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0:01
Good afternoon from New York City and Columbia Business School. My name is Scott Gardner and Willie Pietersen and I are very happy to have you join us today for the 6 Lessons for the Modern Strategist webinar. But before I introduce Willie, I'd like to go over just a few key logistics for the webinar. As you'll see on this screen, a recording of the webinar will be available after the webinar and we will be sending that to you via email. Also we do encourage that if you have any questions,
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please submit those during the webinar in the Q&A box. Willie will field as many questions as possible at the end of the webinar. We're happy to receive those. And last, if you feel that you want to tweet about this webinar, please go to our Twitter handle as #CBSExecEd. All right, Willie, it's great to be here with you today. I'd like to take this opportunity to introduce Willie to all of you. Willie likes to refer to himself as a detribalized practitioner.
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He was born and raised in the South Africa, where he received a Rhodes scholarship to Oxford University. After which he began his first career iteration as a lawyer before moving on to his second career iteration as the CEO of such major international companies as Lever Foods, Seagram USA, Tropicana, and Sterling Winthrop Consumer Health Group. And in 1998 Columbia Business School was fortunate to have Willie join our faculty
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as the Professor of the Practice of Management for his third career iteration. So Willie you have absolutely had a very varied, very robust career, and it completely aligns with your credo, never retire. Would you agree? >> That's right, absolutely, I'm a lucky guy. >> [LAUGH] That's great. So before we begin going over the six lessons, I just would like to ask you, why do you think that it's useful to draw these lessons from the military when doing a business strategy?
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How do you see these two domains relating to one another? >> Yeah, Scott, thank you. And, welcome to everybody in the seminar, by the way. I'm glad you joined in. So that's a great starting point for us. The truth of the matter is that strategy was actually born in the military, not in the business world.
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And the actual word strategy comes from a Greek word, it's a compound of two factors. It comes from the word in Greek, strategia, and that means to lead the army.
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So all the great lessons in strategy, actually, come to us from the military and the business world has often not applied them very well, unfortunately. Now the great expert on military strategy was a guy called Carl von Clausewitz. He was a Prussian general who fought against Napoleon, subsequently became the Director of the Military Academy in Berlin. And he wrote the definitive book on military strategy in 1832, it was called On War. And the golden lessons in that book are taught in
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all the major military academies around the world. The interesting thing to me is when I study that book and all of its lessons, I was astonished about how relevant those lessons are to corporate executives. And that's why I think it's useful to review. >> That's wonderful, great. So let's get started. We've provided six key lessons for the modern strategist, shall we go over them one by one? >> Let's do that, yeah, sure. >> All right, so let's look at our first.
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Number one lesson, to excel at strategy, we must first understand what it is. The talent of the strategist is to identify the decisive point and to concentrate everything on it, removing forces from secondary fronts and ignoring lesser objectives. Now, it seems to me, Willie, that this first lesson is really the foundation of the other five. It's a very robust statement. So can you break it down for us? >> Sure, certainly, it's a very powerful statement, actually.
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And what von Clausewitz repeatedly stresses in this book is that if you want to function strategically, you must first be able to think strategically. And he calls strategy actually a system of thought more than anything else. First thing we need to do is address the threshold question.
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Why do we need to have a strategy in the first place? And if you really think about that, there's only one reason we need to have a strategy. If that reason didn't exist, we wouldn't need to have a strategy. And that single reason is the reality of limited resources. If we had unlimited resources, wouldn't need a strategy, wouldn't need to incur any risk, competitors would [INAUDIBLE]. Truth of the matter is that every organization is functioning with that constraint, limited resources.
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So essentially what strategy is, it's about making choices on how we will deploy our limited resources for competitive advantage.
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Von Clausewitz's definition which is there up on the screen really flows from that very important kind of premise, starting point. So let's look at the definition. As you said, it's very powerful. The first thing he stresses here is the need to identify the decisive point. Now what is the decisive point? Well, in the military the decisive point is the crucial, central idea that directs the organization towards winning the conflict.
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So the important thing here to emphasize is that strategy is about winning. It's not just about participating. Same thing is true in the business world. Now, obviously in military conflict, winning means defeating the enemy, that's clear cut.
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In the business world, we need to compete for advantage. And that means creating greater value for our customers than our competitors are able to do. That's what winning means in business, so that's the first part of the definition. He then moves on to emphasize the fact that everything an organization, including a military organization, needs to do is to concentrate the whole of its resources. And the minds and hearts of its people on that decisive point.
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That's the underlying thing that drives success. And if you note the words he uses, they're very strong. Concentrate, remove, ignore, very powerful thing. And so we come back to choice making. And the big reminder here is that a choice is not a choice until you've determined what you will give up. The choice actually is an act of sacrifice. And the big pitfall that I think we see regularly in organizations is to make a series of choices that are additive over time without subtracting anything.
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And all we're really doing then is dissipating the resources of the organization. And we can't succeed that way. So the formula I think that comes from von Clausewitz that we need to apply, that’s not easy to apply. Is subtract first and then multiply, that’s the rule of the rough. >> Right, and it seems like it’s a positive spin then on limited resources. [CROSSTALK] What you come to look at it as a negative, it’s actually quite a positive spin on that. >> You release energy when you subtract.
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>> You release energy, yeah, absolutely. Should we move on to number two? >> Absolutely. >> All right, so number two lesson. Strategy and planning are not the same thing. Tactics are the use of armed forces in a particular battle. While strategy is the doctrine of the use of individual battles for the purposes of war. And over the years I think this is a common mistake that I've seen leaders make is not being able to distinguish between the two. Can you provide a distinction for us?
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>> Yeah, it's a common confusion and I will use the term strategic planning without thinking about the difference between the two. And the military of course is very, very clear, I mean, strategy's about picking battles. And planning or logistics is about fighting them effectively. So the way to think about this is that strategy is about doing the right things.
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Planning or logistics is about doing them right. A good example here is if you were running a railroad company,
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strategy is about where you lay the railroad tracks. It's about ideas. Planning is making the trains run on time, and that's about numbers and logistics. They're both important, one's not a substitute for the other, but have them both. But the important thing here is, that if you're try and mix them together in one process, if you think about the completely different outputs, then there's rampant confusion. In fact, I call that a toxic mixture.
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Sequence is important here. >> So I was going to ask you about the sequence. >> Sequence is really important, and so the rule of the road again here is strategy first, planning afterwards. And if you think about a budget, a budget is simply the financial expression of your strategy, it's not just a jumble of numbers. So that's the important thing, that sequence.
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>> And do you see companies make the mistake, and what percentage of companies do you think are doing the planning before the strategy? >> Well, I'm afraid the answer is too many of them. They start with the numbers, right, and then they work backwards from there. So how are we gonna reach those numbers? Well it's not just a numbers game, it's maybe an ideas game. >> Right, and you can't play with numbers. >> You can't play with numbers, yeah, absolutely because it's sometimes illegal to try.
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>> Right, exactly. >> Yeah. >> All right, so we move on to number 3? >> Yeah, sure. >> Super, all right, number 3, the strength of any strategy lies in its simplicity. Simplicity in planning fosters energy in execution. Strong determination in carrying through a simple idea is the surest route to success. Now, this one really resonates with me, this idea of simplicity. And it seems to point to the intention of getting everyone on board, rallying the troops. Would you say that's a true statement?
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>> Absolutely right. I mean, let's just think about that for a minute. Complexity paralyzes, it's the truth of the matter, and simplicity empowers. So if we think about our role as leaders, one of the most important roles in a complex, fast-changing world is to create increasing simplicity from a world of increasing complexity. And if we can't do that effectively, we can't lead effectively.
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So if you think about the strategy document that we have to produce, that really captures and codifies our strategy, it should never be longer than ten pages. And if you can't crystallize it in that kind of way and simplify and capture its major themes in ten pages, one's kind of typically lost in the jungle, and so is the whole organization. And it doesn't matter how large the organization is or even if it's a government strategy, never longer than ten pages.
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And here I wanna quote Blaise Pascal, a French philosopher. He wrote a letter to a friend and said, I'm sorry to write you this long letter, but I didn't have time to write you a short one. >> [LAUGH] >> The truth of the matter is that simplicity is not a shortcut, it's hard work, but it's important leadership work. Now the next thing I'd like to emphasize here is that the final deliverable of a strategy is not just the document.
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The document is important to codify, then have a point of reference.
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The final deliverable of a strategy is actually a leadership message that extracts the main themes from that and expresses them in a compelling way, that wins the hearts and minds of all the employees. And I think what our challenge is in a complicated world is to recapture the oral tradition of storytelling, as leaders. And that's the way we're able to distill and simplify, using pictures and metaphors and examples. >> Right. >> Those are the ultimate means of simplification.
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>> Indeed, the human side of it that people can wrap their hearts and minds around. >> Absolutely. >> Yes, absolutely. Well, and this goes back to the theory of subtract before you add, and before you multiply. Because otherwise you're just adding, adding on, and it's making it very hard to wrap your brain around. >> Right, in fact Scott, I would say this. IT' organizations sometimes, when they make very complicated, long documents.
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And if it's longer than ten pages by any reasonable degree, it's really just a general anesthetic, it puts people to sleep. >> Right [LAUGH] exactly. Good, good, let's move on to lesson number 4. >> Lesson number 4. >> All right. Competition is interactive, not static. Some generals consider only a unilateral action, whereas war consists of a continuous interaction of opposites. No strategy ever survives the first engagement with the enemy.
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And when I have looked at this one and read about this particular lesson, it reminds me of my father. When I received my drivers license he said, you not only drive your car, you drive everyone else's car. >> A great piece of advice. >> Great piece of advice. >> Absolutely. >> So tell us more about what this means. >> Yeah, well good. I mean, I see this as one of the misconceptions that we easily slip into when we do strategy. Sit in a room and strategize, think deeply about this.
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And there's a kind of an unspoken notion, that our competitors are standing still and we're the only ones moving. >> Right. >> And if we really want to overtake them, we just catch up to them and overtake them. The truth of the matter is, they're striving as hard as we are to create a competitive advantage. And they're trying to do that faster than we're doing it. So in this kind of competitive game of action and
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reaction, we've gotta remember that it is a race and we have to actually run faster. So smart strategic choices always consider the potential countermoves of competitors and how we would react to those countermoves. Always seeing the world clearly, not just through the eyes of our customers, but through the eyes of our competitors who are striving to outperform us. Now, great lessons come to us from the chess masters. These are the great strategic thinkers.
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And no move a chess master makes on a chessboard is ever ad hoc, just one single move. >> Right. >> Chess masters are always trying to think several moves ahead, and to consider the potential countermoves. And they're looking at the whole chessboard through the eyes of their opponent. >> Right. >> And that’s what makes them champions. >> Right. And I think a lot of people, it's the image of running a race, where you really wanna be hyper focused and perhaps not look back at your competition.
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So people get confused in that situation as to, should I be looking at my competition or should I be blazing the trail? Do you think that's an issue that people have? >> Yeah, now that's a good point. Actually, the interesting thing is, that it is about overtaking competitors. But the only way you overtake competitors is by offering your customers better benefits than they're able to offer your customers. >> Right. >> So in many ways,
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it's not like trying to score points against your competitors. It's scoring points for your customers. >> Right. >> And you pile up more points for your customers than they do, and that's what winning means in a business setting. >> Right, I like that, good, I'm glad you made that distinction, because I think people- >> Right, sure. >> All right, let's move on to lesson number 5.
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Morale makes all the difference. War is a trial of moral and physical forces by means of the latter. In the last analysis it was at moral, not physical strength, that all military action was directed. Moral factors, then, are the ultimate determinants in war. So would it be correct to say that this lesson focuses on a leader's balance of IQ and EQ, in other words emotional intelligence? >> Yeah, I think that's a good way of framing it. I would say as I studied Von Clausewitz and his teachings,
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this is probably the most surprising point of emphasis in his book. I mean, if you think about it, war is a physical contest. It's a blood sport. And what Von Clausewitz does repeatedly in his book is this emphasis on what he calls the moral factors, what you call moral or motivation and the spirit of the fighting force. And he makes the point, pretty strongly, very bluntly, that if you destroy the spirit of your opponents army then you've won the war.
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So, a very important point he makes and then he goes on to illustrate the fact that most of the armies up to that point, 1832 is when he wrote the book. And you examine if you like the scorecard. The armies that were most successful were the ones that had the strongest support from the citizens back home.
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So this is equally true obviously in the business world. And I think what we have to acknowledge is that every failure of strategy is actually a failure of leadership, either to set the right direction, or to win the hearts and minds of employees behind the strategic focus. That's a pretty important thing. And the other factor of motivation is to make participation of the creation of the strategy as broad as you possibly can. People support what they help to build. >> Right.
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>> So I think that back to your point of I2 to an E2, as leaders we really lead two very large systems, an economic system and a social system. And if the one is underperforming it undermines the other. And what the one we too frequently discount is the importance of the social system. >> Absolutely. And it's very hard to measure. >> It is indeed. >> And it's very hard for, it's not a sort of not that hard skill that people talk about. So I think a lot of leaders struggle with this, and
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it is important for them to learn that EQ side of themselves. >> Absolutely right. >> It has to be a balance. would you say it's a 50/50 balance? >> No, I would actually, and I like that, that's a challenging question. No, I think it's more like 60/40 in favor of the social system. >> Interesting. >> And that's von Clausewitz was saying. You defeat the spirit of an army, and no matter how robust it might be and no matter how many fighting people there are, that's it.
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>> And we've seen it time and time again. History and art and everything. It's always about that part of it, the morale. >> No great things ever happened without great passion. >> Without great passion, that's great. Alright, shall we move on to our last lesson Number six >> Yep >> Strategy requires a dynamic process. We need a philosophy of strategy that contains the seeds of constant rejuvenation. A way to chart strategy in an unstable environment.
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Yeah I like to think this lesson refers to the overall culture of an organization the thing that gives it, its life force. So what are your thoughts? >> Yeah absolutely, I mean conscious shows up through behavior, and behavior is driven by business processes and organization. Of course what the military and what the von Clausewitz emphasizes here is that in the chaotic conditions of warfare, strategy is a process of continuous assessment and reassessment as the conditions change.
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Of course our business environment is equally dynamic, and we're also challenged in this way to frequently be able to reexamine, reassess and redirect our energy. This is a very important thing to do. And the way I look at this, is it requires a shift of gear in the way we approach strategy from strategy as planning to strategy as learning a dynamic kind of process of ongoing learning and renewal. So the big issue for me is how do you put that into practice and translate it,
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as you say, into the behaviors, the every day behaviors of our people? And what I'd like to just show briefly here, and we can discuss further depending on time available. I translated this imperative, if you like, into a business process. It's called Strategic Learning. It's a four step process, learn, focus, align and execute, and then a learning loop that goes back again to the learn phase. So I just leave that there on the screen as a snapshot for people to consider.
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Happy to answer any further questions about it. It's been a very exciting journey working through strategic learning, and we've been together in programs on this. And what's happened that I'm delighted about, that is many companies and not for profit groups have applied this process with a high degree of success. But it really does come back to the ultimate competitive advantage. The only one, the only sustainable one, available to us is our ability to adapt to changing circumstances.
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So sustainable competitive advantage for me is an organizational capability, not just a product or a service. And that's the idea of this process, to engender that capability. >> And I think that it's important for people to know that there's a process where they can go step by step and in order in a way, and have it become part of a culture. Because I remember you saying in a program one time, we want everyone's involvement, but being on board means being on board once the decision is made.
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And so the beginning is to open it up but then you come down to a more now this is the culture, this is the decision that's been made. >> So, learning, good learning is divergent, and that's what the situational analysis is all about, the learning size. And then defining our strategic choices, of where we will compete, how will we win, that's convergent. That's taking these divergent perspectives, and translating them into a winning proposition, a decisive point if you like.
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That really represents the core of how we would create greater value for our customers than our competitors. And the rest then moves through alignment and implementation, but that's the magic moment. That's the decisive point that von Clausewitz talks about. >> Great. Well Willy, this has been wonderful, and I'm sure that there are many questions that people have out there and we have some time we'd be happy to take those with you right now, are you willing to answer some questions?
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>> Happy to do that, sure. >> All right, so let's see what we have out there. So our first question would be, how is agility relevant and the ability to update in the moment and respond to the emergent data?
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>> Okay, I think the answer to that question, to say how important is agility, I would say that it's of overriding importance. But in a chaotic world, we have to first stop, look, and then go. So the key to being agile is an interpretive capability at the outset, and rapid assimilation of what's happening. Think about Wolfe and the chaotic conditions. To take stock, to interpret, to understand. Then to understand how you need to shift from one situation to the next situation.
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And there's never a point at which the organization comes to rest and says, well that's it now, we've got the magic bullet and this is all we're going to do, because you have to continuously assess and re-assess. And the magic lies in your ability to do that better than your competitors. >> All right >> You know it's. Say the quote that you think is the most dangerous quote in business. >> Yes >> Or life >> The most dangerous words in the English language are.
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If it's not broken, don't fix it. But the words to live by is that if we don't fix it, it will break.
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>> And that's a living organization. >> Absolutely. >> In a living world. >> Right, and that's this guy I read who used to be at the Shell company. And he wrote this article, I think, in 1997. It was called the Living Company. And he made the point that the only sustainable competitive advantage in the future will be the ability to learn faster than our competitors. And I think has come home to roost as a truth. It becomes an imperative for us. >> More and more every day.
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>> More and more every day. All right, should we take some more questions? >> Sure. >> Great, all right. So would you suggest any frame works that are most relevant in today's world for strategy execution? Is congruence model still relevant?
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>> Yes, certainly the congruence model is absolutely relevant. And if we can go back to putting the strategic learning process on the screen,
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the congruence model is step three, the align process. >> Yeah. >> And what's important about the congruence model, powerful as it is of aligning all the levels of the business system strategy is you don't start with it.
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You start with a situation analysis. Nothing ever begins before that. That's the learning stage. And then we transfer to infosciences over and over. So first, we learn about customers, about competitors, about the shifting environment. Then we translate that learning into a our winning proposition of priorities. Then congruence means, how do we align all the levers of the business system powerfully with each other and to help drive extract?
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So that's where the congruence model comes in, it's a very powerful model. And Mike Tuchman and a guy called O'Reilly were responsible for putting that very powerful framework together. But it fits within the scheme here in terms of the sequence of steps. >> All right, I think we have time for more questions. >> Certainly. >> All right, how do you develop strategic competencies amongst leadership to manage change in an effective manner? That's a good one.
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>> Strategic competency, how do you master it? You know this is an interesting thing. I would give you one word, it's through practice. Just think about this, if we do a strategy on ad hoc sort of schedule, every four or five years and just turn around let's do a strategy. It might be good idea. I haven't done one in three or four years. And then try to, we're not going to be very good at that. The organization wouldn't have developed as one of the great, I think it was Sam Snead,
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a champion golfer, said, put brains into our muscles by, through practice. So it's just my little metaphor is about, how about showing up at the Olympic Games every four years without any practice and running in the 100 meters. You can't expect to win. So become great at things when we're able to devise a method of a process to do that's shared in the organization. We can't have separate methods running around, that just created confusion, shared method. Practicing doing that very well.
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The biggest thing to practice on it is not just to go through it mechanically, but do you understand the underlying ideas that inspired the process? And just constantly strive for simplicity. Distillation, simplicity, that becomes the key word. >> And not silos. >> And not silos, it has to be a shared process across, in other words a core process. A strategy process is a core process because if you think about it, it's the way we shape our destiny.
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The way we shape our the future of an organization, there are not many things that are more important than that. So being able to have a shared process to do that in an outstanding way, and to do it rapidly, faster than competitors, so we don't get mired in detail and so on and so forth. To keep moving through this cycle at a rapid pace. >> And strategy in a vacuum at a company is debilitating. And the people who felt they were a part of it. >> Sure. So there must be action.
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But participation is a magical way of getting. You know, people support what they help to build, as I said before. I'd like to quote the German philosopher Nietzsche who said people would do almost any, what if you give them a good why, you know the logic of it all? So this is a key thing. >> Absolutely, yeah. >> I think that's one of our first questions as a child why? >> Yes, why? >> Because we haven't stress learning we have to understand >> At that age,
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you should be doing that as an adult too. [LAUGH] >> And where do I fit into the scheme of things, how do I contribute to success? >> Exactly, all right. Do we have time for one more question, wonderful.
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>> All right, great session thank you. Are there any tools, resources or methods that you would recommend for conducting an impactful situation analysis. This is a good question because we always have a lot of questions. >> We always have a lot about that situations. >> Yeah. >> Well, let's first just mention the key aspect of doing a good situation analysis.
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Don't ask overwhelming questions. For example, don't say, let's do an environmental scan. What does that mean? It's like, why don't we boil the ocean? So the way I like to do this is to create four different areas of inquiry.
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To break it down into manageable, digestible pieces. And these typically, these four areas of inquiry, are about number one, the industry dynamics. Number two, the competitors and their actions, strength and weaknesses. Third, the needs of customers. And the fourth, our own realities. And pull these together into a synthesis of insights that help to inform when you weigh. I do have on my website, I'm not trying to sell anything, I'm just trying to answer the question.
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A work book that people can order that takes everybody step by step through this process, including this very important starting point of doing a great situation of numbers. I think the other thing, the deliverable of this is not just data. The deliverable of this is actually insight to see things more deeply and to understand them more clearly in terms of those four areas of inquiry. And then involving diverse teams in each of those ares of inquiry. That to challenge each other's thinking and
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to avoid the pitfalls that happen when we think alone. >> Right. >> Have some content experts in there but also to have this diversity of thought. Very important and without the situation analysis, it's almost impossible to move. >> Right. Well, it's a blind shot. >> It's a blind shot. >> It's acting without thinking, essentially. That's the brains of the operation, the situation. >> Right. And it takes work. >> It does take work. But with practice, we get faster at doing that work.
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>> Right. Wonderful. Well Willie, this has been wonderful. And we're very happy, and hope you enjoyed this webinar. For those of you who are interested in more information regarding strategic learning you know, as Willie mentioned or looking at any of his blogs. Please look at this website williepietersen.com or out his book, Strategic Learning. Thank you so much for being with us today. We really appreciate your attendance and I'd like to thank you, Willie. This was very enjoyable.
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I enjoyed myself. >> Well thank you Scott and thank you everybody for joining in. Lots of good luck to everybody.
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