Transcript Wharton on Managing Emerging Technologies

2011 MILE PROGRAM IN MEDINAH
STRATEGIC THINKING &
DECISION MAKING
Paul J. H. Schoemaker, Ph. D.
The Wharton School
Tel: 610 – 525 - 0495
E-mail: [email protected]
Website: www.decisionstrat.com
Copyright 2011. Decision Strategies International
Opportunities in Weak Signals
Domain
Opportunities in the
Periphery
Who Saw It
Who Missed It
Technological
Digital revolution
Apple and iPod
Music industry
White LED lighting
LED companies
Light bulb manufacturers
Open-source software
Linux, IBM
Microsoft and Sun
Microsystems
CD-ROM encyclopedias
Microsoft
Encyclopedia Britannica
Rapid spread of GSM
Nokia
Iridium
Overnight package delivery
FedEx, UPS
USPS, United Airlines
Search engine potential
Google
Microsoft
Discount point-to-point
airlines
Southwest, Ryannair and
EasyJet
United, Delta, Lufthansa
Sports and New Age drinks
Snapple, Gatorade
Coke, Pepsi (initially)
Popularity of reality shows
Reality show producers
Game shows
Age compression and demand
for more sophisticated dolls
Bratz
Mattel (Barbie)
Generic AIDS drugs in Africa
Indian pharmaceutical
companies
Major global pharma companies
Social discontent in Venezuela
Hugo Chavez
Establishment (PDVSA)
Role of “exurbs” in changing
US voter patterns
George Bush and Karl Rove
John Kerry
Economic
Societal
Political
2
How Is Your Peripheral Vision?
Strength of Capability
(strategic thinking, culture,
configuration, knowledge
management)
Need for
Peripheral
Vision
(complexity and
volatility of
environment)
High
Vulnerable
(myopic)
Focused
(laser-beam)
Vigilant
(20/20)
Neurotic
(ADD)
Low
Low
Copyright 2011. Decision Strategies International
High
Balancing Learning and Performing
Performance Organization
Learning Organization
• Internally oriented
• Focused on making the
numbers
• Rewards consistency
• Dislike of ambiguity and
deviations
• Rule and procedure oriented
• Inquisitive and externally
focused
• Experimental and
innovative
• Shares information: fluid
• Rewards risk-taking
• Relies on cross-functional
teams
Five Reasons We Get Blindsided
1. Reactive Leadership
– Narrowed focus on current business
– Lack of curiosity about the periphery
2. Strategic Planning Process
– Inside out rather than outside-in
– Fear of cannibalization
3. Inward looking Culture
– No willingness to listen to scouts
4. Limited information sharing
Across organizational boundaries
5. Organizational configuration
Limited windows on the larger world
The Field of Decision Sciences
Critical Thinking
Inference, Logic,
Interpretation,
Meaning
Thought/Language
Creativity &
Problem Solving
Slide 6
Decision Analysis
Decision Trees, Utility
theory,
Probability Analysis,
Optimization
Behavioral Decision Theory
Heuristics & Biases,
Framing, Prospect Theory,
Kahneman & Tversky
Neuroscience; Brain imaging
The Decision Process
Framing the
Issues
Learning from
Experience
Metadecision
(Deciding How to Decide)
Coming to
Conclusions
Copyright 2011. Decision Strategies International
Gathering
Intelligence
Changing Your Habits
Actual
Time
Allocation
Intended
Time
Allocation
Framing
5%
20%
Intelligence-Gathering
45%
35%
Coming to Conclusions
40%
25%
Learning Focus
10%
20%
The Four Phases
Copyright 2011. Decision Strategies International
69
Strategic
Levels of Strategic Planning
Level V: Managing Uncertainty
Viewing uncertainty as opportunity
Create flexible/innovative strategies
Monitor the Environment
Level IV: Strategic Management
Wide-spread strategic thinking capability
Alignment of visions across units and functions
Integration of strategy and reward system
Tactical
Focus
Level III: Strategic Thinking
Focus on strategic issues & mindsets
Dynamic, creative portfolio management
Explores multiple futures
Level II: Forecast-Based Planning
Multi-year budgets
Use of forecasting models
Assumes high predictability
Feedback loop
Level I: Financial Planning
Strategy is mostly implicit
Budget is primary focus
Performance
Learning
Culture
Expand Your Tool Kit
Newer Tools
- Influence diagrams
- Scenario planning
- Real options analysis
- Developing Intuition
- Total risk management
- Dynamic monitoring
- Systems Thinking
- Creating Learning Cultures
Certainty
Risk
Uncertainty
Lower Risk & Lower Reward
Traditional Tools
- Extrapolative forecasting
- Net Present Value analysis
- Decision trees
- Bayesian updating
- Expected utility theory
- Monte Carlo simulation
- Portfolio optimization
- Stochastic modeling
- Insurance Safety
/
programs
Copyright 2011. Decision Strategies International
Ambiguity
Chaos / Ignorance
Higher Risk & Higher Reward
Navigating Uncertainty
Scenarios Bound The Future
Number of Possible Future Worlds
Instead of forecasting, when one follows a trend and adds
estimated deviations, scenarios present a cone of possible
“futures”
B
C
A
D
2010
Present
2020
Future
Building Blocks for Scenarios
Drivers of Change
Key Uncertainties
Basic Trends
Rules of Interaction
Multiple Scenarios
Copyright 2011. Decision Strategies International
97
The Future of Credit Unions
CU Power
Wallet Wars
Technocracy
THE PROCESS
1) Conducted
interviews
2) Identified forces
3) Identify trends and
uncertainties through
survey
4) Created a 2X2 matrix
5) Developed scenario
sketches and themes
6) Completed scenarios
AFTERWARDS
7) Develop strategies
8) Track and update
Current
Situation
Copyright 2011. Decision Strategies International
Chameleon
98
Monitoring The Cone
B
Cycle 36
Cycle 25
Cycle 3
C
Cycle 2
Cycle 1
A
2004
Year 1
Monitoring helps project the
long term mean towards one
scenario and also the shorter
term variations/disruptions in
individual forces
D
Strategic Decision Point &
Option Execution
2014
Scenario Monitors
Dashboard Trends
Source: www.decisionstrat.com
Paul’s Books