Steps Towards Business Agility
The Art of Strategy: Challenges
2. How to use and reduce inertia, entropy and friction
What is strategy? Why do you need it? How do you do it? And, how can you be more certain to succeed? The Art of Strategy provides timeless answers to these eternal questions. It is a modern reading of Sun Tzu’s Art of War using the lenses of strategists John Boyd and Simon Wardley (swardley). All parts. Other reading formats.
Sun Tzu
To successfully deploy strategy,
people and equipment are needed.
This incurs huge costs —
psychological, social and financial:
employing people and securing their services;
finding allies and securing their support;
keeping the organization united in purpose.
Therefore, always aim for swift success:
delay grinds down people and drains finances.
A mission too tough weakens people and drains the organization;
then, competitors will exploit the situation
and even skilled leadership lacks solutions.
While it is mindless to move too fast,
it is even more foolish to take too long.
Organizations suffer mightily
when letting strategy deployment take too long.
Successfully deploy strategy by being aware of these challenges.
Entering new areas incurs huge costs —
psychological, social and financial.
Most ventures into new areas fail:
investments here drain the organization
and leave existing areas suffering.
Therefore,
treat stakeholders well;
use equipment in better ways;
use competition’s weaknesses;
treat those you recruit well;
This improves resilience.
In strategy deployment,
treasure success and avoid long campaigns.
Master strategy
to secure the organization’s safety and sustainability.
Boyd
From A Discourse on Winning and Losing.
Operate at a faster tempo or rhythm than adversaries — or, better yet, get inside adversary’s Observation–Orientation–Decision–Action time cycle or loop (OODA Loop) … Simultaneously compress own time and stretch-out adversary time to generate a favorable mismatch in time/ability to shape and adapt to change. “The entire operational and tactical leadership method hinged upon . . . rapid, concise assessment of situations . . . quick decision and quick execution, on the principle: ‘each minute ahead of the enemy is an advantage.’“
Confusion and disorder are related to the notion of entropy.
Entropy is a concept that represents the potential for doing work, the capacity for taking action, or the degree of confusion and disorder associated with any physical or information activity. High entropy implies a low potential for doing work, a low capacity for taking action or a high degree of confusion and disorder. Low entropy implies just the opposite.
Viewed in this context, the Second Law of Thermodynamics states that all observed natural processes generate entropy. From this law it follows that entropy must increase in any closed system — or, for that matter, in any system that cannot communicate in an ordered fashion with other systems or environments external to itself.
Accordingly, whenever we attempt to do work or take action inside such a system — a concept and its match-up with reality — we should anticipate an increase in entropy hence an increase in confusion and disorder. Naturally, this means we cannot determine the character or nature (consistency) of such a system within itself, since the system is moving irreversibly toward a higher, yet unknown, state of confusion and disorder.
An entropy increase permits both the destruction or un-structuring of a closed system and the creation of a new system to nullify the march toward randomness and death.
The atmosphere of conflict is friction (or entropy).
Friction is generated and magnified by menace, ambiguity, deception, rapidity, uncertainty, mistrust, etc.
Friction is diminished by implicit understanding, trust, cooperation, simplicity, focus, etc.
In this sense, variety and rapidity tend to magnify friction, while harmony and initiative tend to diminish friction.
People, ideas, and hardware — in that order!
Wardley
From Wardley Maps.
Climatic Patterns for Speed and Cost
Success breeds inertia. Any past success with a component will tend to create resistance to changing that component. There are many different forms of inertia. All forms of inertia relate to some loss of capital whether physical, social, financial or political.
Inertia increases with past success. Be careful with inertia, it will grow and tempt to you away from change even when you must. The more success we have had with a component then the more resistance and bias we have against it changing.
Inertia kills. It’s rarely lack of innovation that gets you, but rather inertia caused by pre-existing business models. Blockbuster out innovated most of its competitors through the provision of a web site, video ordering online and video streaming. Its problem was not lack of innovation but past success caused by a business model based on late fees.
Efficiency does not mean a reduced spend. Whilst evolution does result in more efficient provision of a component this should be not be confused with a reduction of spending on it. In many cases there is a long tail of unmet demand that efficiency will enable or previously uneconomical acts that become feasible or even the creation of new industries that result in greater demand. This is known as Jevon’s paradox.
Doctrine for Speed and Cost
Manage Inertia. At some point you will face inertia to change e.g. existing practice, political capital or previous investment. Try and understand the root cause. Ideally use a map to anticipate this before you encounter it and hence have prepared countermeasures. If possible, use maps to enable people to discover their own inertia.
Move fast. The speed at which you can loop around the strategy cycle is important, i.e. the mean time it takes to respond to e.g.
- an economic change;
- a failure;
- a competitor’s move;
- a new entrant;
- a new need;
- your own move.
There is little point being fast in product development if it takes you a year to make a decision to act. An imperfect plan executed today is better than a perfect plan executed tomorrow.
Think fast, inexpensive, restrained and elegant (FIRE). Break large systems down into small components, use and re-use inexpensive components where possible, constrain budgets and time, build as simply and as elegantly as possible.
Remove bias and duplication. Use multiple maps to help you remove duplication and bias within an organization. You will often find in any large organization that there are people custom building what is a commodity or rebuilding something that exists elsewhere. Remember, that they’re not doing this because they’re daft but because of pre-existing inertia or the lack of any effective communication mechanism i.e. they simply don’t know it exists elsewhere. People can get very defensive in this space and want to shut you down.
Use standards where appropriate. If something is industrialized and if standards exist then try to use them. There’s always a temptation to build a better standard but avoid this or building abstraction layers on top of other “standards” unless you have an extremely compelling reason to do so. If you need a toaster, buy a toaster and don’t try building one from scratch.
Use appropriate methods and tools. Try to avoid the tyranny of one. Understand that there is no magic solution and that you have to use multiple methods (e.g. agile or lean or six sigma) as appropriate. In any large system, multiple methods may be used at the same time. Be mindful of ego here, tribes can form with almost religious fervor about the righteousness of their method. Have fortitude, you’ll often find you’re arguing against all these tribes at the same time.
Optimize flow. Within a map there will be many flows of capital — whether information, risk, social or financial. Try to optimize this and remove bottlenecks.
Do better with less. Have a bias towards continuous improvement.
Effectiveness over efficiency. Whilst optimizing flow is important, be careful not to waste valuable time making the ineffective more efficient, i.e. doing the wrong thing better. Understand the landscape and how it is changing before you attempt to optimize flow.
Gameplays for Speed and Cost
Speed up by accelerating evolution through:
- Education: overcoming user inertia to a change through education. There are several forms of inertia (see Doctrine Manage Inertia above) and many can be overcome directly with education. Don’t underestimate this.
- Open approaches: whether source or data or practice, the act of making something open reduces barriers to adoption, encourages collaboration and accelerates the evolution of the component.
- Market enablement: encouraging the development of competition in a market
- Industrial policy: government investment in a field.
- Exploiting network effects: techniques which increases the marginal value of something with increased number of users.
- Cooperation: working with others. Sounds easy, actually it’s not.
Slow competition down by:
- Intellectual property rights (IPR): IPR, e.g. patents, can be used to slow evolution by limiting competition even to the point of ring fencing a component making it difficult for others to evolve it further.
- Fear, uncertainty and doubt: often used to slow evolution by exploiting inertia to change within customers and forcing new entrants to divert energy away from the components and into countering the accusations.
- Reinforcing competitors’ inertia: identifying inertia within a competitor and forcing market changes that reinforce this.
- Raising barriers to entry: increasing expectations within a market for a range of user needs to be met in order to prevent others entering the market.
- Defensive regulation: using governments to create protection for your market and slow down competitors.
- Exploiting existing constraints: finding a constraint and reinforcing it through supply or demand manipulation.
- Creating constraints: supply chain manipulation with a view of creating a new constraint where none existed.
The Art of Strategy: All Parts
Contents: A very short summary of each part
Introduction: What is strategy and why do you need it?
- Assessments: How to assess, prepare and shape
- Challenges: How to use and reduce inertia, entropy and friction
- Success: How to succeed together with stakeholders
- Setup: How to create resilience
- Momentum: How to use creativity, focus and timing
- Shaping: How to shape and avoid being shaped
- Engagement: How to engage using surprise
- Adaptations: How to adapt to shifting situations
- Movements: How to move to optimize momentum
- Landscape: How to approach difficult areas
- Situations: How to handle difficult situations
- Disruption: How to disrupt and avoid being disrupted
- Intelligence: How to use intelligence to create foreknowledge
Annex: Wardley Mapping Examples
Glossary: Explanation of key terms and symbols
Acknowledgements: Standing on the shoulders of giants
Sources: Where to learn more
Other reading formats: Hardcover, paperback and PDF
This is provided as Creative Commons Attribution-ShareAlike 4.0 International by the author, Erik Schön.
Wardley Mapping is provided courtesy of Simon Wardley (swardley) and licensed as Creative Commons Attribution-ShareAlike 4.0 International.
