By Mark Chussil

I get around a bit. I conduct business war games for companies in different industries and different countries; I speak at conferences; I teach classes. I’ve noticed a few things. This isn’t the grand unifying theory of strategy that we all crave. It’s just a few observations as we lurch, slide, dive, bound, stagger, drag, and hop(e) from 2011 to 2012.

Budgets versus investments

A classic difference between an established company and an upstart is that the former sees budgets and the latter sees investment. That seems true of countries too. Of course there’s nothing that forces established companies or countries to see budgets instead of investments; it’s a decision, an attitude, and some do focus on investments. The point is that upstarts always see investments, and when budgets confront investments, investments win. (See also Do Not Overtighten and Answering Four Questions Well.) I suspect there’s a link between a budgets culture and lack of agility. It’s unclear to me which is cause and which is effect.

Take my risks, please

I spoke a few weeks ago in New York City at a conference of chief strategy officers sponsored by The IE Group. Many speakers spoke of the need to encourage risk-taking, yet outside such conferences we see little patience or tolerance for the hiccups that come with risks. Take Netflix. People have written scorching articles about CEO Reed Hastings, based on a couple of ambiguous short-term metrics, when he’s clearly making a long-term shift to avoid copying Blockbuster’s implosion. I’m not saying Hastings is right, nor am I saying he’s wrong. What I am saying is that it’s wrong to judge the quality of a long-term strategy on the basis of ambiguous short-term metrics. (See also Netflix Gone Vile: Fourteen Reasons Why Netflix Was Wrong, Or Not.) And I am also saying that, in an intolerant you-should-have-known culture that demands eternal and infallible accountability, how can we expect even a successful CEO to accept necessary risks?

I’m still confused

The last observation for now is that much of the public discourse around debt and austerity confuses me. I don’t particularly mind confusion, especially because I’m used to it. I envy people who glow with the comfort of certainty even if I don’t admire them. Anyway, it seems to me that when supply exceeds demand there is no reason to increase supply, so until demand grows we’re not likely to hire or build much. The movie Field of Dreams had a catchy line but it’s backward. It’s not “if you build it, they will come.” It’s “if they come, you will build it.” We all — companies, countries, citizens — need to demand demand.

Thank you, and best wishes for 2012

Thank you for being here with me. Best wishes for you and your family to enjoy a safe, peaceful, joyous, and prosperous 2012.

by Mark Chussil

I remember where I was when JFK was assassinated, when Neil Armstrong walked on the moon, when the Challenger exploded, and on 9/11.

Today, when Steve Jobs died, I was on vacation in Napa Valley. Even in a winery’s tasting room, someone thought the news important enough to burst into the room and make an announcement.

Steve Jobs was a complex man, a thinking man. http://bit.ly/qvAJsl He pushed others hard and he pushed himself hard. We find that motivating. No one is driven to achieve easy things; we are driven to achieve hard things.

When’s the last time we mourned the passing of a business leader? What other business leader would we mourn?

What do the answers to those questions mean?

I’m thinking about those questions and I want to take my answers to heart. I know that no one will burst into a room to announce my demise. Still, when my time’s up I want to be able to look back and honestly say I am satisfied with the decisions I made. Not in some revisionist or perfectionist way, but rather that I made thoughtful decisions with what I knew and believed at the time I made them. That applies to my personal life and my business life, because in truth there is no separation; there is only my life.

Farewell, Steve Jobs. Thank you for what you did for us, for your dedication to excellence, and for living consciously.

“I didn’t say it would be easy. I said it would be worth it.”
Heard from Dan Gibbons, one of my teachers.

“How we spend our days is, of course, how we spend our lives.”
Annie Dillard

“Don’t get called out on strikes.”
Leo Durocher (?)

“Do not pray for easy lives. Pray to be stronger men.”
John F. Kennedy

“May you live all the days of your life.”
Jonathan Swift

by Mark Chussil

If we ran a survey asking “are you biased?” we would find no one is. Bias is a characteristic of others, not of ourselves. It’s about you, not me. Which is ironic, and the point.

We see others’ biases, or at least what we perceive as their biases, and don’t see our own. Our biases don’t feel like biases. They feel like self-evident, virtuous truth. That’s why I find it so valuable to read lucid commentaries on bias. They help me recognize and combat my own. My biases, that is, not my commentaries.

And so, kudos to two well-known writers.

Paul Krugman, the Nobel Laureate and columnist at The New York Times, wrote Ideas Are Not The Same As Race. He describes how reasonable self-selection can incorrectly appear as bias.

John Allen Paulos, the Temple University mathematician, ABC commentator, and author of Innumeracy, wrote Who’s Counting: Testing and Hiring Disparities Need Not Imply Bias. He describes how innocent coincidences can incorrectly look like bias.

(See also Fire! Or Maybe Not, my take on the New Haven firefighter discrimination case that went up to the United States Supreme Court.)

Bias doesn’t affect only hiring. It can show up in strategy decision-making. There’s the concept of investing in fast-growing products, which is circular because investment feeds growth and biased because it is self-fulfilling. (See also “viral,” which produces a similar result through a different mechanism.) Another example: many online or text-message surveys use only self-selected respondents. That doesn’t guarantee the surveys will be wrong but it does guarantee they’ll be right only if they’re lucky.

So far we’ve been talking about logical, mathematical bias. There are cognitive biases too, such as overconfidence, confirmation bias (paying attention to evidence that supports a view and discounting evidence that goes against that view), availability bias (vivid anecdotes that stick in our memories more than cold, sober science), and so on. For more on those subjects, I recommend The Psychology of Judgment and Decision Making by Scott Plous (Wesleyan University) and Judgment in Managerial Decision Making by Max Bazerman (Harvard Business School).

Bias is hard to eliminate when we’re unaware of it but not that hard to control when we are aware of it. Here’s what I’ve found helps.

• Pause when you hear the words “obvious” or “because.” Is something really obvious or really because?
• Ask the question implicit in Dr. Krugman’s and Prof. Paulos’ commentaries: Is there something other than prejudice (or whatever) that could cause this outcome?
• Learn, even a little, about probability and randomness, or make friends with someone who has. Prof. Paulos’ books are terrific and non-technical. So is Leonard Mlodinow’s The Drunkard’s Walk.
• Follow Prof. Plous’ advice: “Stop to consider reasons why your judgment might be wrong.” That’s what stress-testing, such as business war gaming, is about.
• Apply Prof. Plous’ advice when working with others. I’ve conducted business war games around the world, and the stop-to-consider process that’s built into them has led to stunning, profitable insights.
• Think about how to answer a question before actually answering it. That might seem silly or obvious, but we often jump to methods even faster than we jump to conclusions. I’ve found this approach tremendously effective when I build strategy simulation models. (See also All About Models.)
• Think you’re not biased? Just for fun, and to support cold, sober science, try Harvard’s fascinating, confidential Project Implicit.

“Fortunately for serious minds, a bias recognized is a bias sterilized.”
Benjamin Haydon (1786-1846)

Dr. Krugman tweets as @NYTimeskrugman. Prof. Paulos tweets as @JohnAllenPaulos. I tweet as @BusinessWarGame and @NiceStart.

“What’s Safer: a Chevy or Mercedes?“ So asked the Wall Street Journal on September 22, 2010.

I remember car makers resisting safety innovations (going back to mandatory seatbelts!) the same way they resist fuel-efficiency standards now: it will cost too much. (Meaning, we think our sales will drop?)

The WSJ’s article reminds us of the 1994 Chevy Cavalier, an affordable compact car. No airbags, no electronic stability control, a price around $12,000 iin 1994 dollars.

The article continues that the 2011 Chevy Cruze, successor to the Cavalier, has 10 airbags, electronic stability control, and systems to prevent rollovers and to tighten seatbelts in advance of a crash. Starting price, $16,995… which, in 1994 dollars, is $11,553.

There’s much more in the WSJ article. What I particularly notice is three things.

First, costs did not go up. The automakers found efficiencies. Their suppliers, selling more units, got scale economies and went down the experience curve. And the automakers improved fuel economy and reliability while they were at it.

Second, the automakers switched from thinking “cost” to thinking “opportunity.” They compete now on safety. A combination of federal regulations and greater consumer awareness made safer cars easier to sell than less-safe cars. (Notice the flight from Toyota with the sudden-acceleration issue, which turns out to have some interesting twists that we won’t go into here. The point is the flight due to the perceived safety problem.)

Third, many automakers initially resisted the safety improvements. Due, perhaps, to what I call spreadsheet thinking, where costs are easy to see while benefits are hard to see. Spreadsheet thinking can unintentionally encourage companies to make shortsighted decisions. (See ”Do Not Overtighten.”)

Two bottom lines.

First, as the WSJ says: “Embarrassment, it turns out, is a powerful motivator.” In 2003 the Insturance Institute started publicizing the results of safety tests. The cars of that year didn’t do well on the tests. Today, cars do much better.

Second, cars are indisputably safer than before. It shows. As the WSJ said, “The death toll on U.S. highways in 2009 is the lowest it’s been in 50 years, according to a federal Department of Transportation report earlier this month.”

Finally, an issue of trust. How can consumers trust companies to make safe products, and to make products safer? Some companies do, as a matter of principle and/or differentiation. (In general, think about airlines. Crashes are very bad for business.) Others don’t. We can rationalize that customers can decide how much safety (or eco-friendliness or whatever) they want to pay for. On the other hand, executives have told me that a “level playing field,” meaning rules they must all follow, is effective because no one is at a perceived cost disadvantage.

To that I would add that better decision-making would help everyone — consumers and businesses — tremendously. It is possible to factor safety and other so-called “intangibles” into strategy decision-making, and to do it quantitatively. I know it’s possible because I’ve done it, and I’m not the only one who has done so. Whether something is a threat or an opportunity is better decided by applying brains than by jerking knees.

Who doesn’t like airbags? These days, no one.

Update, September 5, 2011. The New York Times reports, in A Debate Arises on Job Creation and Environment, on similar does good / too expensive debates in the political arena. Some claim EPA (Environmental Protection Agency) regulations cost jobs and are too expensive in a fragile economy. Others say those claims overstate costs and ignore benefits. Where’s the embarrassment? Where’s the opportunity-thinking? And what’s the equivalent of airbags for the economy and environment?

Update, April 13, 2011. The Wall Street Journal reports, in Hospitals Duel Over Wait Times, that hospitals are starting to advertise low wait times in their emergency rooms.

Update, March 22, 2011. Being green in the construction industry is becoming like being green and being safe in automobiles. In Show to Highlight Fuel Savings, the Wall Street Journal says “Makers of construction equipment, suddenly facing riskier near-term economic prospects, will stress fuel economy and compliance with tougher environmental standards at the industry’s mammoth Conexpo trade show opening Tuesday in Las Vegas.”

Update, October 1, 2010. The Wall Street Journal reports, in Plane Fires Prompt Battery Safeguards, that “U.S. regulators are devising various ways to crack down on air-cargo shipments of…electronic devices that contains lithium ion batteries.” They’re prompted by the fatal crash of a UPS 747 “filled with electronic goods” on September 3 in Dubai, due to fire, and five other safety incidents related to lithium batteries since August. A trade group for the wireless-device industry has told the White House that “restrictive rules could lead to price hikes for consumers.” Contrast: “At least one major cargo carrier, FedEx Corp., has committed to voluntarily equip more than 95 of its long-range, wide-body planes that fly oceanic routes with fire-suppression systems.” (Those are the aircraft at most risk and that often carry electronics.) FedEx started developing fire-suppression technology several years ago after fire broke out on a FedEx DC-10, caused by undeclared hazardous materials. No mention of price hikes at FedEx.

This post is an invitation for you to attend a free webinar presented by ACS’ Mark Chussil on behalf of the LinkedIn group “Corporate Planning & Global Industry Segmentation.”

The webinar will be on Tuesday, November 17, 2009, at 1:30 pm east-coast time, 10:30 am west-coast time. It will be one hour in duration. You can access video through a web link that you will receive 30 minutes before the webinar begins. (See “How to sign up,” below.) You can access audio by dialing a phone link that you’ll receive with the web link.

The topic is Winning: The How and Why of Business War Games.

Overview

Business war games sound cool. That’s because they are. Business war games are more than a way to escape the tedium of gigabyte spreadsheets and death by PowerPoint. They are a way to put your knowledge of your business to better use. With business war games strategists can achieve surprising new insights into businesses they know well. And by the way, business war games are not about war.

Agenda for our interactive presentation

• Why business war games work where conventional strategy development doesn’t.
• What business war games are good for.
• The essential elements of successful business war games.
• How to design or select a business war game for your company.
• What strategists have learned from business war games; in other words, war stories.
• Q&A

About the presenter

Mark Chussil is Founder and CEO of Advanced Competitive Strategies, Inc. and a pioneer in the field of business war-gaming and strategy simulation. He is also a Founder of Crisis Simulations International, LLC. Mark’s technologies have won a patent (for CSI’s DXMA™ crisis simulator) and an industry award (for ACS’ ValueWar™ strategy simulator). A highly rated, thought-provoking, and entertaining speaker, Mark has lectured and conducted hundreds of business war games on six continents. He has written two books, chapters for five others, and dozens of articles and essays. He earned his MBA at Harvard and his BA at Yale.

How to sign up

You can sign up in either of two ways: through ACS or directly through the LinkedIn group. Whichever you select, please sign up before November 17.

Signing up through ACS

Send an email to info@whatifyourstrategy.com saying that you want to participate in the webinar. ACS will inform the group moderator and email access information to you 30 minutes before the presentation begins.

Signing up directly through the LinkedIn group

• Register on LinkedIn if you don’t already have a profile.
• “Search Groups” for “Corporate Planning & Global Industry Segmentation.”
• Ask to join that group by clicking on “Join this group,” displayed at the right of the group description.
• After the group’s moderator sees and approves your request (usually the same day), visit the group and find Discussion “Special Presentation: Tuesday, Nov 17th.”
• Add a comment to say you will attend.
• On November 17 you will receive an email 30 minutes before the presentation with the call-in number and the URL for the webinar.

Please feel free to share this invitation with your colleagues.

We hope you’ll join the webinar!

This is an announcement for a business war game that ACS will present in Washington, DC, on September 30, 2009. It is in conjunction with the Greater DC chapter of SCIP, the Society of Competitive Intelligence Professionals.

Click here to register for the event. For location, cost, agenda, and contact information, please see the end of this announcement.

We all know we’re in an economic crisis, and we all know that no one knows what we should do. We all know that, difficult as it may be, we still have to make strategy decisions. And we all know that it is a time of opportunity as well as a time of danger.

It’s a perfect time for business war-gaming.

Imagine you are Alan Mulally, the CEO of Ford. Or you are the CEO of GM, Hyundai, Toyota, or Volkswagen. (Of course, business war-gaming is for companies in any competitive industry, not just automobiles.) How do you decide what to do? How do you know what will work? Will you be a hero, or will you fail miserably and publicly? How can your company tap the opportunity and avoid the danger?

Business war gaming helps you plan with greater confidence, generate consensus and action, and improve your chances of success. It helps you generate valuable surprise insights. It helps you think more clearly, anticipate second- and third-order effects, and see the true big picture. Business war games help strategists plan realistically, not optimistically.

Companies such as British Airways, GlaxoSmithKline, Shell, Weyerhauser and many more have worked with Advanced Competitive Strategies to run business war games and make much better strategy decisions.

ACS’ Mark Chussil, veteran of more than 100 business war games, will join us for an interactive, hands-on, half-day session. The highlight of the session will be our own business war game exercise. The automotive industry will be our use case, perhaps the most interesting industry to examine right now because of the perfect storm of long-term trends impacting all at once. Mark led the SCIP Oregon chapter through a similar exercise earlier this year, a program that received very positive reviews. We’re excited to bring Mark and this program to the Greater Washington chapter.

About the speaker

A highly rated, thought-provoking, and entertaining speaker, Mark lectures and consults around the world about strategic thinking, advanced business war games, and computer simulation. Mark is the Founder of ACS. He has received a patent and an industry award for his simulations. He has worked around the world with dozens of Fortune 500 companies on six continents, and he has published extensively about competitive strategy. Mark earned his MBA from Harvard and his BA from Yale.

Location, cost, agenda, and contact information

Northrop Grunman
NGIS Competitive Analysis
7575 Colshire Drive
Mailstop C4S2
McLean, VA  22101
Office # 4232S
(703) 713-4000

SCIP Members – $35.00
Non-Members - $45.00
Students - $25.00 (Non-SCIP Student member, please contact Robyn Reals)

Agenda
8:00AM – 9:00AM: Registration & Networking
9:00AM  11:30AM: Presentation 

Contact Information
Jeff Trexel, Greater Washington DC Chapter Chair, jeff.trexel@infoition.com,
703-556-0027
Robyn Reals, SCIP Education Manager, rreals@scip.org, 703-739-0696 x107

ACS announces an upcoming workshop about business war-gaming and a forthcoming article about a business war game for the automobile industry. We also invite strategists to participate in a free and fascinating pricing-strategy tournament.

Workshop
Desperate Competitors and New Rules: Using Business War Games to Compete Effectively During Turbulence. ACS will present this two-day workshop Kuala Lumpur (August 17-18, 2009). The workshop is sponsored by IBN. See below for more about the workshop.

Article
Honey, We Shrunk the Industry: An Automotive War Game. This article will appear in the July/August issue of Competitive Intelligence magazine, published by SCIP (the Society of Competitive Intelligence Professionals). It is based on an ACS blog essay of a similar name.

Pricing-Strategy Tournament
ACS is conducting research on pricing strategy using our Decision Tournament™ technology. We’re using the research in a book about decision tournaments. You can see how your pricing strategies compare to those from hundreds of other strategists! It’s free, fun, serious, fascinating, unique, and confidential. You will develop pricing strategy for businesses in three industries, and you will receive a report detailing the results and implications of your strategy. And if you’re the top pricer, you will be honored on our website! It may not be an Academy Award, but it’s not chopped liver either. Please write to info@whatifyourstrategy.com to enter.

The Desperate Competitors Workshop
How can you compete when everything is changing? How can you know where to commit your resources when the risks are so high? How can you choose new strategies when old strategies have failed and the future is uncertain?

Desperate Competitors and New Rules will challenge the ways you may have thought for a long time. That’s a good thing. What worked in the past may not work when the market is much different, and the companies that succeed in the future will be those who adapt quickly and effectively to that future.

The workshop is not about cheerleading, unsubstantiated magic, miracle strategies, or brow-beating. It is not about uncovering obscure factoids or improving the bottom line by 0.0371 percent. It is not a lecture.

The workshop is not about the past. It is about the future.

Desperate Competitors is about questioning, competing, strategy, and thinking. It is about improving strategists’ skills, applicable every day and starting right away. It is highly interactive, with case studies, lively exercises, simulations, and actual war games. It is designed for people ready to compete effectively by thinking differently.

For more information about the workshop, please write to info@whatifyourstrategy.com.

Patent
Designed by Mark Chussil and implemented by Noam Ben-Ami, Crisis Simulations International’s DXMA™ was recently awarded United States patent number 7,536,287. Mark is a Founder of CSI as well as being Founder and CEO of ACS.

Conference
Mark will speak at the Pricing $trategies at Retail conference, sponsored by the Institute for International Research, on Tuesday, July 14, in Chicago. He will present ACS’ popular Top Pricer Tournament™, in which the conference attendees will compete to see who can develop the most-effective pricing strategy in three different industries. If you would like to join hundreds of executives from around the world by entering the tournament — it’s free, easy, and completely confidential — please write to info@whatifyourstrategy.com. You won’t have to wait for the conference to get your results.

For a 20% discount on the conference, mention code SPKRM2106MC when you contact IIR to sign up.

Here’s what the conference brochure says about the Tournament:

“All bets are off and muted panic rules the land during the current crisis. Hoping to maintain sales volume, companies race to the bottom on prices, not knowing where the bottom is. Hoping to maintain margins, other companies take a deep breath and hold their prices, not knowing what their competitors will do. How can you raise the odds of making good pricing decisions in bad economic times?

“[In the Top Pricer Tournament] You will make pricing decisions that we will simulate against your competitors – the other attendees at the conference – to see how well your strategies perform. You will see a powerful new technology to help pricing strategists develop excellent pricing strategies. You will get a startling new perspective on successful pricing and learn how better to achieve pricing excellence.”

You can read more about the tournament in When I Was Wrong and Millions of Pricing Simulations.

Public Business War Game
ACS will facilitate a public business war game centered on the automobile industry on June 9, 2009, in Portland, Oregon. It’s sponsored by the Oregon chapter of SCIP (the Society of Competitive Intelligence Professionals), and you are invited. Here is program and registration information.

Recommended Book
How do smart strategists choose bad strategies? That’s ACS’ business. How do good people do bad things? That’s Stanford Professor Emeritus Philip Zimbardo‘s business. Prof. Zimbardo has written a stunning, powerful, and intense book, The Lucifer Effect, based on his famous Stanford Prison Experiment. You can read about it at http://lucifereffect.org/. We’re citing it here not because it’s linked to ACS’ usual material. We’re citing it here because it’s fascinating and important.

ACS is proud to facilitate a joint meeting of the Oregon and Seattle/Puget Sound chapters of SCIP (the Society of Competitive Intelligence Professionals). Open to anyone (see registration information below), this is an intensive half-day program where you participate in a business war game on the automobile industry.

Of course we don’t expect to solve all the industry’s problems in half a day. We do, however, expect to give you a hands-on taste of business war gaming and show how you can generate competition-beating surprises for your business.

Program Description
What would you do if you were the GM CEO? Or Alan Mulally of Ford, Akio Toyoda of Toyota, Tom Purves of BMW, Robert Cosmei of Hyundai, or another industry leader? And not only what would you do, but how well would your strategies work?  Here’s your chance to find out. What’s more, here’s your chance to learn how to stress-test your strategies and anticipate your competitors with business war gaming. You might even have some fun while you’re at it. Not to mention the cool Top Strategist bragging rights, complete with official certificate and web-wide recognition, you and your team will secure if you win the war.

War games and simulations almost always lead to surprises. Why? Not because they have more decimal points or curvier demand curves. Rather, because they help us think better. They help us take competitors into account realistically, not optimistically. They help us focus on cause and effect. They help us think things through and see the big picture. They help us learn to think strategically.

And while there are no sure things in life, business war games tilt the odds in your favor. That’s what happened for companies like British Airways, GlaxoSmithKline, Shell, Weyerhaeuser, and a couple dozen more around the world, when they worked with Advanced Competitive Strategies. You’ll get a taste of what they discovered in this special, hands-on, half-day session facilitated by Mark Chussil, ACS’ Founder and CEO, a veteran of 100 business war games and a frequent writer and speaker about business war-gaming.

Speaker: Mark Chussil
A highly rated, thought-provoking, and entertaining speaker, Mark lectures and consults around the world about strategic thinking, advanced business war games, and computer simulation. Mark has worked with ACS clients around the world, including Astra Merck, AT&T, British Airways, DuPont, GlaxoSmithKline, Intel, Kodak, Methanex, Nortel, Novartis, Petronas, Sanofi Pasteur, Shell, Sprint, Weyerhaeuser, and others.  Mark earned his MBA from Harvard University and his BA from Yale University.

Location, date, and time. Tuesday, June 9th, 2009 at the Governor Hotel in Portland, Oregon. Noon – 4:00 pm, followed by a no-host networking event 4:00 pm to 6:00 pm at Jake’s Grill. 611 SW 10th Avenue, Portland, OR 97205. Phone: 503.220.1850.

Registration. SCIP Members – $35.00. Non-Members – $45.00. Lunch is included. Groups of 3-7 people can participate in the business war game as a team.

You can register on-site or by clicking this link: http://www.scip.org/Training/EventsDetail.cfm?itemnumber=7156.

Please contact us (see below) if you plan to register on-site so we can make sure we have a large-enough room.

Registration via the web will close Monday, June 8, 2009.  Cancellations not received in writing by Tuesday, June 2, 2009, will not be refunded.

Contact information
Sean Campbell, Oregon Chapter Chair:sean@cascadeinsights.com, 503.631.7552.
Deborah Trainor, Puget Sound, Washington Chapter Chair: Deborah.trainor@gmail.com, 425-830-0565.
Robyn Reals, SCIP Education Manager: rreals@scip.org, 703.739.0696 x107.

It’s a wide-ranging discussion. You’ll find questions and answers about:

• The difference between business war games and strategy simulations.
• How business war games are the strategy equivalent of clinical trials, flight simulators, and sparring partners.
• The role of business war games and strategy simulations in higher-level strategy.
• How decision tournaments™ can address problems too massive to tackle conventionally.
• How the willingness to be wrong leads to deeper learning about strategy (and strategists).
• Why companies need business war games and why their answers aren’t obvious.
• What strategists and educators should look for as they explore business-simulation options.

Denis writes frequently and insightfully on his blog Experiential eLearning.