I saw battles not as clashes between nations – as the Battle of Britain is usually portrayed – nor as clashes between individual commanders – as Alamein is usually portrayed – but as clashes between organizations. (Location 117)
creating great organizations and devising great strategies is not a science but an art. (Location 121)
Each generation has to relearn old lessons and acquire old skills. They just apply the same principles to new situations. (Location 125)
To learn the art of strategy and the art of creating organizations capable of executing strategy, we have to study the past and develop our skills through practice. (Location 126)
Rommel had inherited an intelligent organization in which the characteristics he displayed were inculcated in every officer. He was superb at running it – but it had been created by somebody else, many decades before. And that creator was a Prussian. (Location 157)
The big issue was not strategy but executing strategy. There was plenty of activity, but not much action. (Location 161)
Applying the principles is not a science but an art. (Location 170)
The provocative and risky question from the floor had many echoes. They were all familiar with the strategy – or at least with the themes of the strategy. But nobody knew what they themselves should do. (Location 223)
The numbers themselves became very detailed, yet divorced from overall goals. (Location 240)
There was a quest to find the sort of certainty offered by science. It was never fulfilled. (Location 281)
In an attempt to cope with the complexity the organization grows complex as well. (Location 338)
Faced with uncertainty, people search for more information; faced with complexity, they do more analysis. (Location 340)
In any of the situations described, any or all of these may be the case, and probably are. (Location 349)
There is no hierarchy of cause and effect but a set of reciprocal relations within a system: every cause is also an effect and vice versa. (Location 350)
Note: Systeemdenken
We should not confuse the set of symptoms with the disease. If the observed effects are systemic, then the underlying causes must also be systemic and must be understood as a whole. (Location 351)
We have to understand a little, at least, of how the causal system works, and then choose the point or points at which to intervene to alter the system as a whole. (Location 354)
Generating activity is not a problem; in fact it is easy. The fact that it is easy makes the real problem harder to solve. (Location 357)
A high volume of activity often disguises a lack of effective action. (Location 359)
If a problem is widespread and enduring, its origins are likely to be deep-seated. The solution is therefore unlikely to be a quick fix or something new to add to what we do already. It is likely to be something fundamental, which involves changing what we do already. (Location 368)
“If this solution has been around for a long time and is simple to understand, why isn’t it common practice?” There are two main reasons. The first is that the history of management thinking has built up barriers to adopting the solution. Management thinking has its origins in nineteenth-century science. It saw business organizations as machines, and the management model it adopted was grounded in engineering. While this view has been disavowed by modern management thinkers, its legacy is insidious. The second reason is that although the failings of the legacy model are clear, it is not clear what it should be replaced with. Lacking an alternative, practicing managers fall back on the engineering model as a default. They often do so without knowing it, because it is so fundamental. They end up with deep-seated problems they cannot address because they are as unaware of the origins of those problems as of the alternative on offer. (Location 373)
A manager was a programmer of robot workers. (Location 389)
However, businesses also involve tasks which are not menial or repetitive, but where knowledge of particular circumstances is critical. The less stable and the more dynamic the environment is, the more they matter. One of them is developing strategy. In the case of tasks such as these, all three of Taylor’s premises are false. (Location 398)
Describing scientific management as “our most widely practiced personnel-management concept,” Drucker praised the brilliance of its early insights, but added that “its insight is only half an insight.”4 He argued that simply because you can analyze work into its component parts, it does not follow that it should be organized that way. He also argued that planning and doing are not separate jobs, but separate parts of the same job. (Location 401)
Strategic planning rose and fell. Its hubris was perfect knowledge, its fatal flaw the increasing rate of unpredictable changes in the environment. (Location 416)
Between inception and execution, every plan could be derailed by something unexpected, and most plans were. (Location 417)
There is no accepted set of management disciplines for achieving the outcomes we want in the dynamic, uncertain environment we are faced with today. (Location 433)
THE DISCIPLINE OF EXECUTION At its most simple, executing strategy is about planning what to do in order to achieve certain outcomes and making sure that the actions we have planned are actually carried out until the desired outcomes are achieved. (Location 436)
The environment we are in creates gaps between plans, actions, and outcomes: (Location 444)
The gap between plans and outcomes concerns knowledge: It is the difference between what we would like to know and what we actually know. It means that we cannot create perfect plans. The gap between plans and actions concerns alignment: It is the difference between what we would like people to do and what they actually do. It means that even if we encourage them to switch off their brains, we cannot know enough about them to program them perfectly. The gap between actions and outcomes concerns effects: It is the difference between what we hope our actions will achieve and what they actually achieve. We can never fully predict how the environment will react to what we do. It means that we cannot know in advance exactly what outcomes the actions of our organization are going to create. (Location 445)
Faced with a lack of knowledge, it seems logical to seek more detailed information. Faced with a problem of alignment, it feels natural to issue more detailed instructions. And faced with disappointment in the effects being achieved, it is quite understandable to impose more detailed controls. Unfortunately, these reactions do not solve the problem. In fact, they make it worse. (Location 453)
Note: Mind blown
1 DECIDE WHAT REALLY MATTERS You cannot create perfect plans, so do not attempt to do so. Do not plan beyond the circumstances you can foresee. Instead, use the knowledge which is accessible to you to work out the outcomes you really want the organization to achieve. Formulate your strategy as an intent rather than a plan. 2 GET THE MESSAGE ACROSS Having worked out what matters most now, pass the message on to others and give them responsibility for carrying out their part in the plan. Keep it simple. Don’t tell people what to do and how to do it. Instead, be as clear as you can about your intentions. Say what you want people to achieve and, above all, tell them why. Then ask them to tell you what they are going to do as a result. 3 GIVE PEOPLE SPACE AND SUPPORT Do not try to predict the effects your actions will have, because you can’t. Instead, encourage people to adapt their actions to realize the overall intention as they observe what is actually happening. Give them boundaries which are broad enough to take decisions for themselves and act on them. (Location 461)
Far from throwing out Taylor’s initiative baby and Mintzberg’s planning baby, the Prussians embraced them both and helped them to grow up. (Location 481)
We may find that the farther back we look, the farther forward we can see. (Location 487)
But of course, business is not war. In order to learn from military experience we have to adopt the right perspective. We are seeking to define the principles which enable large organizations to realize their goals and gain competitive advantage in a complex, uncertain, and fast-changing environment. (Location 489)
Combat is an interaction between human organisations. (Location 492)
“friction,” the defining characteristic of the environment of war, which I argue is also the defining characteristic of contemporary business which makes executing strategy so difficult. Friction creates the three gaps. The concept of friction is entirely consistent with systems thinking and chaos theory, but it is more useful to managers because it describes how working in a complex adaptive system is experienced. Its elements can be seen and felt, so we can more easily work out how to deal with them. Each gap raises specific issues and requires us to take different steps in order to close it. However, ultimately all three are aspects of a single issue: how to get the outcomes we desire. The steps we take to address all three gaps are therefore merely elements of an integrated approach to running an organization. (Location 503)
Friction makes doing simple things difficult and difficult things impossible (Location 530)
Clausewitz had experience in line and staff roles and knew first hand what it was like both to plan an action and to conduct one. (Location 547)
He was by nature an intellectual who felt driven to reflect on and understand his experiences. (Location 549)
Clausewitz castigated von Bülow for distorting the nature of his object. He was trying to turn war into a science because that would make it understandable and tractable. (Location 561)
You have to have experienced war, he wrote, in order to understand wherein its true difficulties lie. (Location 568)
There is a gap between appearance and reality. (Location 569)
in war “things do not happen of their own accord like a well-oiled machine, indeed the machine itself starts to create resistance, and overcoming it demands enormous willpower on the part of the leader.” (Location 575)
“Friction,” he wrote, “is the only concept which covers in fairly general terms what it is that makes the difference between real war and war on paper.” (Location 581)
One leading Clausewitz scholar has summarized the concept of friction as referring to the totality of “uncertainties, errors, accidents, technical difficulties, the unforeseen and their effect on decisions, morale and actions.” (Location 582)
Clausewitz disagreed on two counts. First, he believed that friction was as inherent to war as it is to mechanical engineering and could therefore never be eliminated but only mitigated. Secondly, he believed that studying march tables and the like was not a fruitful means of mitigation. In fact, he came to think that friction had to be worked with. (Location 589)
Note: Je moet werken MET frictie
It actually provided opportunities, and could be used by a general just as much as it could be used by an engineer. The first thing was to recognize its existence. The second thing was to understand its nature. That was and remains more difficult. (Location 592)
war instantly exposes the exaggerations and half truths of the plan. (Location 612)
The very business of getting an organization made up of individuals, no matter how disciplined, to pursue a collective goal produces friction just as surely as applying the brakes of a car. (Location 617)
If Clausewitz is right, no one should develop a strategy without taking into account the effects of organizational friction. (Location 625)
eight sources of friction: 1 Insufficient knowledge of the enemy. 2 Rumors (information gained by remote observation or spies). 3 Uncertainty about one’s own strength and position. 4 The uncertainties that cause friendly troops to exaggerate their own difficulties. 5 Differences between expectations and reality. 6 The fact that one’s own army is never as strong as it appears on paper. 7 The difficulties in keeping an army supplied. 8 The tendency to change or abandon well-thought-out plans when confronted with the vivid physical images and perceptions of the battlefield. (Location 649)
We have partial information, imperfectly processed by people under stress. (Location 659)
We experience friction because of our cognitive limits as human beings. (Location 674)
Note: Cognitive limits
We have limited knowledge about the present and the future is fundamentally unknowable. (Location 675)
Because war involves a struggle between two opposed wills, the outcome of any action taken by one party is at least in part dependent on the actions of the other. (Location 675)
The amount of information each needs in order to take decisions is therefore in principle infinite, and is also in principle only partially accessible, as it involves an independent agent: the enemy. (Location 677)
Note: Infinite information needed but in principle partially accessable
Even if near-perfect information were accessible, it would be open to different interpretations, affected by the psychological states of those interpreting it, their interests and emotions, and all heightened by the exposure to danger, the resulting stress, and the physical exertion inherent in war. (Location 678)
The more protagonists there are, the more interpretations are likely, and the harder it is to create a uniform view. (Location 680)
Hence complexity itself exacerbates other sources of friction. (Location 681)
Clausewitz draws all these apparently disparate elements together into a single concept because all the elements interact with each other and their effects are not additive but multiplicative. (Location 687)
A linear system has two characteristics. It is proportional, in other words a small input produces a small output and a large input a large output; and it is additive, in other words the whole is the sum of the parts. (Location 713)
A nonlinear system is neither. (Location 714)
Systems are nonlinear when the state they are in at a given point in time provides the input to a feedback mechanism which determines the new state of the system. (Location 717)
Clausewitz repeatedly refers to phenomena not as cause and effect but as reciprocal; that is, as co-determining because of mutual feedback. (Location 724)
He stresses that war is not an isolated act but is embedded in political processes which are not strictly part of it but nevertheless influence it. (Location 726)
The means of war have an effect on its ends, which are in constant interplay. (Location 727)
We experience friction even as individuals when trying to get anything done. When we work on a collective enterprise as part of an organization, the experience becomes acute. Imperfect information is imperfectly transmitted and imperfectly processed. (Location 729)
For an organization to act rationally and coherently on the information it possesses is infinitely more difficult than for an individual, because an organization consists of individuals who are not only themselves finite but have independent wills with brains and desires which are not interlocked. (Location 731)
Organizations are engaged in collective enterprises which are far more complex than individual ones. The information available is imperfect not simply because we do not know what we need to know, but because we know things that are irrelevant. There is not only a lack but a surfeit and the surfeit becomes noise, drowning out what we need and making it ever harder to detect it. (Location 733)
Even a few decades ago, there were many businesses in which the key strategic decisions could be taken by a few people. A committee could decide whether or not to invest in a large new low-cost plant, where it should be, how big it should be, what technology it should use, and so on. That decision could well determine the company’s competitive position for years. Today, such decisions are only part of the story. Critical information is held at the periphery, strategy has to be developed and adopted by large numbers of people, and the half-life of a viable strategy has shrunk. Change is now the norm. The syndication of decision making and the ubiquity of change have dramatically increased friction in businesses. It rises with the number of decision makers and it is higher in a changing environment than in a steady state. (Location 746)
Friction is a function of the finitude of the human condition – the fact that our knowledge is limited and the fact that we are independent agents. (Location 752)
Our limited knowledge is due to things we could know in principle but happen not to – that is, lack of information – and things we could not know even in principle – that is, unpredictable events. And the fact that we are independent agents with wills of our own means that there is further information loss in transmitting and processing information between each other, and we can react differently to that information – even if it is perfectly transferred – because we have independent wills. (Location 755)
The overall concept of friction Figure 1 displays the concept visually. At the center is the fact of human finitude. It will never change. The implications of it spread out in concentric circles. While friction is a fact of life, the farther away from the center its consequences are, the more tractable they become. (Location 759)
As one moves from the center toward the left, the consequences are more internal to the organization; as one moves right, the consequences are more to do with the external environment. The organization and the environment interact. Outside the rings are internal, psychological, and real, external factors which further exacerbate friction. (Location 763)
The problem of strategy implementation is often reduced to one issue: the gap between plans and actions. How do we get an organization actually to carry out what has been agreed? However, because of the nature of the environment, even if the organization executes the plan, there is no guarantee that the actual outcomes will match the desired ones; that is, the ones the plan was intended to achieve. The two gaps interact to exacerbate each other. (Location 776)
The problem of achieving an organization’s goals is not merely one of getting it to act, but of getting it to act in such a way that what is actually achieved is what was wanted in the first place. (Location 779)
We have to link the internal and external aspects of friction and overcome them both at the same time. There is a third gap, the one between the two, which we must also overcome (Location 781)
At first glance it looks as though there are four gaps here, but in fact there are only three. Only one of the two vertical gaps in this diagram is real: the gap on the left between actions and the actual outcomes that result from them. The other parallel gap between plans and desired outcomes is simply the recognition of the fact that the actions taken failed to realize the outcomes we desired. (Location 782)
In the case of all three elements – plans, actions, and outcomes – there is a difference between the actual and the ideal. The ultimate evidence for this is that the actual outcomes differ from the desired ones. That means that the actions actually taken were different from those we should have taken. (Location 788)
Our plans are imperfect because we lack knowledge. (Location 792)
Our actions are not always those we plan because it is so difficult to align everybody who needs to act. (Location 794)
And even if we make good plans based on the best information available at the time and people do exactly what we plan, the effects of our actions may not be the ones we wanted because the environment is nonlinear and hence is fundamentally unpredictable. (Location 797)
We are just one of the magnets. (Location 802)
We could name the gap between outcomes and plans the knowledge gap, the gap between plans and actions the alignment gap, and the gap between actions and outcomes the effects gap. (Location 807)
These three gaps constitute the system of causes. They explain why in the case of plans, actions, and outcomes, there is a gap between what we desire and what we achieve. All three are the result of friction. (Location 809)
The knowledge gap gives rise to uncertainty about the nature of the current and future reality (e.g., “Is the cause of our decline in market share poor service or the product offering, and do our competitors enjoy a large enough cost advantage to enable them to cut prices if we do?”) and therefore uncertainty about how robust our plans are. The alignment gap gives rise to uncertainty on the one side about whether people will actually do what we want them to do (e.g., “Are the country organizations going to launch the customer service initiative?”) and on the other side about what exactly the planners want us to do (e.g., “How can we launch the customer service initiative now before getting the new product suite and when we are also being asked to cut costs?”). The effects gap gives rise to uncertainty about what effects our actions are having (e.g., “Did the service initiative fail because the product is not as attractive as we thought or because we did not invest enough in the launch?”) and about what other independent agents will do (e.g., “Or did our competitors pre-empt us by improving their service?”). (Location 811)
These real uncertainties produce general psychological uncertainty. (Location 819)
We do not like uncertainty. It makes us feel uncomfortable, so we try to eliminate it. (Location 820)
Meetings were about analyzing problems rather than resolving them. (Location 830)
A gap in alignment is often indicated by top-level frustration and lower-level confusion. (Location 832)
In a complex matrix organization when initiatives come from all directions they usually clash, creating dilemmas over what to do, like the one faced by the head of regulatory affairs in the drug company. Senior people began to intervene personally in details, throwing those actually responsible off course. Such behavior sends a general message that junior people are not trusted to make decisions. They therefore begin to delegate upward as a matter of course, ending in senior executives being asked to decide about such weighty matters as which color to paint a meeting room. (Location 836)
A gap in effects is typically responded to by an increase in control. The favorite control mechanism is metrics. (Location 841)
Controls have a cost. Overhead builds up around the controllers, and the reporting burden increases for the controlled. (Location 844)
These natural reactions do not simply fail to solve the problem, they make it worse. (Location 851)
Because the cause-and-effect cycles are systemic and reciprocal, all three reactions interact with and exacerbate each other. (Location 851)
The pursuit of detail actually increases noise and so makes it less clear what really matters. (Location 854)
The more detailed we make action plans, the more we constrain what people can do, which increases rigidity. (Location 857)
Controls add to costs, slow things down further, and increase rigidity. (Location 857)
Any potential solution must address the three gaps. It must encompass planning effectively, finding a way of creating alignment and enabling people to take appropriate actions in the light of the situation they actually face at the time. (Location 860)
Note: Voorwaarde strategie
We will have to work on how direction is formulated and given, how we communicate, and what behaviors and values govern the way we work together. (Location 862)
Note: Formuleren, communicatie en uitlijnen
Reducing the problem to closing the alignment gap alone seriously truncates the issue, but it is by far the most common solution on offer. (Location 866)
The reason for these oversimplified statements of the problem is a lack of theory, a deficit made good by developing an overall concept of friction. (Location 880)
Without theory, all one can do is to observe what goes on in companies. What you see is a lot of people doing a lot of things which do not achieve very much. (Location 882)
There is tacit recognition of the three gaps, and some sound advice about how to do a better job, but it is not grounded in any explanation as to why the problems arise in the first place. (Location 893)
A business organization is a complex adaptive system. We need to understand it as a system in order to know where and how to intervene to change it. (Location 894)
All and any of them could be efficacious, but a real cure to this systemic problem has to be systemic itself. We have first to understand the whole in order to understand the parts. (Location 901)
Note: Systemisch probleem systemisch oplossen
Clausewitz observed that armies find executing strategy difficult and developed the concept of friction to explain why. Friction manifests itself when human beings with independent wills try to achieve a collective purpose in a fast-changing, complex environment where the future is fundamentally unpredictable. Friction is a universal phenomenon ultimately grounded in the basic fact of human finitude. Its universality means that it applies in some degree to all organizational life, including business. It also means that we can never completely escape it. Our finite nature means that we have limited knowledge, due to things we could know but happen not to (because we do not have perfect information) and things we could not know even in principle (such as unpredictable future events). It also means that we are independent agents. When we engage in a collective enterprise we therefore face the problem of communicating with each other and aligning our individual wills. While we cannot become God, we can deal with the more tractable implications of our finitude. The first step is to recognize it. Internal friction is exacerbated by the fact that in business as in war, we are operating in a nonlinear, semi-chaotic environment in which our endeavors will collide and possibly clash with the actions of other independent wills (customers, suppliers, competitors, regulators, lobbyists, and so on). The internal and external worlds are in constant contact and the effects of our actions are the result of their reciprocal interaction. Friction gives rise to three gaps: the knowledge gap, the alignment gap, and the effects gap. To execute effectively, we must address all three. Our instinctive reaction to the three gaps is to demand more detail. We gather more data in order to craft more detailed plans, issue more detailed instructions, and exercise more detailed control. This not only fails to solve the problem, it usually makes it worse. We need to think about the problem differently and adopt a systemic approach to solving it. (Location 907)
Note: Eindiheid - frictie - gaps - meer detail en controle - maakt het erger eerst systemisch beskijken
Directed Opportunism Do not command more than is necessary, or plan beyond the circumstances you can foresee (Location 926)
Only the prospect of perdition, it seems, releases real creativity and radical change. (Location 929)
The Army had been run as a machine which required iron discipline to function because the motivation of its men was low. (Location 938)
Nobody took any action without orders to do so. It was a highly centralized, process-dominated organization, assuming Douglas McGregor’s Theory X of human motivation.4 It achieved compliance through compulsion. (Location 941)
The French Army of 1806 which Napoleon had inherited from the Revolution was raised from citizen conscripts. It had no time to practice drill and perfect discipline, so it turned this vice into a virtue. It made extensive use of light infantry or tirailleurs, who engaged the lines of Prussians in an unordered swarm in which each man took advantage of the terrain and fired as he saw fit. The French were highly motivated. Their army was, in McGregor’s terms, a “Theory Y” organization. It achieved commitment through conviction. (Location 946)
At the top level, Napoleon’s dynamic young marshals, all of whom reached that position on merit, shared a few operating principles (such as “always march toward the sound of the guns”) and were expected to act on their own initiative. They had the experience and ability to assess a situation and the authority to decide and act. Decisions were taken rapidly and action followed without hesitation. The result was an operational tempo which left the Prussians bewildered. (Location 950)
Note: Few operating principles
The Prussian Army needed to get cleverer and faster. Of the three fundamental variables in warfare – force, space, and time – lost forces could be replaced and lost space could be recaptured, but lost time could never be made good. (Location 953)
Note: 3 fundamentele variabelen
It was essential to take actions which were about right quickly, rather than waiting to be told what to do. The only way of doing so was to develop a professional officer corps with the ability, authority, and willingness to take decisions in real time. (Location 955)
Note: About right
So it was that the transformation of the Prussian Army began with people and culture, spearheaded by officer selection and training. They were looking for a particular type: intelligent, independent minded, strong willed, impatient, and not overly concerned to bow to authority. (Location 958)
Note: Nice
A Prussian officer was expected to share a set of core values, defining his “honor,” which took precedence over an order. If he acted in accordance with honor – or, as we might more commonly say today, with integrity – disobedience was legitimate. The right talent and the right behavioral biases were put in place as a first step. (Location 962)
Note: Disobedience was legitimate
HELMUTH VON MOLTKE AND AUFTRAGSTAKTIK (Location 982)
He was both a practitioner and a thinker in the fields of strategy, leadership, organization, and what we would today call management. (Location 985)
Von Moltke espoused the cause of independent action by subordinates as a matter of principle. (Location 988)
Fear of retribution should not curb the willingness of subordinates to exercise their judgment. In the confusion and uncertainty of war, people who do so take risks. That must be accepted. (Location 992)
“Obedience is a principle,” he memorably asserted, “but the man stands above the principle.” (Location 994)
Von Moltke wanted to build on the Prussian officer corps’ culture of independent thinking to create an effective system of command, one which also ensured cohesion. (Location 996)
During the campaign, subordinates often acted independently without understanding his concept of how victory was to be achieved, which was to use one Army as an anvil and another as a hammer to take the Austrians in the flank. (Location 999)
15 He concluded that it was vital to ensure that every level understood enough of the intentions of the higher command to enable the organization to fulfil its goal. (Location 1001)
Note: Understad intentions
Von Moltke did not want to put a brake on initiative, but to steer it in the right direction. His solution was not to impose more control on junior officers but to impose new intellectual disciplines on senior ones. (Location 1002)
if von Moltke’s senior people could set direction effectively, control measures on his junior people could be less restrictive. (Location 1011)
The guidance opens by emphasizing the importance of clear decisions in a context of high friction, which renders perfect planning impossible: With darkness all around you, you have to develop a feeling for what is right, often based on little more than guesswork, and issue orders in the knowledge that their execution will be hindered by all manner of random accidents and unpredictable obstacles. In this fog of uncertainty, the one thing that must be certain is your own decision… the surest way of achieving your goal is through the single-minded pursuit of simple actions. (Location 1012)
To accomplish that single-mindedness, orders must be passed down “to the last man.” The army must be organized so that it is made up of units capable of carrying out unified action down to the lowest level. (Location 1017)
Note: Single mind
An officer’s readiness to act in this way depends on discipline. For junior officers, discipline means being ready to act on your own initiative in line with the will of your commander. For senior officers, discipline involves maintaining the chain of command, and: not commanding more than is strictly necessary, nor planning beyond the circumstances you can foresee. (Location 1024)
In war, circumstances change very rapidly, and it is rare indeed for directions which cover a long period of time in a lot of detail to be fully carried out. (Location 1026)
Specifying too much detail actually shakes confidence and creates uncertainty if things do not… (Location 1028)
Going into too much detail makes a senior commander a hostage to fortune, because in a rapidly changing environment, the greater the level of detail, the less… (Location 1029)
Furthermore, trying to get results by directly taking charge of things at lower levels in the organizational hierarchy is dysfunctional: In any case, a leader who believes that he can make a positive difference through… (Location 1032)
It is far more important that the person at the top retains a clear picture of the overall situation than whether some… (Location 1036)
The higher the level of command, the shorter and more general the orders should be. The next level down should add whatever further specification it feels to be necessary, and the details of execution are left to verbal instructions or perhaps a word of command. This ensures that everyone… (Location 1039)
The rule to follow is that an order should contain all, but also only, what subordinates cannot determine for themselves… (Location 1045)
Note: Rule
The overall direction should be communicated in a cascade. Direction from the highest level should be kept high level. The levels below add appropriate detail. Each level is guided by the intention of the one above, which whenever possible was… (Location 1047)
Note: Face to face plus schfiftelijk
Understanding the context and the overall intention is what enables junior officers to take independent decisions if the specific orders issued to them become… (Location 1049)
Understanding an order means grasping what is essential and taking measures which put… (Location 1052)
So it is that by 1869, von Moltke had already outlined a way of closing the three gaps. His solution to each runs directly… (Location 1053)
On the knowledge gap, he emphasizes the need to plan only what can be planned, the need for judgment and timely decision making based on what one can… (Location 1054)
Rather than seeking to fill the gap completely by gathering more data, von Moltke suggests adjusting the scope of plans to the available knowledge… (Location 1057)
On the alignment gap, he recommends a cascade process with each level adding something to the one above, but all united by an understanding of the intentions of the higher levels. Plans should be appropriate to their level: the lower the level, the more specific and detailed they should be. Each level will know less about the overall context and more about the specific situation than the level above. So the higher level should tell the lower level what it needs to know about the situation of the organization as a whole, the overall purpose, the immediate intention of the higher level, the specific role the unit is to play and the roles of other units around it, the freedoms it has, and any constraints it has to observe. That is all it needs to know. With this knowledge of what to achieve and why, it should itself decide about how to achieve it. It will have more accurate and more up-to-date information about the situation it is facing and… (Location 1058)
On the effects gap, he encourages the use of individual initiative within boundaries and actually requires junior people to depart from the letter of their instructions if the situation demands it in order to fulfill the intent. Rather than tightening control, he suggests that as long as the intentions of the higher levels are made clear, individual initiative can be relied on to adjust actions according to the situation. The imposed discipline of controls and sanctions is replaced by the self-discipline of responsibility. There should be no… (Location 1066)
Note: Intentions - responsibility
Von Moltke’s insight is that there is no choice to make. Far from it, he demands high autonomy and high alignment at one and the same time. (Location 1082)
He realizes quite simply that the more alignment you have, the more autonomy you can grant. The one enables the other. Instead of seeing of them as the end-points of a single line, he thinks about them as defining two dimensions, as in Figure 8 (Location 1083)
The insight is that alignment needs to be achieved around intent, and autonomy should be granted around actions. Intent is expressed in terms of what to achieve and why. Autonomy concerns the actions taken in order to realize the intent; in other words, about what to do and how. (Location 1086)
Note: Alignment - intent. AUTONOMY ACTIONS
The result is that the organization’s performance does not depend on its being led by a military genius, because it becomes an intelligent organization. Rather than relying on exceptional – and by definition rare – individuals, this solution raises the performance of the average. (Location 1090)
Note: Intelligent organization
Being able to adapt to circumstances, the organization will tend to make corrective decisions while executing, even if the overall plan is flawed. (Location 1092)
Note: Adapt while executing
He has in effect turned strategy development and strategy execution into a distinction without a difference. The corollary is that von Moltke did not have to wait to develop a perfect plan. He could go with one that was 70 percent right, because the organization would deal with the other 30 percent. He did not need to know everything, he simply needed to be directionally correct. (Location 1096)
Note: Directionally correct
The miracle was that each man acted on his own accord, but in such a way that the actions of the army as a whole cohered. (Location 1105)
Note: Coherent action
Two ideas fomented the debate: the reinforcement of von Moltke’s observation that a higher intent had to unify action; and the realization that every unit had to have a task or mission of its own to perform which made sense within that context. (Location 1120)
It was an argument between those who wanted to manage chaos by controlling how and those who wanted to exploit chaos by commanding what and why. (Location 1154)
Active discipline did not mean following orders but acting spontaneously in accordance with intentions. A soldier did not have the choice whether to obey, but he was left free to choose how to obey. (Location 1159)
Note: Active discipline
If every officer had the responsibility to exercise thinking obedience, they also had the responsibility to give clear direction. (Location 1165)
In the 1869 guidance von Moltke had made the distinction between an order – Befehl – and a directive – Direktive or Weisung.35 This entered into general use. In 1877, General Meckel wrote that a directive had two parts. The first was a description of the general situation and the commander’s overall intention; the second was the specific task. Meckel stressed the need for clarity: “Experience suggests,” he wrote, “that every order which can be misunderstood will be.” (Location 1166)
Note: Directive. Clarity. Can be misunderstood will be misunderstood
36 The intention should convey absolute clarity of purpose by focusing on the essentials and leaving out everything else. (Location 1170)
Above all, the senior commander was not to tell his subordinate how he was to accomplish his task, as he would if were to issue an order. (Location 1171)
The first part of the directive was to give the subordinate freedom to act within the boundaries set by the overall intention. The intention was binding; the task was not. A German officer’s prime duty was to reason why. It was clear that if individuals within the organization were to tread the narrow path between the Scylla of rulebook passivity and the Charybdis of random adventurism, and so unify autonomy and alignment, they must also have a shared understanding of how to behave and what they could expect of their peers and their superiors. (Location 1172)
They needed a common operational doctrine and shared values. (Location 1176)
Note: Operational doctrine and shared values
It emphasized independence of thought and action, stating that “a failure to act or a delay is a more serious fault than making a mistake in the choice of means.” (Location 1179)
The responsibility of every officer was to exploit their given situation to the benefit of the whole. (Location 1181)
Note: Exploit
The guiding principle of action was to be the intent of the higher commander. Officers were to ask themselves the question: “What would my superior order me to do if he were in my position and knew what I know?” (Location 1182)
Note: Wwjd
Nevertheless, the path of true change does not run smooth. (Location 1185)
In March 1918, for the first time since late 1914, the German Army abandoned its reliance on artillery, machine guns, and trenches and flung a body of infantrymen called Stormtroopers, imbued with the principles of Auftragstaktik, at the British lines. (Location 1207)
Note: Stormtroopers
To further this and create greater levels of trust, all NCOs were trained as officers, and officers were expected to master the tasks of two ranks higher up the hierarchy and to take their place if needs be. (Location 1216)
Note: 2 ranks up
The mission identifies the goal to be achieved and must always be the point of focus. A mission which tries to encompass multiple tasks can all too easily obscure what really matters. (Location 1221)
The mission and the situation lead to a decision. (Location 1226)
Note: Mission - zsituation - decision
If anyone changes a mission or does not carry it out, he must report the fact and he alone bears responsibility for the consequences. He must always act within the framework of the whole. (Location 1227)
A decision should pursue a clear goal with all the means available. (Location 1229)
Note: Pursue
Once a decision has been made, it should only be departed from in exceptional circumstances. In the vicissitudes of war, however, sticking rigidly to a decision can also be a mistake. (Location 1231)
Note: Stick
Part of the art of leadership is to recognize the time and circumstances in which a new decision is called for. (Location 1232)
Note: Art of leadership
In the end, of course, despite all the battles won by the German Army, Germany lost the war. It became a war of attrition like the previous one. Hitler’s hideous ideology and murderous war aims gathered against him an alliance wielding massive superiority of resources, which was determined to extirpate the canker which had grown in the heart of Europe. (Location 1239)
The operational skills of the Wehrmacht were deployed in an attempt to realize a strategy which at the highest level was incoherent and irrational. (Location 1241)
A contributing factor to the German defeat was Hitler’s contempt for the principles of Auftragstaktik and his attempts to reverse its practice, particularly on the Eastern Front from 1942 onward. (Location 1245)
Auftragstaktik is not popular with tyrants. (Location 1250)
It was in any case beginning to look as if technology would allow masterplanners to control everything, with perfect information becoming instantaneously available at the center. As the brightest and the best assembled in Washington to run the Vietnam War under former Ford executive Robert McNamara, they reveled in vast amounts of data and superb communications. They measured body counts and then told the generals in Vietnam what to do next. This created a “pathology of information.” (Location 1265)
Note: Pathology of information
Scientific management worked for quite a while. It was not until the 1980s that some writers began to suggest that business organizations were more like organisms than machines and that they contained people with brains as well as hands and legs. (Location 1303)
Mission command is scaleable. It does not work because a bunch of creative individuals team up and do funky stuff together. There have been and continue to be plenty of those. (Location 1309)
In contrast, mission command has been made to work in organizations of hundreds of thousands of people with attendant levels of complexity. (Location 1313)
Thirdly, neither Auftragstaktik, nor its descendant mission command, was developed as a theory, but as a set of practices which were continually modified in the light of experience. It was vigorously questioned and debated. Weaknesses were exposed and ironed out and the results were anchored in reality. (Location 1314)
There is a method for developing plans, breaking them down, and using them to brief subordinates. There is a procedure, which the military calls “mission analysis,” to help subordinates to draw out the implications of what they have been asked to achieve. The subordinates then go through a process of “backbriefing” their superiors to check their understanding of the intent and its implications before passing it down the line to their own subordinates in a cascade. These techniques create internal predictability, which helps when the environment is chaotic, and allow scaleability. (Location 1319)
Using these techniques requires skill. The military invests an enormous amount of time and effort in training. (Location 1324)
Adopting mission command as an operating model is not a matter of setting up some processes, but of mastering some skills, perhaps more precisely called “disciplines.” (Location 1325)
Note: Disciplines
Despite that, we have to recognize that the cultural soil out of which mission command grew is the hardest factor to reproduce and may act as a constraint in transferring it into some organizations. (Location 1338)
Note: Culture consttraint
So the cultural background of any organization attempting to adopt mission command should limit its expectations. (Location 1349)
2 Laurence G. Hrebiniak, Making Strategy Work, Wharton School Publishing 2005, p. 4. (Location 3756)
A high level of discontent on the part of talented people is a sign that mission command could take root quite quickly, as it would liberate them. It is the silent, compliant ones who pose the greatest challenge. (Location 1353)
Management is not a science but a practical art. Practicing it skillfully means applying general principles in a specific context. (Location 1357)
The Prussian general staff, under the elder von Moltke, perfected these concepts in practice. They did not expect a plan of operations to survive the first contact with the enemy. They set only the broadest of objectives and emphasized seizing unforeseen opportunities as they arose. (Location 1376)
Strategy was not a lengthy action plan. It was the evolution of a central idea through continually changing circumstances. (Location 1379)
Note: Central ida
Business and war may differ in objectives and codes of conduct. But both involve facing the independent will of other parties. (Location 1380)
Note: Independent will
Welch took over the approach, calling it “planful opportunism.”69 He quoted Peppard’s words in a speech to the financial community in New York delivered on 8 December 1981, and it remained a lasting principle of his celebrated term of office at GE.70 Welch describes that speech as “a disaster,” because the analysts could not understand why he put so much emphasis on “the human element.” Undeterred, the whole of the next 20 years, he claims, “was toward the vision I laid out that day.” (Location 1383)
“Command” is a military term not used in business. It covers those aspects of leadership concerned with setting and giving direction. “Mission” is simply a translation of Auftrag to mean a task directed toward fulfilling a purpose. In business it risks confusion with the meaning of “mission” found in high-level mission statements, a far more abstract sense than the military use of the word. (Location 1388)
Welch’s choice of phrase captures von Moltke’s refusal to compromise and his insistence on achieving alignment and autonomy. The result is an organization whose actions cohere because it is following a clear direction, and seizes unexpected opportunities because individuals and groups adapt as they go. (Location 1391)
Note: Coherene. Opportunism
The name I have chosen for mission command in business is “directed opportunism.” (Location 1393)
This solution constitutes a system and enacting it involves going round a loop. It involves abandoning the linear model of developing a strategic plan and then implementing it. Instead, there is a cycle of thinking and doing. The horizon within which actions are planned is limited, the effects of the actions are observed, reflected on, and new action initiated. So the thinking–doing loop becomes a learning–adapting loop. An organization which behaves in this way will be observed to take action rapidly and keep adjusting what it does. So the “plan-and-implement model” of strategy becomes a “do-and-adapt” model. Strategy development and execution merge into one circular process, as in Figure 10. Figure 9 Directed opportunism The thinking–doing loop is kept as short as possible so as to reduce uncertainty and increase tempo. However, the intended outcomes may be far away in time. The key is not to plan the whole journey but to set direction and allow the organization to navigate. They will need a map before they set out, but they can add detail to the map as they go. They will be able to do so because as they go round the loop, they learn. (Location 1394)
Note: Not plan the journey
Mission command creates an organization which is not only more thrusting, but more resilient. (Location 1407)
If they have a clear understanding of purpose, people understand what matters and can react quickly to whatever is unexpected, be it good or bad. (Location 1407)
People whose self-understanding is a version of Noll’s, who see themselves as functionaries, the servants of a process, or cogs in a machine, behave quite differently from those who understand themselves as independent agents bearing some responsibility for the achievement of a collective purpose and as part of a living organism. (Location 1413)
The ultimate test of how embedded the disciplines are is how individuals think. (Location 1415)
Note: Ultimate test
In his comparison of the US and German armies of the 1940s, van Creveld points to the difference succinctly: A German officer, confronted by some task, would ask: worauf kommt es eigentlich an? (what is the core of the problem?). An American one, trained in the “engineering approach” to war, would inquire: what are the problem’s component parts?74 The American’s question is quite legitimate, of course. The German officer would ask himself that question as well, but he would ask it only after answering his first one. The American would typically never get around to asking the first one at all. The difference in mindset is subtle; the impact is enormous. (Location 1416)
The unchanging core is a holistic approach which affects recruiting, training, planning and control processes, but also the culture and values of an organization. (Location 1422)
Mission command embraces a conception of leadership which unsentimentally places human beings at its center. It crucially depends on factors which do not appear on the balance sheet of an organization: the willingness of people to accept responsibility; the readiness of their superiors to back up their decisions; the tolerance of mistakes made in good faith. (Location 1423)
Designed for an external environment which is unpredictable and hostile, it builds on an internal environment which is predictable and supportive. (Location 1426)
His answer to the knowledge gap was to limit direction to defining and expressing the essential intent; he closed the alignment gap by allowing each level to define what it would achieve to realize the intent; and he dealt with the effects gap by giving individuals freedom to adjust their actions in line with intent. (Location 1435)
Such a model will only work if people are competent and share basic values. (Location 1439)
Strategy is a framework for decision making, a guide to thoughtful, purposive action (Location 1450)
Note: Defonitie
Why does a business need a strategy in the first place? As a collective enterprise, a business organization needs to act cohesively. It may have a very clear vision or sense of purpose, and for some types of organization that can suffice to provide the cohesion needed. However, it is unlikely to suffice for a business. (Location 1451)
A business is a collective enterprise that has to prosper in a competitive environment. (Location 1454)
The fundamental purpose of most businesses is to create value, often measured by – and sometimes identified with – the value created for shareholders. From the point of view of those responsible for directing the business, that does not specify how value is to be created. From the point of view of the members of the organization, it does not tell them what they are supposed to do. They need some direction, and what makes that direction strategic is that it answers the question: “How are we going to compete?” A good strategy is derived from insight into the basis of competition. (Location 1457)
Note: How compete
Because it involves preparation, we tend to identify strategy with a plan. This is dangerous. (Location 1467)
In 1871, von Moltke wrote a three-page essay called “On Strategy” which confronts us with that reality. “The aspiration of strategy,” he wrote, is “to achieve the highest end it can with the means available.” (Location 1469)
In the realm of organizational strategy, both ends and means are ambiguous and interdependent. The relationship between them is reciprocal. (Location 1472)
The first task of the strategist is to make resources available and deploy them. Initial resource deployment has to be broadly correct, for it cannot be made good later on. Here, detailed planning is required well in advance of any action. (Location 1473)
Note: Detailed plan
They did so because detail mattered, the arrangements were complex, central coordination was vital, they had plenty of time to get things right, and no one was trying to stop them. Their mobilization plan meant that when war was declared in 1870, they beat the French to the frontier and were able to carry the war to their territory with superior forces. It gave them a competitive advantage. (Location 1476)
Things are different, however, in the next main task of strategy: the use of these resources on operations. For here, we encounter the independent will of an opponent, which we can constrain but not command. Von Moltke continues with what has become his most celebrated observation: No plan of operations can extend with any degree of certainty beyond the first encounter with the enemy’s main body.1 Only a layman could imagine that in following the course of a campaign he is watching the logical unfolding of an initial idea conceived in advance, thought out in every detail and pursued through to its conclusion. Whatever the vicissitudes of events, a commander will need to keep his mind fixed unwaveringly on his main objectives, but he can never be certain beforehand which paths offer the best hopes of realizing them. Throughout the campaign he will find himself forced to make a whole series of decisions as situations arise which no one was able to predict. (Location 1479)
Note: First encounter
The first sentence of this passage is a necessary truth. From the point at which his forces meet the enemy, the strategist meets an independent will and is engaged in Clausewitz’s wrestling match. The outcome of his actions depends on the reactions of his enemy – even if the enemy chooses to do nothing – and those reactions cannot be predicted with any degree of certainty. (Location 1487)
He had prepared his mind to make decisions during the process of executing the strategy. He refers to them as “acts of spontaneity” and they were as much part of the strategy as the initial planning had been. (Location 1495)
The balance of probabilities is that the sum of all those chance events is as much to the detriment or advantage of one side as the other, and that a commander who in each case issues directions which are at least sensible, even if not optimal, stands a good chance of success. (Location 1503)
When all is said and done, the reputation of a commander rests on his success. How much of it is in fact down to his own efforts is very hard to say. (Location 1508)
In strategy there are no general rules or theorems of any practical value, von Moltke observes. (Location 1511)
Indeed, strategy provides tactics with the means of beating the enemy and can increase the chances of success through the way in which it directs armies and brings them together on the battlefield. On the other hand, strategy builds on every successful engagement to exploit it further. In the face of tactical victory the demands of strategy are silent – it must adapt to the newly created situation. (Location 1512)
Strategy is a system of expedients. It is more than science, it is the application of knowledge to practical life, the evolution of an original guiding idea under constantly changing circumstances, the art of taking action under the pressure of the most difficult conditions. (Location 1516)
Note: System of expedients. Evolution of guiding idea
Von Moltke effectively rejects the notion, so well established that it is often taken as a given, that strategy is a long-range plan, standing in contrast to “operations” which are short-term actions. Yet, if we are not doing strategy now, when will we do it? Surely, if a strategy has any value, it must be something we are doing now. (Location 1519)
What we do operationally must be grounded in strategy, it must provide its rationale. Operations must be the manifestation of strategy. (Location 1521)
Note: Manifesttion of strategy
Von Moltke clearly rates the value of strategy very highly, as the articulation of an “aim” which the organization’s leaders must always keep clearly in mind, and stick to whatever happens. It is not a path, but a direction. A direction could be set by giving a destination or simply a compass heading. It could be set by saying “Get to San Francisco” or “Go west, young man.”4 For the direction to be strategic, it would have to involve competition: someone else would have to be trying to stop us, or get there before us. (Location 1523)
Note: Not a path but a direction
A strategy seeks to realize the “highest end it can” given the means available. Means are limited, and so partly determine what the strategy should be. (Location 1531)
Note: Limited means
No one is in that position, but the more constrained our resources are, the cleverer we have to be. Having limited resources, we must make choices about how to deploy them. We cannot do everything. (Location 1533)
Ideally, we would set a direction by determining both the compass heading and the destination. However, we may not be able to set both. If long-term uncertainty is very high, we may not be able to say where we want to get to at a distant future point. (Location 1534)
The important thing is to get going. (Location 1538)
The best that strategy can do is to offer the probability of success, to shift the odds in one’s favor. Luck will play a part, but a good strategist can manipulate luck by loading the dice. (Location 1543)
We need to make decisions which are “about right – now,”5 take action to change the situation, and then move on to the next decision. (Location 1546)
The laws of probability dictate that if our decisions are reasonably good, we will avoid disaster and are likely to do quite well. We will certainly outperform someone who tries to take one big decision about how to do everything or someone who makes no decisions at all. (Location 1548)
We manipulate luck by making a series of small choices which open up further options. (Location 1550)
Doing strategy is a craft which, like all practical skills, can only be mastered through practice, by learning from our own and others’ experience. (Location 1551)
So although the aim is constant, the path can change; indeed, it normally should. The existence of the original aim gives coherence to the decisions and provides criteria for subsequent decision making as circumstances change. (Location 1552)
Note: Aim - coherence
However, the relationship between strategy and operations, between strategy development and strategy execution, is reciprocal: “strategy builds on every successful engagement to exploit it further.” Strategy is about fighting the right battles, the important ones you are likely to win. Operations are about winning them. The intelligent way to manipulate luck is to observe the effects of actions and exploit successes. The organization thus goes round the thinking–doing loop. (Location 1554)
Whether the consequences were intended or not makes no difference, but we can still distinguish strategy from operations. Operations are about doing things right. They involve reacting to problems and eliminating weaknesses, because in conducting operations you are as strong as the weakest link. You can improve by imitating others, because achieving operational excellence means adopting best practice. Strategy, in contrast, is about doing the right things. It involves proactively shaping events and investing in strengths, because in creating a strategy you have to make choices, to decide to do some things and not to do others. You can shift the odds in your favor by differentiating yourself from others, because a good strategy seeks uniqueness. (Location 1558)
Note: Strstegy : unique
Rather than a plan, a strategy is a framework for decision making. It is an original choice about direction, which enables subsequent choices about action. It prepares the organization to make those choices. Without a strategy, the actions taken by an organization degenerate into arbitrary sets of activity. (Location 1563)
Note: Defnitie
A strategy enables people to reflect on the activity and gives them a rationale for deciding what to do next. A robust strategy is not dependent on competitors doing any single thing. It does not seek to control an independent will. Instead, it should be a “system of expedients” – with the emphasis on system. (Location 1565)
Note: Rationale - system
Von Moltke thought through worst-case scenarios and insured against the downside while being ready to exploit the upside. (Location 1568)
When his opponents failed to do what he feared, he exploited his surplus.6 He did not plan for one, but he was prepared for one. He created a system within which his expedients were available. (Location 1569)
His opponents always ran out of options before he did. So strategy becomes “the evolution of an original guiding idea under constantly changing circumstances.” A strategy is thoughtful, purposive action. (Location 1571)
Note: Purposive
In an article published in 2001 that rediscovers some of the principles of von Moltke’s essay just 130 years later, Kathy Eisenhardt and Don Sull quote examples of companies including Yahoo! and eBay, Dell and Cisco, Miramax and Nortel as conceiving of strategy as “simple rules” which guide decision making.11 (Location 1584)
Note: Simple rules
Disillusioned by the results of planning and the need to absorb much of the literature Mintzberg toiled through (some of which, he opines, is “not very helpful” and a portion of which he describes as “complete rubbish”), Simpson concludes that the keys to success are “an overall sense of direction and an ability to be flexible.” (Location 1589)
Simpson adds an interesting comment after citing Welch. “I think more successful companies are developed through this sort of planful opportunism than through the vision of an exceptional CEO,” he writes. “They aren’t in the media spotlight as much as companies with the visionary CEO, but they are more common.” (Location 1595)
We are extraordinarily reluctant to admit that luck plays a part in business success. (Location 1601)
A recent scholarly article argues that the greater a CEO’s celebrity, the greater their perceived control over the actions and performance of their firm. This leads CEOs to continue to take actions… (Location 1604)
Hubris encourages a return to the deadly cycle of organizational stagnation we examined in Chapter 2. Because friction is rooted in human finitude… (Location 1608)
To attribute to CEO-heroes the ability to control events and be immune to good or bad luck is at heart a metaphysical worldview reminiscent of Greek polytheism… (Location 1609)
Note: Musk
Strategy, then, demands a certain type of thinking. It sets direction and therefore clearly encompasses what von Moltke calls a “goal,” “aim,” or “purpose.” Let us call this element the aim. An aim can be an end-point or destination, and aiming means pointing in that direction, so it encompasses both “going west” and “getting to San Francisco.” The aim… (Location 1611)
How we set about achieving the aim depends on relating possible aims to the external opportunities offered by the market… (Location 1614)
Note: Opportu ities - capabilities
A good strategy creates coherence between our capabilities, the opportunities we can… (Location 1618)
Different people have a tendency to start with, and give greater weight to, one or other of these three factors. Where they start from does not matter. Where they… (Location 1618)
The strategy triangle confronts us with the first observation von Moltke makes about the nature of strategy: reciprocity between ends and means. Both are ambiguous and interdependent. In most of our day-to-day problems, the end is a given. It is fixed and we just have to work out the means of achieving it. In Figure 11, the two-headed arrows indicate that our consideration… (Location 1621)
The task of strategy is not completed by the initial act of setting direction. Strategy develops further as action takes place, old opportunities close off, new… (Location 1627)
Doing strategy means thinking, doing, learning, and adapting. It means going round the loop. The reappraisal of… (Location 1629)
In assessing ends and means, we have above all to be realistic. Developing strategy is an intellectual activity. It involves… (Location 1630)
Leadership is a moral activity. It involves relating to people and generating… (Location 1631)
Developing a strategy around pre-existing emotional commitments is… (Location 1631)
Many of the best-known strategy development tools – such as Porter’s five forces and value chain models, the matrices for displaying competitive position used by BCG or McKinsey, cost analysis, supply curves, market segmentation, and so on – are in fact tools for analyzing the situation and trying to work out what drives success. Useful though they are, they do not produce strategies. They help to sort out information, simplify the complexities of reality, and focus attention on the… (Location 1636)
A notion central to Clausewitz’s thinking about strategy was that war aims and the strategy adopted to realize them should be developed from an understanding of what I am calling the “basis of competition,” and what he called the enemy’s “center of gravity.” “Making out this centra gravitatis in the enemy’s war effort,” he… (Location 1640)
Businesses engage in a vast range of activities. The art of strategic thinking is to identify which of them is the decisive differentiator, the determinant of competitive advantage. (Location 1650)
The true strategist is a simplifier of complexity. Not many people can consistently do it well. (Location 1652)
There are people who possess a highly refined ability to penetrate the most demanding problems, who do not lack the courage to shoulder many burdens, but who nevertheless cannot reach a decision in difficult situations. Their courage and their insight stand apart from each other, never meet, and in consequence they cannot reach a decision. Conviction results from an act of mind which realizes that it is necessary to take a risk and by virtue of that realization creates the will to do so… the sign of a genius for war is the average rate of success.21 The phenomenon of making good judgments in uncertainty has since been the object of careful examination. It is about the use of intuition. (Location 1662)
Psychologist Gary Klein has made a study of intuitive decision making. By observing experts in a given field in situations in which they made decisions, Klein realized that they did not follow the conventional “rational model” of developing and evaluating options before choosing between them. They seemed to go straight to the answer, using what appeared to nonexperts, and indeed often to themselves, to be a “sixth sense.” On analysis, the sixth sense turned out to be perfectly rational. It was based on pattern recognition. (Location 1668)
Through years of experience in their field, experts build up patterns of expectation, and notice immediately when something unusual occurs which breaks the pattern. These signals make the “right” decision obvious to them. (Location 1671)
Whatever the language, schooled intuition is the basis of insight. (Location 1675)
Note: Schooled intuition
Insights into the center of gravity of a business and hence innovative strategies tend to come from people of long experience who have an unusual capacity to reflect on that experience in such a way that they become aware of the patterns it shows. This awareness enables them to understand how all the elements of their experience relate to each other so that they can grasp and articulate the essentials. Because of this, what to others is a mass of confusing facts is to them a set of clear patterns making the answer to many problems obvious. Hence they have the courage to act. (Location 1677)
Note: Experience- pattern awareness - courage
“Our business,” he said deliberately, “is about service to the installer. But I am the only person around here who gets that. (Location 1695)
“We are being successful because we offer our installers better service than any of our competitors. (Location 1697)
Everyone knew that it was important – but so were lots of other things. The managing director was the only one there who regarded it as essential. (Location 1700)
They were already making their implicit strategy happen, but as it became explicit and the top team grew more aligned, so decision making and execution became more focused. (Location 1709)
In this example, service to the installer is the source of competitive advantage my friends are seeking to exploit. Their aim is to achieve leadership of their chosen segments. They have identified becoming the supplier of choice to the installer as an opportunity across the market, and by excelling at that they are unhinging the position of their major competitors. They already have the capabilities to do so, but they are investing further in those capabilities and creating others. (Location 1711)
They are doing what all successful strategists do, which is to build further on their existing strengths. They therefore have a coherent strategy – they have linked up all three corners of the strategy triangle. (Location 1715)
Note: Build on strength
Their strategy informs all their decisions and their operational plans. It is being pursued as a central idea under continually evolving circumstances. (Location 1720)
Note: Central idea
Centers of gravity are not static. (Location 1725)
Identifying the competitive center of gravity is a first step in setting direction and will inform further decisions. (Location 1728)
The most fundamental strategic decisions are those determining the compass heading and/or destination. From those follow further decisions about investment, resource allocation, and actions. The direction has to be turned into a path, the route of which is always informed by the center of gravity, but which also takes account of changing circumstances. (Location 1729)
If we approach them with the natural, intuitive decision-making approach described by Gary Klein, we run a serious risk of getting things wrong. Unless we are strategy specialists (as some consultants are), it is unlikely that our experience base will be appropriate and we may tend to prejudge an issue as being of a certain type. (Location 1734)
There is an enormous difference between knowing that something is important and realizing that it is the basis of competition. (Location 1738)
Having an inappropriate experience base is dangerous when the nature of the issue itself is at stake. We are also liable to become emotionally anchored on a certain solution or type of solution. (Location 1739)
It is usually reframing that generates creative solutions. (Location 1743)
In order to provide guidance for decision making under continually evolving circumstances, strategy can be thought of as an intent. (Location 1744)
Note: Intent
Essentially, a strategy has to articulate an intent. An intent is the decision to do something now (a task) in order to achieve an outcome (a purpose). The decision will be a function of the situation and the aim. (Location 1748)
A good analysis of the situation will result not simply in a description of things that are going on, but insight into the basis of competition, the center of gravity of the business. (Location 1750)
Strategy is essentially an intent rather than a plan, because the knowledge gap means that we cannot plan an outcome but only express the will to achieve it, and the effects gap means that we cannot know for certain what the effects of our actions will be, and that we will probably have to modify our actions to achieve the outcome we want. We can only do that if we are clear about what outcome we desire. (Location 1751)
Even if we are unsure about the destination, we can specify an end-state; and even if we are unsure about our compass heading, we can specify a next step. (Location 1758)
If we think backward from that end-state, effectively “retrapolating” from a desired future rather than extrapolating from the present, we can work out what we will need to do between now and then in order to be able to compete effectively in that future. By thinking backward we can derive a next step. (Location 1763)
By thinking through the essential demands of the present, we can also derive a next step. (Location 1770)
If we put end-state retrapolation and next-step analysis together, we can create what conceptually and diagrammatically might be called a strategic staircase, as in Figure 12 (Location 1772)
While the ambition seemed fantastic at the time, it was not chosen at random. (Location 1777)
Caterpillar’s formidable capabilities specified the end-state Komatsu had to achieve. In creating it, Komatsu worked backward from there to create a series of decisive points, which Hay and Williamson characterize as the steps making up a staircase, each resting on the previous one, as in Figure (Location 1780)
Quality and reliability were worth paying for, so quality had to come first. (Location 1786)
In a staircase, each step rests on the one below it and the whole relies on every one. (Location 1791)
The plans for each step were created not by the corporate executives, but by the teams assigned to them. (Location 1792)
The staircase enabled Komatsu to link a distant future to the present. The long time horizon created uncertainty, and the gap in capability and market position between the real present and the future aspiration was large, meaning that there was a lot to be done. The staircase enabled Komatsu to use time to structure the large number of things which had to be done and so create focus. It would have been difficult if not impossible to make progress if the company had tried to do everything at once. (Location 1793)
It would have become mired in complexity of its own making. Instead, it worked its way through a huge change program by focusing on one theme at a time, each of which resulted in a stable position which improved on the preceding one, opened up future options, and was carried out with a view to what would follow. (Location 1796)
The long time horizon produced uncertainty, and the nature of the end-state was initially quite vague, only gradually acquiring shape. Defining direction in this way offered the company enough, but not too much, to make progress. (Location 1800)
Complexity is the most insidious enemy of execution. (Location 1802)
Note: Quote
If the environment is complex, the temptation is to mirror the complexity internally. (Location 1802)
If it is fast changing, the temptation is to match it with the pace of internal change. In fact, if an organization is to cope it needs to create as much internal predictability as it can and to make things simple. (Location 1803)
The steps of a staircase are not to-do lists but sets of tasks related to each other as elements of a whole. (Location 1805)
At each level, one task is defined as the “main effort.” (Location 1806)
The steps of the staircase define the company’s main effort every year (in Komatsu, the “President’s theme”) at the strategic level. There was a lot going on in the first year apart from quality. But the quality effort had first claim on resources, got the best people, and was the main yardstick of success. “Main effort” is the one thing that has to succeed, either because it in itself will have a greater effect than anything else or because other things depend on it. (Location 1807)
As direction is passed down the organization, so every level has to work out what its own main effort is. (Location 1812)
Since the dawn of time, military commanders in a strongly disadvantaged position have recognized that they had to build capability over the course of a campaign in order to win it. It is common sense. (Location 1835)
The content of western and Japanese strategies was different because of their fundamentally different situations. (Location 1842)
The understanding of strategy behind what I am calling directed opportunism is an implication of the fundamental nature of the environment and the demands it makes on any organization which hopes to be successful in it. They are derived a priori, and von Moltke and many others since have realized them in practice. Hamel and Prahalad reach their conclusions by extrapolating from a few examples which happen to be Japanese. Their method is inductive and a posteriori. In explaining the phenomena they observe, they are not always accurate in identifying the determining variables. (Location 1845)
The variable determining Komatsu’s approach to strategy was not time, but uncertainty. It looked as if it was time, partly because uncertainty increases with time, but time was not the driver. What Komatsu did was to use a “do and adapt” approach over a “plan and implement” approach. (Location 1852)
As it moved through them, it went through a cycle which it called the PDA process – plan, do, adapt. (Location 1857)
In choosing to use the method of strategic intent, time is irrelevant. (Location 1862)
Because of their inductive method, Hamel and Prahalad only discussed examples in which the uncertainty was a function of the long time horizon and so conflated the two. (Location 1862)
The first is the value of intent to provide cohesion in uncertainty. (Location 1879)
Circumstances change, opportunities come and go, but intent is constant. (Location 1882)
The second is that the end-state is not arbitrary. (Location 1883)
The end-state is determined by insights gained from an analysis of the existing situation. (Location 1884)
Hamel and Prahalad equate intent with the end-state. However, the future end-state will remain a dream unless it shapes action in the present. (Location 1886)
Like any other goals, “stretch” goals work if they are realistic and fail if they are not. Executives who set them wisely know that there is some stretch left in the elastic band. (Location 1900)
A business strategy sets direction by considering both the ends to be achieved and the means of achieving them in a competitive environment. Means include execution. Strategy development and strategy execution stand in a reciprocal relationship and co-determine each other. A strategy is not in itself a plan, but prepares the organization for the future by providing it with a framework for decision making, based on some basic choices about how to compete. It is “the evolution of an original guiding idea under constantly changing circumstances.” Depending on the nature of the uncertainties in the environment, a strategy can set direction by giving a compass heading or a destination, or both. A robust strategy does not guarantee success, but shifts the odds in one’s favor. Thinking strategically involves “going round the loop” to establish coherence between aims, opportunities, and capabilities. It is a rational activity involving analysis, experience, and pattern recognition to generate insight into the basis of competition, the center of gravity of the business. Good strategies involve risk, but they are realistic, not heroic. A strategy is fundamentally an intent: a decision to achieve something now in order to realize an outcome; that is, a “what” and a “why.” Even if our destination is unclear, we need some sense of the end-state to be achieved which gives our current actions a purpose. And even if the current situation is volatile, we need to decide what to do next in order to get into a better position than we are in at present. Strategic thinking can therefore be laid out as a staircase: a logical sequence of steps which lead to an end-state, which is either the destination or a position which opens up future options. The steps of the staircase define the organization’s “main effort” at a strategic level. The main effort is that single thing which will either in itself have the greatest impact or on which all other things depend. It has resourcing priority. Defining main effort creates focus and energy, helps people to make trade-offs, and cuts through complexity. (Location 1911)
Each paragraph of the text, all but two of which consist of a single sentence, is devoted to a distinct point. (Location 1987)
The second paragraph articulates his overall intention. He wants to exploit the dynamic of the situation, and encourage the movement his opponent is already making while disrupting his ability to control it by taking aggressive action against any attempt to make a stand. (Location 2003)
He has the initiative and he is shaping events, but he is not planning beyond the circumstances he can foresee. (Location 2009)
In these two paragraphs, he has conveyed to his commanders a picture of the overall shape of things. They now share with him and each other a common view of the situation and what they are collectively trying to achieve. (Location 2010)
Note: Picture
The reference to Mouzon is to deal with a contingency which constitutes an anti-goal, something von Moltke does not want to happen. (Location 2016)
Note: Anti-goal
Finally, in line with the disciplines he preached, he makes sure his commanders know where his headquarters will be the following day, and when it will move, so that they can backbrief before then. (Location 2028)
The speed with which thinking followed action and action followed thinking ensured that no momentum was lost. (Location 2030)
In just 250 words, none of which is superfluous, von Moltke conveyed to his army commanders everything they needed to know to enable them to exploit a tactical success gained on the field outside Beaumont and create a decisive action. (Location 2031)
Once again, von Moltke’s tactical and operational moves were informed by his strategy. But because his strategy was an intent, not a plan, its realization was the result of tactical and operational developments which were entirely unforeseen. (Location 2037)
The instructors, who after 1872 were led by von Moltke himself, regarded it as a specific skill which needed constant practice, and, recognizing that clarity of thinking and clarity of expression go hand in hand, they taught their students how to write with a rigor only occasionally matched and never surpassed in the Humanities departments of today’s best universities: (Location 2045)
Orders were to be clear: logically arranged, short sentences, using universally understood expressions and railroad designations – 0700 for 7 a.m. and 1900 for 7 p.m. Orders were to be precise: subordinates were to be made acquainted with the intentions of their superior. Orders were to be complete – distinguishing the part that each unit was asked to perform. Orders were to be short. The rule was that they should never contain a single word by the omission of which their meaning would not be suddenly and completely affected.12 (Location 2048)
Note: Clear. Precise. Concrete. Short
‘The bewildering problem with Tony,’ John Birt remarked at one point, ‘is that while he knows what he wants, and he has the focus and direction of a good CEO, he doesn’t give clear, direct orders.’” (Location 2057)
Knowing what you want is not enough. You also have to be able to actually set direction. (Location 2059)
Unless you deliberately practice giving direction, you are unlikely to be much good at it, no matter how talented you are. (Location 2060)
She needs two things: information in order to make a decision; and support in order to act. There is no one to issue direct instructions. It is too late now to wait till someone can tell her what to do. She has to work that out for herself. (Location 2087)
She first needs to be able to orient herself. What is the situation? How important is this? Does this guy matter? Does what she does matter? To work this out she needs to have some understanding of her company’s strategy and her role in it. If the basis of competition is clear, that will be a good start. Someone needs to have understood and articulated the center of gravity, and made clear to her what that means for her. The acid test of whether she understands that or not is whether she is able to make trade-offs. (Location 2089)
The critical customer was the full-fare-paying frequent flyer. (Location 2097)
“Our employees must understand their role in delivering superior service and must have the power and ability to deal with customer problems.” (Location 2101)
In order for her to decide what to do and to act on it, Tracy then needs to understand the space she has and its boundaries – she won’t act until she knows how far she can go, how much power she has. If people do not know the boundaries, a few of them will go off like loose cannon, making undeliverable commitments and spending money like water. Most, however, knowing full well that there are boundaries somewhere, will stay rooted to the spot and do nothing. (Location 2103)
Specifying boundaries is like marking out minefields – it enables the troops to use the space between them. If they are known or even rumored to be there, but are unmarked, advances usually come to a halt. (Location 2106)
Note: Minefield
By giving them freedom to act within specified boundaries. I try to impress upon our people that in a service business the customer doesn’t expect everything will go right all the time; the big test is what you do when things go wrong. (Location 2109)
Recovery matters as much as good service.” (Location 2112)
Tracy’s decision and actions were based on her company’s strategy. Different strategy, different actions. (Location 2136)
For us, what matters is not the content of the strategy but how the strategy, whatever it is, is made to happen. (Location 2137)
The quality of the direction coming from the very top can make an enormous difference to performance. (Location 2140)
If Peter Drucker first urged managers to manage by objectives, von Moltke could be said to have led with directives. We can take over his principles in formulating strategic intent at the highest level. Such a statement needs to contain the following: An account of the situation, bringing out the essential features which bear on the course of action to be taken. (Location 2141)
Note: Account. Essential features
A short statement of the overall intent. This is classically stated as a task plus a purpose. In other words, what we need to achieve now and why (Location 2148)
Given all the possible goals, objectives, initiatives, and priorities one could and does have, this is the real focus, the thing that lends coherence to all the others. Achieving it defines success. It answers the question everyone in the organization can and should ask of their leaders, the one which is hardest to answer. The question was once succinctly formulated by The Spice Girls: “Tell me what you want – what you really, really want.” (Location 2150)
An extrapolation of the more specific tasks implied by the intent. These will have to be turned into responsibilities for the next level in the organization, and will thus define their role in making the strategy happen. (Location 2153)
Note: Extrapolation
At this level, as at each subsequent one, one should try to define the main effort. (Location 2157)
Finally, it should give any further guidance about boundaries, in particular the constraints to be observed, and indicate future decisions which may have to be taken. (Location 2158)
Note: Boundaries. Constraints
Constraints do not only define boundaries, but help to clarify what is wanted by making explicit what is not wanted. (Location 2160)
These are not binding prescriptions. The statements should reflect variations in the complexity of the task, the stability of the situation, and the expertise of the subordinates. However, experience suggests that if one of these items is left out, clarity will be lost. Experience also suggests that the more that is added – and the greater the level of detail – the more clarity will also be lost. (Location 2163)
Strategy is not developed in a vacuum, and most of the audiences will be partly initiated. Different audiences will be familiar with different parts, and the laws of friction will rule here to ensure misunderstandings, varying interpretations, and the operation of local interests. A statement of intent is needed to clarify the essential points. In many cases, it might well replace some of the noisier alternative forms. (Location 2168)
Each step was broken down into more specific elements, down to the level of projects. Within this overall framework, different product groups had main effort maps of their own. The main effort map gave shape to the overall intention and linked it to the actions of individual groups. (Location 2186)
The strategy development process was simplified and Glocer gave direction through statements of intent which specified the essentials of what and why on a single page. (Location 2188)
Note: Single page
Decisions about marginal business areas should be on the side of ruthlessness.) (Location 2200)
There are some things that everyone needs to know. However, the overall intent implies some different things to different people. (Location 2218)
As the strategic message is passed on, it may need to be modified and made more specific. The first thing that needs to be in place, then, is a channel of communication. This is provided by the reporting lines of the organizational structure. Sometimes the reporting lines facilitate the passing on of the message; sometimes they make it difficult; sometimes they make it so difficult that they block the message. When that happens the problem has to be addressed. This is not the place to expound a methodology for organizational design. That has been done by others many times already.21 We need not worry about how to make the structure perfect. However, unless the structure of the organization broadly reflects the structure of the tasks implied by executing the strategy, the strategy will not be executed. (Location 2219)
Every organizational structure makes doing some things easy and doing other things difficult. If the structure makes doing some things so difficult that there is a conflict between… (Location 2225)
So if you are serious about the strategy, in the case of conflict you have to… (Location 2227)
The issue comes down to people. They are both the problem and the answer. Nothing happens unless the key people involved in it want it to, and if the top team does not stand four-squarely behind the strategy, it is doomed. They may not say that they disagree, but if there is a conflict… (Location 2231)
Curiously, people’s convictions tend to correlate with their interests. Their interests are largely determined by the structure and the compensation system. Both, therefore, must be… (Location 2234)
To claim that organizational structure should reflect task structure is simply to say that it be “fit for purpose” given the nature of the task and the environment. As we have seen, when the situation and the tasks it required changed, von Moltke was able to reorganize his forces in the middle of a campaign, cannily sidelining a recalcitrant subordinate in the process. He did it in two days. The German Army retained this ability to change structure rapidly at all levels, forming “battle groups,” often named after their commander, to carry out specific tasks. It also gave them the ability to throw… (Location 2235)
Note: Ft for purpose
The general environment is characterized by friction. Friction means that there will always be less information available than we would like, that identifying the essential information is difficult, and that understanding each other will require special effort. That leaves us with some choices. Historian Martin van Creveld has delineated them with startling clarity: Confronted with a task, and having less information available than is needed to perform that task, an organisation may react in either of two ways. One is to increase its information-processing… (Location 2241)
Note: Frictio organization
Van… (Location 2247)
Note: Martin van creveld strategie
Whereupon, toward the end of his survey of some 2,500 years of attempts to create strategies and make them happen, van Creveld concludes: (Location 2252)
Note: Command in war
For our purposes, we need to check that there are no blocks, and, if there are, we must stop and remove them. Following van Creveld’s principle, we have to structure the tasks implied by the strategy and the units responsible for carrying out those tasks in such a way that the units can perform the tasks with the available level of information. (Location 2259)
The bottom line is that organizational structure should make doing the most important things easy. That will inevitably make doing other things difficult. There are ways of compensating for that, but the basic trade-off must be made. No structure is perfect. (Location 2261)
Note: Easy
Can we identify organizational entities which can be made wholly or largely accountable for executing the key elements of the strategy to the extent that controls are in place to measure how well they are doing so? (Location 2264)
If a major plank of what is implied by the strategic intent is split across more than one unit, think again. Those activities which most need to be coordinated should fall within unit boundaries. (Location 2266)
Are the leaders of these units skilled and experienced enough to direct their units on a semi-autonomous basis and are they committed to the strategy? (Location 2273)
The difference between compliance and commitment grows with the seniority of the people concerned. (Location 2276)
Is there enough, but not too much, hierarchy, and does each level of the hierarchy have the decision rights it needs to play its part? Hierarchy is valuable. It allows one to take decisions on behalf of many, enabling an organization to carry out different collective actions simultaneously and cohesively. (Location 2280)
However, it is also possible to have too little. If there is not enough hierarchy, effort fragments, local interests are optimized, scale and focus are lost, and cohesion dissipates. (Location 2284)
A hierarchy only works if it encompasses appropriate decision rights and responsibilities. Decision rights are appropriate if the person or group with the best knowledge and expertise in any given area is able to act in a timely manner without asking for permission. (Location 2285)
If the answers to these three questions are positive, there is a communications channel available that does not have crossed wires or lines that lead nowhere, and we can start to align the organization behind the intent.23 The structure has to be used to pass on the message. The message to be passed on is: “This is what we want you to achieve and why.” (Location 2291)
Note: The message
What does anyone need to know in order to take action? They need to know something about the overall intent. Armed with this knowledge, they themselves need to say what they are going to do as a result. (Location 2293)
In order to close the communications loop, they need to repeat the message back up, adding the specific tasks they intend to undertake. This simple but critical step – which is as obvious in theory as it is rare in practice – is called a “backbrief.” (Location 2296)
In a military organization using mission command, this discipline is called “mission analysis.” In the language I have developed for business, I call it “strategy briefing.” (Location 2299)
In the real world, managers will often have to brief themselves, based on information gleaned from multiple sources. (Location 2301)
Arriving at sufficient clarity to allow action is an iterative process. (Location 2302)
The first questions to ask are “What?” and “Why?” He went over to the whiteboard and wrote down “task + purpose.” (Location 2331)
“that’s an aspiration anyone could have. It makes no difference, it’s vague and vacuous and has nothing to do with our situation. What are we actually doing now?” (Location 2339)
New product development was a link in the whole chain, and he had made it clear to himself that success for him meant getting product out now. They had to speed things up. (Location 2358)
Over lunch, Joe wandered off outside to have a think. He had been so busy over the past six months he had hardly done any thinking at all. (Location 2362)
He had been told to do something, but how did that fit into the overall plan? (Location 2365)
He realized that the things they needed to know were things that had consequences for what they were going to do. The rest did not matter. (Location 2366)
They stared blankly at the screen. “Sounds like marketing are behind that,” someone commented. (Location 2385)
“So how do we fit in?” (Location 2393)
“Higher intent.” (Location 2403)
“What do we have to do now?” (Location 2413)
It was also becoming clear that the critical factor was time. Cost and quality were constraints. (Location 2415)
They had to focus their effort and decide which ones made the most difference. (Location 2419)
If we give ourselves a target we can’t achieve we’re just setting ourselves up for failure, as we usually do. That doesn’t inspire, it demoralizes. (Location 2425)
Setting an appropriate target was the job of the people working on them. (Location 2428)
Someone narrowed his eyes and frowned. “We ourselves cannot stop market share from declining,” he said. “Do we want to measure ourselves on that?” “Strictly speaking, no,” replied Joe, “but it is the purpose behind everything we are doing now. If the rate at which we are losing share goes down, we will know that what we are doing is working, even if we don’t hit the target of making it stop. If we don’t look at it, we might be barking up the wrong tree. (Location 2434)
We may not be measured on that ourselves, but we have to monitor it to know if we are being successful.” (Location 2438)
I will renegotiate the targets for this group. I will explain what we are doing and that the measures are just there to tell us whether we are successful or not. What we are trying to optimize is the outcome. (Location 2443)
What we are trying to optimize is the outcome. The measures are the dashboard. (Location 2444)
We’ve got a speedometer, a milometer, and a fuel gauge. We need to watch them, but we should not confuse the readings on them with what we really want to do, which is to arrive on time at our destination. (Location 2444)
Each task would become the most important thing somebody had to do (Location 2469)
They all knew their jobs better than he did and achieving what they had agreed would require some creative thinking. (Location 2474)
Let’s try to define the limits of our authority and the conditions we have to meet, and the freedoms we have within the limits which we can use to help us. We can begin with the constraints. Some constraints are a direct result of what we are trying to achieve.” (Location 2486)
They realized that by defining their boundaries, they were also identifying who they had to talk to in the organization and the outside world. (Location 2495)
Note: Boundaries
As he looked at those, Joe realized that he had defined his own role. His job as leader was to manage the boundaries of the team. He had to work on the constraints. (Location 2499)
Tracy could think in her head and act immediately. Joe had to write things down in order to engage with others and needed some structure to help him think through the issues. He needed some moments of quiet reflection and the problem required some iteration before he got to an acceptable solution. (Location 2523)
The core principle of their thinking was to understand “what” and “why,” and the consequences. (Location 2526)
If you are a soldier you will call a “what” and a “why” your “mission.” If you are an executive you can call them a “goal” or an “objective,” if that is more in tune with your company’s terminology. The word I have used is “intent.” Up to a point, the words do not matter, as long as everybody knows what they mean. (Location 2527)
Briefing is difficult to do well and has a major impact, for it essentially determines how people are going to spend their time and what outcomes they are going to try to achieve. Few things could be more important for any business. (Location 2533)
The story of Joe’s off-site meeting is a composite of several real examples, and is designed to reveal some of the thinking which typically goes on and why it is difficult. To an outsider, the result often looks banal. A good part of the value lies in the quality of the thinking which has gone on, and how deeply the protagonists engage with the strategy and their own dilemmas. The end result should give all involved an image of what is going on and their part in that. (Location 2536)
Note: Looks banal
The purpose of briefing is to enable people to act independently. (Location 2541)
Their final attempt may not have been perfect, but it was good enough to enable them to organize themselves. It involved paring things down to their essentials by leaving out more and more. (Location 2543)
Briefing is radical in the way in which it unifies effort. The effort is directed toward a desired outcome – everybody has an ultimate goal which is defined in terms of a state of affairs to be attained in the real world. The effort is expressed as action to be taken, a task – something to be done – which will be something which makes a difference. (Location 2546)
Note: Unifies effort
They turned some of the activity into purposive action and stopped the rest. That produced a degree of calm in his overworked department. (Location 2549)
As their effort became purposive, so – diverse though it was – it became unitary, which immediately created focus. (Location 2550)
Note: Purpose. Unity. Focus
Of course, we all have many things to do. We tend to put them on a list, which helps to get through the day. Lists do not help to get through a strategy. The discipline of briefing turns lists into a structure. A structure reveals how things are related to each other. (Location 2552)
The discipline of briefing turns lists into a structure. A structure reveals how things are related to each other. If there really are things on the list which are totally unrelated, you have a problem which should be raised with your boss. (Location 2553)
We now need to identify the main task which forms part of our intent. To do so, we need to understand the higher intent. (Location 2567)
Good guidance allows us to make trade-offs. With that guidance, we can put together a proper briefing and pass the message on. (Location 2577)
If we brief everybody well, they will have a strong sense of purpose. (Location 2582)
An important corollary of unity of effort is the emphasis on clarity and simplicity. What matters about creating alignment around a strategy is not the volume of communication, but its quality and precision. (Location 2584)
What matters about creating alignment around a strategy is not the volume of communication, but its quality and precision. (Location 2584)
In order for something to be clear, it must first be made simple. (Location 2585)
What is not simple cannot be made clear. (Location 2586)
The observation made by Meckel in 1877 that “every order which can be misunderstood will be misunderstood” still stands unrefuted. Hence the discipline of backbriefing. (Location 2587)
In the backbrief three things happen. The first obvious thing is that the unit being briefed checks its understanding of the direction it has received or worked out. Secondly, and less obviously, the superior gains clarity for the first time about what the implications of their own directions actually are, and may revise them as a result. Thirdly, it provides an opportunity to ensure alignment across the organization as well as up and down it. If everyone backbriefs together, the results can be checked for gaps, overlaps, and coherence. Adjustment follows. (Location 2590)
It is normal for them to get it slightly wrong the first time around. It is also quite normal for a strategy brief to require revision. (Location 2596)
Useful as it is for a team, a single strategy brief is only the starting point in closing the alignment gap for the organization. The briefing cannot stay within the team. It needs to be continued in a cascade, as in Figure 15. (Location 2597)
The cascade creates a clear line of sight downward toward actions and upward toward the strategy, and also aligns functions across the organization as they understand the part each of them is playing in supporting the others. (Location 2613)
It is logical, and once one has understood that “what,” “why,” and “how” are not absolute but relative terms which depend on what level you are on, it is conceptually quite simple. Therein lies a trap. This looks like a process, rather like budgeting, except that the content is actions rather than money. So indeed it is. The trouble is that organizations like processes. They are warm, familiar things and can be rolled out fairly easily. It is therefore tempting to understand strategy execution as a process, distribute the forms, get everyone to fill them in, and relax. The result will be resentment, rigidity, and stagnation. (Location 2615)
Note: Is not a process
The essence of briefing is not a process, but a skill. Although the strategy briefing template looks like a form, it is really a set of… (Location 2621)
Unless and until the thinking skills are in place, a briefing cascade will be stillborn. It not only will not… (Location 2622)
The skills must be developed first, before the cascade process. Strategic briefing works because it helps people to do their jobs effectively and stops them from wasting time. But… (Location 2624)
The steps required to achieve alignment in the context of friction have been famously and memorable enumerated by the Austrian psychologist Konrad Lorenz. Drawing on his observations about what is needed to make people change, we might modify them for an organization as the following: 1 What is said is not yet heard. 2 What is heard is not yet understood. 3 What is understood is not yet believed. 4 What is believed… (Location 2625)
How does a briefing cascade address Lorenz’s steps? STEP 1 First, a briefing is written down. This ensures that it has been heard.26 There is a great deal of noise in an organization. There are strategic plans, initiatives, projects, operational plans, budgets, and targets. In all of this, everybody has to have a clear answer to the question: “What do you want me to do?” Writing a strategy briefing ensures that this at least has been heard. STEP 2 Secondly, it ensures that what has been said and heard is also understood. The acid test of understanding is being able to say what the message implies about what an individual should do. What ultimately defines understanding is being able to extrapolate implied tasks now and being able to make trade-offs in the future. To the discipline of structuring implied tasks so that they have no gaps and no overlaps is added the further refinement of identifying a main… (Location 2634)
Rigor is added here by demanding the explicit articulation of the intention both one and two levels above. In other words, I have to understand both what my boss and their boss in turn are trying to achieve. Everybody understands the intentions of everybody else two levels up in the hierarchy. This practice has been arrived at by trial and error. Experience suggests that understanding the immediate intention one level up is not enough to give full alignment if things change, and that understanding the intention three levels up is of little additional help. (Location 2649)
STEP 3 Understanding gets compliance. Only belief gets commitment. There are many reasons why people might only go through the motions. Two of the most common are that they do not believe a course of action is feasible or that they do not believe it makes sense. Strategy briefing flushes this out. It requires the stipulation of resources and constraints. It is perfectly valid to come back and say: “I can do this, but not that, unless I have more resources or more time.” The process checks the realism of the direction. It also checks its relevance. A nice idea which is impractical or not making a contribution to the real objective will not survive a strategy briefing. STEP 4 In an organization, what needs to be done must be promulgated. It requires advocacy. After the backbrief, the owner of each task has to brief their own people and cascade the process down. The tasks they identify as constituent of their part in the plan have to be owned by the next level. If they have done a rigorous strategy briefing exercise themselves, it will make the job of doing so easier for the level below them. Indeed, it gets simpler as it goes on. STEP 5 The identification of tasks enables the mission to be acted on. As the process cascades down, the tasks become increasingly concrete and specific until no more analysis is necessary or possible. However, by that point, actions taken will all be relevant and cohere. It is simply a matter of structuring what needs to be done. Simple, perhaps, but something which requires effort. Hence at the end the question of the mission’s validity is explicitly posed. I have to assess whether or not the situation has changed from when I was first briefed and what that implies about what I ought to do now. I have several stepped options. If there has been a change and I can still fulfill my original part in the plan by modifying what I was planning to do, I carry on. However, if the change is so substantial that I can no longer carry out my original task, or carrying it out no longer makes sense, I should refer back. If that is impossible, I do whatever I judge to be most in keeping with the guidance I have been given about the intent. STEP 6 Action can begin, but how do we know that it is the right action and when enough is enough? Only if we can measure the effects. It is through measures that we know how to adjust and when a task is completed. (Location 2660)
Some businesses are run “on the numbers” because their strategy is designed to optimize them. In a military context, this is rarely the case. Nevertheless, even in a military context, some effort is made to measure the outcome in order to improve clarity. For example, if the mission is “to make town x safe in order to establish stability,” what does “safe” mean? In the end it will be a judgment call, but some measures help. So a peacekeeping force will monitor the number of shooting incidents, the number of teenagers on street corners, the number of refugees returning, the level of economic activity, and so on.27 This provides some data for whoever has to form the judgment that the town is “safe” and that the peacekeepers can be withdrawn. (Location 2679)
No set of measures will give an automatic answer. (Location 2685)
In the final analysis it is behavior that counts. If we close the knowledge and the alignment gaps in the ways suggested so far, we will be able to gain traction, focus effort, and deliver a strategy – until something unexpected happens, which sooner or later it will. (Location 2686)
People at all levels can find themselves in situations where they have to exercise independent thinking obedience. They can only do so if the organization has already prepared them by providing them with the information they need to take decisions. That information can be formulated as a statement of intent, which distills the strategy for everyone. That statement can then be broken down into its component parts and used to start a process of briefing each level. A briefing should cover the higher intent, up to two levels up, the tasks that this implies for the unit concerned, where their main effort should lie, and their freedoms and constraints. Working this through in a structured way pays dividends in aligning the organization both up and down levels and across functions. The whole organization can be aligned if briefing is done in a cascade, with each level adding more specificity to the tasks implied by the higher intent, and then presenting the results to the level above in a process called backbriefing. This checks mutual understanding, allows for adjustment of the original brief, and, when done collectively, helps alignment across functions. A briefing cascade will only work properly if the organizational structure broadly reflects the task structure implied by the strategy. If it is in conflict with the strategy, it should be changed before anything else. It requires an appropriate level of hierarchy of entities that can be made wholly or largely accountable for critical tasks, led by people who are skilled and experienced enough to make autonomous decisions. (Location 2691)
Von Moltke was clear that his job was not merely to develop campaign strategies and set direction on campaign, but to build an organization capable of taking decisions and acting in line with the direction he set. In fact, he spent most of his time doing this. He saw the outcome in terms of success or failure as being as much down to the organization as a whole as to his own decisions. He had humility, a quality that has only recently been noted in the business literature as a characteristic of many leaders of outstanding companies. (Location 2709)
Of the eight papers, five were on military subjects requiring a modest amount of technical knowledge. The questions were mainly problems requiring a solution, and marks were awarded for the quality of the decision, the reasoning behind it, and the originality of approach. (Location 2725)
The syllabus of the War Academy was designed not simply to build skills, but to impart a shared approach and ethos. The single aspect of performance emphasized more than any other was individual initiative and responsibility. (Location 2742)
If a commander’s intent was not clear, subordinates had the right, indeed the duty, to demand clarity. They had the right to exercise freedom of judgment. Everybody knew that. Everybody also knew that when, as expected, things started to go wrong, they could expect the organization to help them and they were expected to help others. People knew how they could expect others to behave. That built confidence. (Location 2746)
They were taught to recognize patterns and use their intuition, to take decisions which were “about right – now” rather than wait for more information, and then take another decision as they saw the effects of the first. (Location 2751)
Note: Effect
He created a unified operating model by working on the minds of his generals, allowing them to absorb a common doctrine based on principles rather than rules. (Location 2755)
His methods did not only develop what Argyris and Schon have called “single-loop learning,” in which an organization learns to correct its actions so as to carry on its current policies and fulfill its current objectives, but “double-loop learning,” in which the organization’s policies, objectives, and behavioral norms are modified. (Location 2756)
Note: Loop learning
Von Moltke reinforced the behavioral norms in the way he reacted to mistakes. He knew that punishing one case of misjudgment would kill off every attempt to foster initiative in the officer corps for years to come. (Location 2759)
“All commanders must always be aware that an omission or failure to act is a graver charge than making a mistake in the choice of means.” (Location 2763)
Superior officers were instructed to refrain from harsh or wounding criticism of mistakes lest it undermine the self-confidence of subordinates, to praise the fact that they did show initiative, and to correct them in such a way that they learn. Otherwise, as one general wrote, “you will extinguish a hundred positive initiatives in order to prevent one error, and thereby lose a tremendous amount of energy.” (Location 2765)
Creating a common culture is a long and difficult process, but some things can have a big impact. (Location 2774)
She is ready because she has understood what to do. But being ready is not enough. In order to act, she must also be willing and able to do so. To be willing and able she needs support, both physical and moral. The organization must provide her with the means to deliver what is needed, and she requires confidence – in herself, in her boss’s reaction, and in the rest of the organization. (Location 2783)
People only show independent thinking obedience if they have the means to do so, and are operating within a network of trust. (Location 2789)
Most organizations will by definition mainly employ average people most of the time. (Location 2797)
The real challenge is how to create an organization which enables average people to turn out above-average performance. (Location 2798)
What really matters is not the performance of the individual stars but the performance of the collective. (Location 2799)
Those in one group like being told exactly what to do and following procedures. They are uncomfortable with responsibility and lack the self-confidence to exercise independent judgment. So their default behavior pattern is to delegate upward by continually asking for direction. The other group consists of natural authoritarians who only feel safe if they have total personal control. They are uncomfortable with uncertainty and lack the trust in others to delegate. So their default behavior pattern is to micro-manage and punish deviation from set procedures. (Location 2803)
Both groups are a problem, though the severity of the problem varies widely. (Location 2808)
The type of direction and the amount of space given to any subordinate must be appropriate for their particular skills and experience. (Location 2816)
The most serious problem is the chronic micromanager who is also an authoritarian. Such individuals micromanage under all circumstances because their psychology leads them to fear uncertainty and seek control. (Location 2817)
The psychological makeup of the authoritarian character was studied after the war by an international group led by German philosopher Theodor Adorno, which published a seminal study in 1950.21 Authoritarians are conventional, are uncritical of and submissive toward those of higher status, are inclined to think in rigid categories, and tend to follow rules and procedures. (Location 2818)
Note: Adorno
In contrast with the authoritarian, the autocrat is not interested in details, but is conceptual enough to be able to grasp the essentials of a situation and self-confident enough to be comfortable with uncertainty. Autocrats seek responsibility and are able to trust others if they have grounds to do so. They are thoughtful and humane. (Location 2836)
Note: Autocrat
If you want to change the way people think and act, even if you do not want to found a religion, you need to create disciples to send among the people as well as preaching to the people yourself. (Location 2849)
It can be argued that the military have the luxury of times of peace when they can train for “the real thing.” In business, “the real thing” is always going on, and finding time for training is difficult. (Location 2850)
It is not necessary to train everybody in the organization in order to inculcate directed opportunism. (Location 2857)
The key group is upper–middle management, people running a department or unit who are senior enough to have to make strategic decisions. Typically, this is two levels below the executive board. They need to master the disciplines of strategic thinking and briefing. If the development effort is focused on them, they will then pass down the skills and develop them in those working for them. (Location 2858)
Because they have day-to-day operational roles, they will have a greater influence on culture and behavior than more senior executives. They are usually the best place to start. It may seem more logical to start at the top. In practice, it is more difficult. (Location 2860)
It is very hard to craft a good statement of intent without first understanding the implications for the lower operational levels. (Location 2862)
High-performing organizations tend to have a strong culture. By having a strong sense of “the way we do things round here,” they offer potential employees a choice about what sort of working environment they want. (Location 2874)
Sometimes, as at P&G, the culture is not explicitly articulated; in others, like Nordstrom, it is documented. At Nordstrom it is embodied in an employee handbook, which is simply a single five-by-eight-inch card stating: “Our number one goal is to provide outstanding customer service.” It then lays out what it calls the Nordstrom Rules: “Rule #1: Use your good judgment in all situations. There will be no additional rules.” (Location 2876)
Statements and documents should be used to reinforce and consolidate rather than lead change. The best ones are short, simple explanations of the principles guiding behavior which help people to make choices, and are best illustrated with stories. If the principles are so universal and bland that no trade-offs can be made, they will have little impact. (Location 2885)
Note: Documens should not lead change
People tend to be risk averse and compliant. That can pose a problem both for those who delegate responsibility and for those who are asked to accept it. (Location 2895)
In delegating authority for decision making one gives away power without giving away accountability. (Location 2897)
Letting go is hard to do but can bring great rewards. (Location 2901)
The answer to this type of fear is to create controlled situations in which you can test how much trust to place in people. (Location 2901)
There are two dimensions to trust. One is moral – I will trust you if I am confident in your motives. In the end, people who optimize their own interests over those of the collective should depart. We can usually identify them, and a good briefing process will help to flush them into the open. The other is practical – I will trust you if I believe you are competent. Competence is a function of context. I may be quite willing to trust you to drive me to the airport, but not trust you to fly me across the Atlantic. So it is up to me to create a context in which I can trust you. (Location 2917)
Note: Create context to trust
The framework of strategy briefing allows me to do this. I can determine how much space to give you by setting the boundaries and the control loop. The default is to give you as much as possible, but if I have doubts (for example because you are inexperienced or we have never worked together before), I can make the boundaries narrower, and I can make the control loop tight or loose. (Location 2921)
Directed opportunism is a tough approach, but it is enlightened. It is not about being nice to people, but respecting them. The bedrock of morale is feeling confident that you are making a contribution to a collective purpose. (Location 2926)
Experience suggests that managers who have the courage to let go are often surprised by just how much their subordinates are capable of achieving when given good direction. It exploits and develops human potential. Making a start is simply a matter of having faith that the potential is there. It is remarkable how seldom that faith is disappointed. (Location 2930)
In its essentials, the model claims that the behavior exhibited by groups of actors in organizations is a function of their goals, their resources, and the constraints under which they operate, as illustrated in Figure 16. (Location 2939)
In order to explain behavior in an organization we need to understand: Who the groups of similar actors are and how they interact with other groups who have different levels and sources of power. The real goals these groups have, be they explicit or implicit. Their resources, which are not only physical (such as money, equipment) but mental or moral (such as authority or the expectation of mutual support). Their constraints (time limits, other demands, limits to power and authority, including the ability to influence others, and problems they face in achieving their goals). (Location 2943)
In order to influence the resulting behavior, managers can change the system either directly (by changing the actors, setting new goals, giving more resources, or removing some constraints) or indirectly (by, for example, changing reporting lines, processes, information, training, and so on), as in Figure 17.32 (Location 2950)
Figure 17 The human system can be managed We are usually alerted to dysfunctional behavior because we notice effects which will fail to add up to the outcomes we want. The systems appear to be malfunctioning, although on their own terms they are functioning perfectly well. To get them to deliver what we want, we need to modify some or all of the variables in the system, watch what happens, and carry on modifying them until we get the behavior which achieves the effects we are after. (Location 2953)
In trying to achieve what we all really want, obeying orders is in fact an unnatural learned behavior. (Location 2982)
Nature programmed us to think for ourselves, take risks, and seize unexpected opportunities. This in turn suggests that if an organization wants to encourage such behavior, the most important thing it can do is to identify and stop doing whatever is currently inhibiting it. To put it bluntly, it should get off people’s backs. (Location 2982)
People are very good at finding and using resources even if they are less than obvious. And not only are they good at working around constraints, they can manage to actually turn them into resources. When we don’t like the result we call this “playing the system.” From a neutral point of view it is a compliment to human creativity. The challenge is to harness this energy productively. Doing so usually means changing the system, not the players. (Location 2986)
Constraints are often a valuable resource, and not only for canny software engineers. (Location 3004)
These stories also show that one of the challenges of strategy execution is to meet not only the company’s objectives, but the objectives of the people who work in it as well.36 If company objectives are in conflict with personal ones, only one of them will win. (Location 3013)
If company objectives and personal objectives are not in conflict but are indifferent to one another, employees will generally be compliant, and some things will get done, at least until the going gets tough. Only if the two are aligned and mutually supportive will employees feel commitment. (Location 3017)
While it will not guarantee such alignment, good formalized or semi-formalized briefing and backbriefing will tend to flush out incongruities. (Location 3019)
A budget is a resource and a constraint, and so needs to be considered as part of briefing. Logically, briefing should come first. Practically, they co- determine each other and the process can be iterative. (Location 3035)
After briefing, backbriefing, and budgeting, each unit is in a position to write an operational plan with more detailed actions, responsibilities, and timelines. These plans are not needed for control purposes, and can be left to the individuals directly concerned. (Location 3036)
The more objectives someone has, the harder it is for them to focus on what really matters and the more their freedom of action is constrained. (Location 3040)
Dispensing medals or money is part of corporate body language. It reveals what is really valued, whatever people say. (Location 3042)
In assessing the performance of the organization and of individuals, do not try to replace judgment with measures. Measures offer some objectivity, so they are a valuable support mechanism. In the final analysis, assessment requires human judgment. As the word itself suggests, organizations are organic. They are human systems and only work if the people in them can trust each other’s judgment. We should do our best to ensure that the judgment is informed, but the ultimate judgment is about the fulfillment of the intent. Performance appraisal should therefore be driven by the briefing process and is a result of it. (Location 3048)
If an organization systematically builds the strategic thinking and briefing skills of its executives, it can create something very powerful. It can turn a set of principles into an operating system for the whole company. (Location 3053)
Note: Os
We need to create room for more frequent reviews to ascertain what effects are being achieved and changing our actions. (Location 3060)
Budgeting is hard enough work as it is – doing it once a year makes many companies almost grind to a halt, so why invite more pain? The answer is that the budget is a business matter, and all that is generally needed are adjustments. (Location 3065)
The other is that financial markets like predictability. They like strategies to be plans, and everything to go according to them. Deviation is seen as a “failure to deliver.” (Location 3068)
It is unwise to make promises to the financial community which make the company a hostage to fortune. (Location 3073)
During the year, the strategy and the budget are reviewed in March, June/July, and September. The following year is prepared in November. (Location 3077)
The main theme of the reviews is the question: “Has the situation changed?” This is where the measures come in, but they alone are not enough. Participants must also be able to address the questions “Why” and “What does that imply about what we should do now?” In order to answer those questions, direct observation is required and causality needs to be debated. (Location 3081)
The focus is not simply on understanding what has happened so far, but on what to do next, even if nothing has changed. This serves not just to adjust but to affirm and re-energize. (Location 3093)
Budgets were originally designed as a control mechanism. As such they are traps, leading us into the jaws of the effects gap by allowing us to use them to exert more detailed control (see Chapter 2). (Location 3094)
Organizations like processes, but they adore metrics. The knowledge gap acts like a vacuum which sucks metrics in. Their precision creates the satisfying illusion that they lack ambiguity, and our ability to collect and collate them creates an equally seductive feeling of control. As advances in technology over the last 15 years or so have allowed the collection and dissemination of ever more measures, adoration has turned into infatuation. Infatuation leads to perversity. Metrics become an end in themselves, and get separated from what it was they were intended to measure in the first place. They become a fetish. This danger is particularly pronounced if the metrics are not simply monitored to see whether things are on track, but are turned into targets which define performance and hence individuals’ success. (Location 3100)
From the point of view of making strategy happen, we must grasp that linking performance to pay raises the stakes. If we first turn measures into targets and then link targets to incentives, we have created a very powerful force for good or for ill. We have also made it very hard to change our minds about the measures. And we have also invited the creation of a fetish. (Location 3111)
Target setting is not inherently bad; far from it. But the practice leaves a lot to be desired. It is precisely because measurable targets are so powerful that we need to treat them with great care. What gets measured gets done. That is the beauty of it. The Beauty can turn into a Beast. What gets measured gets done – and nothing else. If we are not careful, we may get exactly what we have asked for, and regret it. (Location 3117)
If we are to know whether or not we are making a strategy happen, we need a strategic control system: financial and nonfinancial measures which tell us what the effects of our actions are and whether or not we are on track.46 Otherwise, it is hard to adjust. However, replacing direction setting with control would be like asking a compass to tell us our destination, rather than using it to help us get there. (Location 3142)
Your boss has asked you to drive from Chicago to Oskaloosa, Iowa, a journey of 317 miles. He’s prepared a budget for you with clear metrics. You can spend no more than $16 on gas, you must arrive in 5 hours and 37 minutes and you can’t drive over 60 miles an hour. But no one has a map with a route to Oskaloosa, and you don’t know whether you’ll run into a snowstorm on the way. Ludicrous? No more so than the way many companies translated their strategic plans into operations. (Location 3146)
There are some dark sides to the balanced scorecard.52 The first thing is that – all protestations to the contrary apart – a scorecard is fundamentally a control system, whereas the prime purpose of strategy is command; that is, setting direction. Unless the “what” and the “why” are clear, the fetishization of the metrics is a near certainty. Metrics provide a means of making strategic thinking more precise, a set of milestones, and a means of identifying the destination. They help us to navigate. If we follow a satellite navigation system slavishly we can end up in traffic jams, roadworks. and one-way systems we would rather avoid.53 If we hit our targets and don’t fulfill the purpose, we should not congratulate ourselves and relax, but change the targets. (Location 3160)
In the language of business, “command and control” has come to mean “micromanagement” with an authoritarian bent. In military thinking it is the means of setting direction and achieving specific outcomes. (Location 3171)
It is ironic that of the two concepts of “command” and “control,” we feel far more comfortable with control than with command. Perhaps we have the feeling that command has the rather undemocratic ring of telling people what to do, whereas control is just about acting responsibly. Whatever the reason, it has taken us down a path which has led us to widespread acceptance of the principle that it is a good idea to use a control system like the balanced scorecard to exercise command. (Location 3177)
Reliance on the measure alone could lead us astray. We need specific, local observation as well. (Location 3187)
We maintain our aim, set the system to behave in a way that we believe will fulfill the aim, use controls to monitor the results by measuring them, and then take action to alter the behavior of the system, or act on things outside it which affect the outcome (such as draughty windows). This is not very complicated; it is merely common sense. (Location 3190)
Command is an act of will, based on considerations outside the system… (Location 3193)
The system will not tell us what is right. Control is the ability to adjust, which means knowing what is actually happening and having some means of affecting it. Deciding what to do to affect it is another act of command. Without the original act of command, control is helpless because it does not know what it is trying to do. And no act of command can be… (Location 3195)
To exercise command is to articulate an intention to achieve a desired outcome and align a system to behave in such a way that the… (Location 3201)
Note: Kern command
To exercise control is to monitor the actual effects resulting from the behavior, assess the information, and report on the system’s performance with respect to the desired outcome. It is then the function of command to decide what to do: to adjust the behavior of the system, take some other action outside the… (Location 3202)
Note: Control monitor
The second observation about the balanced scorecard is that, despite Kaplan and Norton’s distinction between the need to monitor a large number of diagnostic measures and to set only a few strategic measures as targets, in practice they elide this critical difference, even recommending the general rules that… (Location 3205)
The third aspect follows from the critical difference between monitoring and targeting. Monitoring should be balanced. The instrument panel of a car or aeroplane should provide a range of information. Most of the time we are not very interested in how much fuel we have, but if it runs out the journey is at an end, so when the fuel is low we become very interested in it. At any point in time, the scorecard is actually unbalanced. In operations, everything matters… (Location 3210)
The fourth thing is that while no driver would undertake a journey in a car with no instrument panel, when they’re actually driving good drivers spend most of their time looking through the windscreen at the road and the other traffic, and react fast to what they see. Similarly, no company should neglect the need for a scorecard, but sophisticated measuring systems can encourage bad driving habits. If there is a problem with a major customer it may not be a good idea… (Location 3217)
Better to get out there and find out what is wrong. You will learn a lot more that way anyway. There is no substitute for direct observation, which is why von Moltke had a telescope, talked to people all the time, and had his own… (Location 3221)
The fifth concern is that a scorecard does not explain causality. This is where Kaplan and Norton go seriously awry. In The Balanced Scorecard, they explicitly define strategy as “a set of hypotheses about cause and effect,” and in The Strategy Focused Organization, this belief underpins the… (Location 3225)
We could get by with balanced scorecards and strategy maps alone if business organizations were frictionless machines. But in fact they are complex adaptive systems trying to survive and prosper in a fitness landscape full of diverse organisms with different agendas in which their interaction produces unpredictable first-, second-, and third-order effects. Every cause is itself an effect and every effect a cause, linked by feedback loops, some dampening, some reinforcing. (Location 3233)
We are surrounded by independent wills, and some of them are actually hostile. When thinking strategically, we must bring them into our equation from the first, and when acting strategically, we need an organization which will adapt to what they do. (Location 3240)
Furthermore, the causal nexus that the balanced scorecard is supposed to illuminate cannot be complete, even in theory, for it is not based on a systematic view of stakeholders, let alone all the other actors who can affect outcomes. It has no “competitor” perspective, no “government” or “regulator” perspective, no “social” or “environmental” perspective, any more than the instrument panel of a car monitors the traffic conditions, road surfaces, or roadworks. It merely tells you some useful things about how you are doing. (Location 3242)
In the final analysis it is behavior that counts. If we close the knowledge and the alignment gaps in the ways suggested so far, we will be able to gain traction, focus effort, and deliver a strategy – until something unexpected happens, which sooner or later it will. At that point everything depends on people. (Location 3250)
There is a general requirement for individuals in a leadership position to adapt what they do in line with the organization’s intent, and to take responsibility for their decisions. Not everybody will be willing to do this. Equally, there will be others with an authoritarian personality who will be unwilling to give subordinates the space they require to be adaptive. Both groups are minorities in the management population, but they need to be detected in the recruitment and development process. The bulk of the management population do not fall into either of these problem groups, but they need to be developed so that they master the appropriate briefing and decision-making skills. A common development program covering the behaviors which go along with these skills can begin to shape the culture, as long as it is reflected in day-to-day practice. Even if they understand what part they are to play in executing a company’s strategy, people do not always behave in the way required. However, they usually do behave rationally from the point of view of the subsystem of the organization to which they belong. If we examine the goals, resources, and constraints of the subsystem, we can understand why they behave as they do and can take steps to change the subsystem itself in order to produce the behavior we want. Day-to-day practice is in part determined by organizational processes, most importantly budgeting and performance management. They should themselves be aligned with the strategy, and using a briefing cascade to link them all together is a practical way of achieving this. They should also enable rather than inhibit adaptation. A good first step toward making them flexible is to create an operating rhythm with quarterly reviews of progress, in which adjustment is expected and the budget is a treated as a rolling forecast. In order to know if the intent is being realized, we need a system of metrics. However, we should not allow metrics to be separated from what they are supposed to measure and substitute for it, or they become a fetish. A scorecard should be used to support strategy execution by monitoring the effects actions are realizing, not to supplant strategy. Business leaders should supplement internal scorecards by taking a look outside through the commander’s telescope. (Location 3255)
Business has inherited from the military the distinction between strategy and tactics. Strategy was the art of the general and tactics the craft of the soldier. (Location 3277)
Because it was unprecedented, nobody knew what effects it would have. (Location 3297)
Note: Dit.
Fifty years before the Battle of the Somme, von Moltke had realized that thinking in terms of strategy and tactics was not going to work. He was the first to conceptualize a third level situated between strategy and tactics which he called “operations” (Figure 20).2 This was the realm of free thinking that translated strategy into action, requiring strategic thinking and operational direction on the part of the entire officer corps. The three levels co-determine each other. Von Moltke saw the relationship between them as reciprocal. (Location 3305)
Note: Operations. Codetermining
In von Moltke’s mind, “operations” was an area of problem solving. The binding strategic objective was the war aim, which specified “why.” The operational objective specified “what.” Operational decision making meant thinking through how to do what was needed to achieve the strategic aim, considering alternative solutions to the problems raised by the specific situation, and evaluating possible courses of action.4 It was the realm of oneoff, nonroutine decisions in which von Moltke demanded free, creative thinking of himself and others, for even the operational objective could change. Tactics, on the other hand, was the realm of routine day-to-day activities which could be learned on the parade ground, and some general rules embodying best practice about how to carry out nonroutine but recurrent tasks. Routine tasks such as forming up a column of march or deploying a skirmishing line were standardized and everybody was trained in how to do them. Today, they include things such as forming a road block, and are called standard operating procedures or SOPs. They are very useful because they create uniformity and therefore predictability where that has high value. They enhance efficiency by enabling these tasks to be carried out at speed with little supervision. (Location 3310)
We might say (very broadly) that strategy involves business units, operations involves departments and functions, and tactics involves subunits, whether in support roles or with direct customer contact. The three levels are distinct but linked together. Strategic thinking penetrates operational activity. Operational decisions… (Location 3321)
Because strategy is unitary, it allows these decisions to be consistent, even when taken by different people at different times under different circumstances. Everybody follows tactics, and managers do not have to waste their time thinking about how they should be carried out. They… (Location 3324)
With three conceptual levels, von Moltke was able to reconcile two apparently conflicting requirements: flexibility and efficiency. As one writer has put it: “productivity is highest when most of the activity necessary to win is highly routinized, but specialized work is… (Location 3326)
Formulating strategy is “specialized work” whereby top management makes a commitment on behalf of the organization about how it is… (Location 3329)
Introducing the concept of an operational level was an innovation. However, by placing it between strategy and tactics, it is given limits. Not everything the army did required creativity, and no officer was free to do everything exactly as he pleased. Extending the operational level down too far would… (Location 3332)
The tactical level imposes a deliberate constraint on independent… (Location 3335)
Tactics specify how to do things and are binding on everyone. Good… (Location 3335)
Von Moltke took a hand in creating tactical… (Location 3336)
Note: Tactical guidelines
Good tactics were a matter of competence and the result of good doctrine and good training. Officers could rely on their troops and NCOs to know how to do things. They concentrated their minds on the nonstandard realm of… (Location 3339)
Note: Routine vs judgement
So the realm of standardized tactics was just as important as the realm of flexible operations. Moreover, occasions arise even within the operational realm… (Location 3341)
Von Moltke makes the point more generally, and adds: “At the same time, it was recognized how important it was to ensure that the Army Commands had an overview of the motives behind the orders issued to them by the Supreme Commander and properly understood them.” (Location 3357)
Note: Motives
Even when assuming direct control, von Moltke explained himself, and he relinquished control again as soon as he felt able to do so. (Location 3359)
Note: Explain and relinquish
It is hard to talk about something if it does not even have a name, and unfortunately in business we do not make the distinction between strategy, operations, and tactics. (Location 3366)
Strategy is unitary and binding, and tactics are standardized and binding. So unless we create a third level, we have tied everybody’s hands. (Location 3368)
Business thinking about these three levels is fuzzy and in practice we try to plug the chasm between strategy and tactics by using targets and initiatives which get layered on top of day-today activity, (Location 3372)
In some businesses tactics are very important. A tactical advantage over a competitor could turn into a strategic one. (Location 3402)
In other businesses, such as consulting, tactics do not confer much of an advantage. Every client is different, every project has a different solution, and creativity is at a premium. Almost all the staff are highly paid professionals who are self-motivated and recruited for their talent. If they are told to follow a standard procedure, the first thing they will do is to question it and tell you why it won’t work in their case, and the second thing they will do is to invent a better one. (Location 3412)
Note: Haha
most of the business of a consulting firm is about the art of execution. (Location 3417)
There are periods in most businesses when things are fairly predictable both in the short and long term. Such times should be exploited by honing tactical efficiency. The danger is in believing that those times will last. Large changes often creep up unnoticed as the cumulative effect of small increments. (Location 3420)
NATO defines command as “the authority invested in an individual for the direction, coordination and control of military forces.”16 Command is something granted to someone by an external party. The external party confers rights of authority and along with them go responsibilities, duties, and accountability. (Location 3429)
Command is as unavoidable in the business world as it is in the military one. Because it is a real requirement, somebody has got to do it, and because of its central importance in business we have to talk about it. So we do. (Location 3437)
Business thinking suffers from offering the simple duality of management and leadership, and the leadership literature contains futile debates because of a… (Location 3443)
