A New Model For Strategic Wisdom
Dear Friends,
Hereby I happily announce that on 22 December 2017 I will present my ‘bible’ of strategic thinking to the world. I will do this by defending a 448 page PhD thesis that could envigorate strategic thinking and strategy teaching for decades to come.
In this document I state that for strategy to enter a wisdom age, we ultimately need some sort of outline for an all-encompassing and unifying thinking exercise that guides the strategist from ‘ignorance’ to ‘wisdom’. To this end, the thesis presents an elaborate new Model for Strategic Wisdom that maps in full the yet unchartered field of how to think when it comes to strategy
The Model I present embraces the notion that we should detach ourselves from our desires to rush decisions, and instead seek to distinguish the true from the false and the facts from their unfounded assumptions, and then choose among courses of action. As you will learn, such wisdom is all about discernment, and about forming your own justified and true beliefs about an industry or company. At the same time the Model will show why a lot of strategy talk has little to do with knowledge.
In the build-up to the book introduction I will publish three articles on LinkedIn.
This article: Introduction
2nd article: The Model and strategy teaching (published 30 November)
3rd article: The Model and strategy consulting (published 15 December)
PhD Defense: 22 December
WHERE DID THIS COME FROM?
There are many tools and frameworks in the field of strategy. They are inspiring and certainly easy to use, but I could never see how a mere focus on past observations or just four or five aspects of a business could possibly constitute ‘good’ strategic thinking. That is why I went on a quest to counter all the obvious delusions, blind-spots and thinking deadlocks I encountered in my professional life. As it turns out, it took me two decades of experience in corporate finance, private equity and strategy consulting and many years of hard thinking to basically answer one simple question:
How should one think strategically?
What I present is not uncontested. The included ideas have been discussed with, among others, key representatives from McKinsey, BCG, Roland Berger, PWC Strategy Consulting, Accenture Strategy, Deloitte Strategy and INSEAD, both in Europe and the US. Naturally, I hope that teachers, students and professionals aspire to understand and apply the Model, and recognise in it a solution to many of the conceptual, theoretical and practical challenges that still define the strategy field.
IS IS USEFUL IN PRACTICE?
The Model incorporates everything I consider to be fundamental in strategic thinking. However, I am also a practitioner and that is why I don’t just tell you how to think, I also provide the tool to do this. This explains why the thesis is so thick. It covers everything from how to understand value creation, and how to approach and gather information, to how to logically generate and justify all relevant beliefs, and how to apply this understanding to coherently envision the future. All regardless of the industry or company.
Naturally, because it is not published yet I can only rely on my own experience. That experience, however, is that the usefulness of the Model for structuring business world information and for the thinking based on that information is unparalleled. I can promise you this: you’ll never be stuck at another ‘So what?’ question again, ever.
HOW IS IT DIFFERENT?
Most well-known strategy tools like Porter’s Five Forces or McKinsey’s 7S model are alike in that they specify what aspects of a company you must think about. However, what they don’t do is show you why that would be correct, how those aspects relate to long-term value creation, or how that thinking would actually work. In other words, it means they prescribe the topics of your analysis, but they are not concerned with the truth-value of what you end up saying. For that, you would need to know why and – most importantly - how to think. Existing models simply do not provide such guidance, and that is why they can never lead to true knowledge.
The Model I present is completely different. For one thing, it does in fact show you how to structure your thinking to gain a full and accurate understanding of any industry or company. And it does this in a way that enables you to perfectly align strategic and financial consideration from the very start. Naturally, such differences would not emerge unless the Model’s design process was not also fundamentally different, which is the case. In fact, you will learn that the Model’s development did not rely on observation at all. Instead, it’s design is based on much more fundamental stuff like the study of what ‘is’ (ontology), the study of the limits of and conditions for true knowledge (epistemology) and an effective use of language (rhetoric).
What is also an important difference is that the Model prepares you for strategic decision making for an actual company, not a statistical company. It does so by systematically guiding you through an empirical phase, a sensemaking phase, and an envisioning phase. Ultimately, the Model distinguishes a maximum of 49 subcategories of information that need to be addressed in a particular order and to a particular end to enable the type of sound strategic reasoning that wisdom calls for.
The underlying claim is: the closer you get to a proper application of the Model, the more sound your reasoning will be, and the better your decisions. For ease of use, an overview is provided in the thesis of one guiding question for each of the 49 subcategories of information. These questions might not be infallible in the way the Model is – hence, they do introduce a level of bias - but the guidance they offer comes close to the Model’s intentions. As a bonus, I provide a tool to expose those false strategy prophets.
HOW IT CAN IMPROVE STRATEGIC DECISION MAKING
I could provide an elaborate substantiation here, but it comes down to three things: the Model prevents bad answers, it shows you how to justify what you say, and it provides the outline for the telling of a coherent story of any industry or company. The first guarantees more good answers, the second that you prefer the use of logic over educated guesses, and the third benefit is in itself ‘truth-conducive’, which means that it makes a certain outcome more likely or possible.
HOW IT CAN IMPROVE BUSINESS TEACHING
Supported by 6,000 pages of hard-core strategy literature I can safely say there exists no other model or framework for company-specific strategic thinking, and certainly not something that is actionable. This means that the literature is able to inform the strategist, but it still cannot guide him or her in practice. This omission explains why students always struggle to present a well-structured, coherent, and purposeful strategic analysis of a company or industry. As argued, the Model I present provides a solution to this problem.
Put more technically: the Model aids the strategist in the pro-active constructing of what is ultimately needed for strategic wisdom, which is an accurate, dynamic and for decision making purposeful mental model of a company. Application of the Model will demand a paradigm shift. At the same time, it also pretty much covers every relevant theoretical statement-, sensemaking-, practice-, financial-, knowledge- and cognition perspective that is identified in the literature and its theoretical underpinnings were already compared to the works of strategy professors at Harvard, Wharton, Tuck and Stanford.
A VALUABLE SOLUTION
The purpose of the model is threefold: to improve strategic decision making, to bridge rigor and relevance, and to provide an actionable solution for the two main problems business teaching, being a lack of integration and too few opportunities for critical reflection.
To the extent that the Model lives up to its promise, it contributes to the field of strategic management in at least three ways. Firstly, it maps in full the yet uncharted field of how to become ‘strategically wise’. Secondly, it enables a pedagogy in which all financial and non-financial knowledge is purposefully integrated in one coherent strategic thinking exercise, it provides a detailed answer to Herbert Simon’s quest for a ‘full solution to the organizational design of a business school’. Thirdly, with the Model, students can be taught to reflect on decision making using rich, domain-specific content matter.
WANT TO KNOW MORE?
For now I will only hand out copies of the thesis in book form at the defense ceremony. If you are unable to attend but would still like a copy, let me know and I’ll see what I can do.
