withproducts, services, and spaces.

E xperimenter Prototyping new ideas continuously, learning by aprocess of trial and error.

C ross-pollinator Exploring other industries and cultures searching for cues.

ORGANIZING H urdler Overcoming and outsmarting roadblocks for innovation.

C ollaborator Bringing eclectic groups together.

Director Gathering cast and crew to spark creative talent.

BUILDING E xperience Architect

Designing compelling experiences that go beyondmere functionality to connect to a deeper level withcustomer latent or expressed needs.

S et Designer Creating a stage on which innovation team can do their best work.

C aregiver Building on metaphor of healthcare profession to give

customer care in manner that goes beyond merecustomer service.

S toryteller Building internal and external awareness throughcompelling narratives that communicate human valueor reinforce specific cultural trait.

Source: Thomas Kelley et al., µThe Ten Faces of Innovation : IDEO's Strategies for Defeating the Devil's Advocate and Driving Creativity Throughout Your Organization¶ , Reed Business Information

�M

ore is better.

� Diversity/mixquality.

� Intimacy withissue at stake.

E ach speci f ic situation will require a di ff erent mix of skills.







Appropriately formulating problems can make or break opportunitiesfor creative thinking

Reformulating Problems

� Invitational stem (in what ways mightwe...?)

� Positive statement.

� Making it more global (e.g., 5 whys).

� Making it more specific (e.g., what, where,who, when, how, why).

� Separating the whole from the parts.

� Shifting perspectives (e.g., 6 thinkinghats, customers, competitors).

If a comet was to hit and destroy Earth in the next hour, I would spend 55 min. formulating the problemand the remaining 5 min. solving it.

± Albert Einstein

Productivity of sales force is not high enough

In what ways might we increase theproductivity of the sales force? Invitationstem,positivestatement

Why ± to generate more new sales

Why ± to reduce cost of sales

Why ± to grow the top line and improve profits

Why ± to increase share price

Making itmore global

Sales rep.

� Increase

close rate� Increase winrate

� Reducecorruptedsell time

� Improvelead quality

Customer

� Make the

decisioneasier

� Make thewholeprocessfaster

Competitor

� Be the first

in the door � Avoidcompetitivebid

Shiftingperspectives







Sources/AnalysisMix

Diversifying the mix of sources and analyses increases the odds for acreative outcome

E xpanding horizons

Generating brand new

insights

Area of lowcreative

opportunity

C asting new light

Existing New

Existing

New

ANALYSIS

SOURCES OF INFORMATION

Understand where client is at prior todesigning analysis plan (e.g., FocusInterviews identifying situation anddisconnects):

� What has been proven/how

� What is assumed� What is unknown

Openly question assumed and unknownareas:

� Potential implications on current strategyif discovered/proven wrong

Diversify sources of information:

� Alternate secondary sources

� Primary research (even qualitative, atleast at the beginning)

� Outside of the industry

� Internal perspectives

Target a 25-25-25-25 mix.







Broadening the scope early on

Broadening the scope early, as well as after solutions start shapingincrease the odds of a creative outcome

Traditional Process

� Challenging status quo/¶given¶assumptions - pushing scope boundaries.

� Injecting new sources of insights.

� Identifying areas of disconnect.

Reopening it as solutions start shaping

� Imposing design challenges (e.g., buy-up, buy-down, status quo).

� Taking different vantage points (e.g.,what would company A do if they werefacing this opportunity).

Issues Solution

Creative Process







Conventional Responses

Although a Reality, uncertainties are typically discounted²there are 3 ³conventional´ responses, which all discount critical uncertainties

K ey trendsC ritical

uncertainties

Minor trendsMinor

uncertainties

Low High

Low

High

LEVELOF UNCERTAINTY

DEGREEOF IMPACT

µGut feel¶

µI know we cannot be sure

it is what to do but myinstinct tells me we shoulddo it¶

µWait and see¶

µIt is too unclear, let¶s stickto our knitting¶

µDo as everybody¶

µEverybody is doing it, weshould do it too¶

1

2

5

3

4

610

11

1220

1314

15

1617

18

19







To drive shifts in mindset, we can use uncertainties to plan out variousscenarios «

Developing S cenarios

Each axes of uncertainties are expressed in terms of its most extreme outcome.

Scenarios are developed, combining various possibleextreme outcomesa.

Potential Outcomes

A (Favorable) B (Unfavorable)

US opportunitypotential

Good (>125%reserves

replacement)

Limited (<100%reserves

replacement)

Producingcountry stability

Stable Unstable

Globaleconomicgrowth

Slow Moderate-high

Openness Regulated Unregulated

Politicalinfluence

Free market Interventionist

Environmental Weak Green Strong Green

Scenarios

BaseCase

GlobalInstability/Local

Protect.

GasBloodBath

USGrowth

USopportunitypotential

A B B A

Producingcountrystability

A B A B

Global Eco.growth A A B A

Openness B A B B

Politicalinfluence B B A B

Environ-mental A B B A

a Usually starts by producing all possible scenarios and then select the 2-5 presenting the most: consistency (plausible), relevance (realistic), challenge (posing a challenge),distinctiveness (presenting different enough configurations).







Working the scenarios

« and develop contingency plans, driving a more comprehensivethought process

Leveraging S cenarios to Drive Mindset S hi f ts/ C ontingency Planning

� Engage into a disciplinedapproach of the future.

� Align behind a commonunderstanding of the drivingforces shaping the future andprovide a common framework towork on it moving forward.

� Develop new and structuredinsights about potential futureoutcomes.

� Identify possible requiredchanges in capabilities andpressure test currentorganization¶s adaptiveness.

� Create a robust 'radar system'on the business environment

tracking the relevant market'signposts.

� At minimum, pressure testcurrent approach withµcontingency¶ plan.

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Strategicoptions

Strategicoptions

Strategicoptions

Strategicoptions

Portfolioshifts

Capabilitybuilding

Preemptivecompetitivemoves

Sales andmarketing

tacticsTHIS IS A PARTIAL PREVIEW






Uncertainties can also be leveraged by evaluating the 4 levels of certainty and «

Level 1

Clear enough future

Level 2

Alternative futures

Level 3

Range of futures

Level 4

True ambiguity

Description O utcome predictableenough to identi f y a

clear conf ident solution

M E C E set of possibleoutcomes, one of which

will occur

W ide enough range of possible outcomes.

Limitless range of possible outcomes.

Representativeexample of strategicdecision

Retailer storefootprint expansion.

Marketing decisionon well establishedbrands in stablemarkets.

Acquisition of competitor in stable,mature market

Unpredictable moveof competitor (e.g.,entering or notentering into market).

Regulatory change(e.g., happening or not).

Establishment of anew industrystandard.

Customer demand for completely newproduct or service.

Relative preferencefor new competitiveservices.

Unstable macro-economic conditionsimpacting underlyingdemand.

Major discontinuity.

Markets justbeginning to form.

Extended timeframerequired to evaluatepotential strategy.

Level of uncertainty reducing over time

Source: Adapted from Courtney, H. et al. (1997), Strategy Under Uncertainty

1

2

3

?

Majority of strategic decision making options

falling in this range

C ategorizing Uncertainty







« invention new solutions to address each level

Pushing O ptions Depending on E ach S ituation ( 1 of 2 )

KeyQuestions

Level of uncertainty/Possible actions

Level 1 Level 2 Level 3 Level 4

Adapting Can we optimize our company fit withidentified trends?

Can we radicallyimprove our execution?

Are we experimenting and readying ourselves for potential shifts?

Should we start replicating some of the innovations introduced by some of theindustry shapers?

Can we increase the flexibility of our organization?

Shaping Can we introducediscontinuity to our advantage?

How could we influence the creation of a standard and shape future outcomes toour advantage?

Can we introduce innovation and take a lead in the market?

Can we restructure the industry?

Can we replicate existing business model into new markets?

How could we influence the conduct of our competitors to our best interest?

Commitment Are we delayingcommitment for noreason?

Are we delaying µno regrets¶ investments unnecessarily?

Are there growth, learning, or insurance real options available that would give us

an edge once uncertainty clears up?Focus Are we being too

distracted when weshould increase our focus?

Can we hedge our betswith cost effectivesolutions?

Should we take someinsurance to protectourselves against worstcase scenario?

Should we diversify our portfolio?

Can we take insurance against worst casescenarios?








Here is an example of using Decision Analysis to evaluate a level 2 uncertainty scenario

Assessing O ptions ± Level 2 Uncertainty E xample

MagicCo facing potential entry of competitor Globalco in home market which would introduce a new retail formatcompeting withMagicCo¶s traditional format ± assessing relative attractiveness of preemptive move throughlaunching full scale chain competing with GlobalCo¶s position or hedging risks with launch of pilots.

MagicCo

GlobalCo

GlobalCo

GlobalCo

MagicCo

Do nothing

Inv=$0

F ull scale launch

Inv=$200M

Pilots launch

Inv=$65M

MagicCo

($500M)

$0

($275M)

($125M)

E nter (p=90%)

Do not enter (p=10%)

E nter (p=2 0%)


E nter (p=30%)


($300M)

($450M)

($150M)

$0

Go f ull scale

Go f ull scale

Do not

Do not

($450M)

($355M)

($155M)

Pay-off to MagicCo








ENDOF PARTIAL PREVIEW




2 0 Questions & feedback? Email me ±d [email protected]


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