20 Years of ACS

Posted:
Wednesday, February 15th, 2012
Category:
Hot strategic yoga, Of note

20 Years of ACS: Plus, Four Great Trivialities about Strategy

by Mark Chussil

Advanced Competitive Strategies was officially incorporated in February 1992. Please join me with a smile: it’s time to celebrate and reflect upon twenty years of ACS.

We will do that here with accumulated facts, acquired wisdom, sincere thanks, and hopes for what’s yet to come.

Facts

It’s easy to catalog facts. Two hundred business war games on six continents for dozens of Fortune 500 companies and at numerous conferences and universities. Nearly 100 articles and essays. A couple of books. Many strategy simulators. Uncounted speeches and classrooms. Thousands of pages of computer-code gobbledygook. Colleagues and friends come and gone. I’ve spent more than half of my career running ACS.

Wisdom

It is tempting on ACS’ twentieth birthday to unveil the strategist’s equivalent of greatest hits. Behold wisdom! Deep thoughts ponderously expressed, just like this. I choose instead to talk about four favorite trivialities. Of course I don’t really think they are trivialities. It’s just that they may seem so in a world that wants definitive sound bites now.

1. Uniqueness isn’t so special

In Monty Python’s Life of Brian, Brian addresses a crowd.

Brian: You’re all individuals!
Crowd: Yes! We’re all individuals!
Brian: You’re all different!
Crowd: Yes, we are all different!
Man in crowd: I’m not…

Every person is unique. Still, the similarities among us vastly outweigh the differences. That’s why medicine works.

Every business is unique. Still, the similarities among them vastly outweigh the differences. There are far fewer business problems, and solutions, than there are businesses.

Teach yourself to look at businesses the way a doctor looks at people: the doctor appreciates and respects them as individuals, and also applies rigorous thinking and science. (Think of it this way: when I need health help, I don’t ask a friend who knows me well. I ask a doctor, a stranger who knows me better.) It’s the skill or habit that’s made it possible for my colleagues and me to help strategists time- and cost-effectively in dozens of industries.

2. It absolutely depends

One of the audience-involvement exercises I use in my workshops about strategic thinking involves this way of categorizing businesses in a market, called a value map:

I ask the audience this question: where’s the best position for a business?

They sputter and debate for a while, as it’s a surprisingly hard question. (“Surprisingly hard” due to nuances and data into which we will not delve here.)

Eventually I change the question and ask, for each quadrant in turn, whether it’s possible to make money there. Yes, of course. As it turns out, the only absolute in the value map is that you maximize unit demand if you position yourself as the ultimate bargain. The ultimate bargain is perfection for free, and if you can do that, there’s no reason for a customer to buy from anyone else. But as soon as you back off from that maximize-unit-demand goal, the best-position answer is no longer absolute; it is it depends.

No one disagrees with advice to keep an open mind, which is what makes such advice a triviality. It’s quite another thing to experience that one’s mind is not so open and that it’s getting in the way. Really, seriously, keep an open mind. The worst that can happen from asking what-if or why or why-not is that you waste a few minutes. The best that can happen is that you achieve a breakthrough. Not to mention gaining a reputation for having an open mind.

Related: here’s one of the most-provocative questions I’ve come across. When you see someone doing something that looks terribly stupid, ask yourself why a smart person might do that seemingly stupid thing.

3. It worked, unless it didn’t

We saw a problem and took action to solve it. We carefully tracked the results for years. We find that we performed much worse after we implemented the solution. We conclude that our solution didn’t work.

If we believe that line of reasoning, we should advise General Motors to resume making its less-reliable, lower-quality cars of a few decades ago. After all, that was when their success was at its peak, and they stalled after they improved their products.

Of course we wouldn’t advise GM to go back to that past. But the process is the important thing, and it’s important enough to elevate this story to one of the great trivialities.

When we say “I did X and the result was Y, therefore X worked (or didn’t),” we commit at least three serious errors. Here’s one: we assume that X caused Y all by itself. In other words, we assume we are in complete control of the situation and that no one else’s actions had any material effect. The only reason for Y is X.

Our decision is fully under our control. Our performance is only partly under our control. A great decision can be trashed by an unpleasant surprise. A bad decision can be rescued by an unpleasant surprise for someone else.

Being able to tell the difference — were we lucky or were we smart, were we unlucky or were we not-smart — sounds trivial but it is very hard. In medicine, we use clinical trials to see if a treatment works. We don’t use clinical trials in business. What we can use is simulation, which is why I think the most-exciting development in ACS’ twenty years is our patent-pending strategy decision test technology.

4. Strategy matters more than precision

When a forecast goes awry (see also previous triviality), what do we do? As far as I can tell, one of two things. One: chuck the whole lot of models, computers, statisticians, and databases. The future is unknowable and anyone who pretends otherwise has got a microchip loose. The other: add a whole lot of models, computers, statisticians, and databases. The future is knowable but we need more better data faster. Tighten the microchips and show more digits to the right of the decimal point.

The former is like saying it’s impossible to know what my chess opponent is going to do so I’m going to concentrate only on my moves. The latter is like saying I’ll play better if I measure more-precisely where each piece stands within its square. Both, of course, are wrong.

Most of the business war games my colleagues and I have conducted used quantitative, computer-based simulation models. At the start of those war games the client company’s strategists grill us (not literally) about the model. How do we know it’s accurate?

Once the war game gets underway and they see simulated outcomes, questions about the model simply evaporate. Partly because the results show that the model is sensible. More importantly because the strategists see that the difference between strategy A and strategy B is not measured in cents. The difference is measured in millions of dollars, or tens of millions, even hundreds of millions. Strategy is not trivial. Strategy matters, and switching from one strategy to another simply swamps the inevitable, strategically trivial effects of imprecision. In other words, there’s a very high signal-to-noise ratio.

Incidentally, the question is never whether to use a model. We always, always use a model when we make decisions, even when we simply say “I think this strategy will work.” The question is only whether to use a so-called mental model or a computer-based model. And unless you know in a millisecond the answer to (163,948 x 992,580) ÷ (4,822 x 33,086 x 1,020), then you can surely applaud computers for helping us out.

Thanks

Thank you, my friends, colleagues, and clients, for twenty years of ACS. Special thanks to Adrian Cruz, Bruce Hamilton, David Reibstein, Dennis Damore, Don Heaney, Don Swire, Joanne Kahn, Joaquim Branco, Joe Hull, Julie Baugh, Ken Paillé, Mindy Clark, Rika Warner, and Ruth Newman for the vital roles you played in ACS and my career. Most-special thanks to Sidney Schoeffler, who saw I had more than fingers to offer.

The best is yet to come: The next 20 years

With ever-fewer career years ahead and ever-more behind, such optimism hums slightly with defiance. Still, it is true. As a younger man I could not have imagined the perspective and (I hope) wisdom that comes from a mind forever voyaging.

And that’s why one more not-really-a-triviality is something that sounds like a cliché: the best is yet to come. We observe. We analyze. We create. We keep our unique minds open and the insights keep getting better.