Summary: We can often uncover creative solutions by holding two opposing models in our mind at the same time. Conversely, we can miss these solutions by over-simplifying the situation. This book helps build awareness of our own thinking, and presents tools to think more integratively.
Crisis at AIC (Canadian largest privately-held mutual fund company): AIC adheres to the Warren Buffet investment philosophy, holding only 20 or so stocks vs. hundreds at a traditional fund. During the dot-com bubble, they started losing customers who wanted more aggressive investments. They were faced with the (conventional) choice of abandoning their business model and broadly buying tech stocks, or having to sell and risk a vicious cycle. Instead, they chose to double down by buying heavly into another stock (Mackenzie), which avoided the poor tradeoffs, and turned out to be a winner.
Thomas C. Chamberlin proposed the idea of "multiple working hypothesis" (vs. only considering one at a time) for scientific study.
The Four Seasons: Hotels are typically either small, cozy, budget, with few amenities, or large, wel facilitated, but impersonal. However, the Four Seasons managed to create a model that provided exceptional customer service at a premium price.
P&G: Consumer products are typically either commodities and cheap (store brands), or innovative and premium. P&G sought to be both innovative and low-cost at the same time.
Red Hat: Software is typically either proprietary and high-margin, or "free" (open source) and low-margin. Red Hat created a service-oriented business model that allowed it to effectively profit from open source software.
The basic message seems to be similar to one from Built to Last: "embrace the genius of the AND instead of the tyranny of the OR". The cases are also reminicent of the ones from Blue Ocean Strategy (low-cost AND premium). The trick is to think in new and different dimensions from the conventional wisdom and your competitors.
The process of thinking and deciding:
1. Salience: What features / data do I deem important?
2. Causality: How do the salient features relate to one another?
3. Architecture (of the decision): What tasks will I do, and in what order to decide?
4. Resolution (of decision): How will I know when I'm done?
In conventional thinking, this process is an iterative chain.
Isadore Sharp instituted the Golden Rule policy for everyone at the Four Seasons. Employees were treated like respected partners as opposed to interchangable cogs (in the rest of the hotel industry), which instilled a higher standard of customer service.
In conventional thinking, we tend to restrict and simplify the salient features and their causality, make sequential or independent (non-integrated) considerations, and accept unattractive trade-offs.
In integrative thinking, we consider more salient features plus their multi-directional and nonlinear relationships. We also keep the whole causal map visualized while working on individual parts, and seek creative resolutions of their tensions.
When communicating strategy or goals, a good leader should also appropriately communicate the context (salient features and causality) that form the basis of that decision. That way, implementors can successfully flesh out the details around the stated objectives in-line with the leader's intent.
We tend to treat our perceptions of reality as reality itself, when in fact all of our mental models are heavily filtered and interpreted views of objective reality.
A.G. Lafley's predecessor at P&G was fired for overspending on R&D which resulted in 2 bad quarters. The two competing models were "P&G was an R&D company" and "P&G is a marketing and brand-building enterprise". Lafley treated both models as hypotheses instead of objective truths.
Lafley questioned many basic assumptions, including the reasoning that useful innovation output was proportional to invested dollars. He discovered that innovation was broadly distributed, with proportionally more coming from solo inventors, academics, and small companies. This led to P&G's Connect & Develop program, which called for 50% of innovations to come from outside the company, and produced such fruits as the Spinbrush toothbrush.
"Buying proprietary software is like buying a car with the hood welded shut. If something goes wrong, you are not able to even try to fix it." -- Bob Young (Red Hat Software)
Bob Young saw the 2 flaws in the open-source OS model as the high maintenance costs associated with patching and the desire for enterprise buyers to go with the clear market leader. Red Hat's model was to manage the patching process and to offer free delivery over the Internet (vs. CDs) to become the overnight market leader.
Piers Handling confronted two prevailing models in film festivals: Juried prizes, which were elitist, vs. grassroots, which gave attendants a sense of ownership but generated little buzz. His solution for the Toronto International Film Festival was to promote the People's Choice award, which solved both needs at once and propelled TIFF into a premier event.
A key skill is to suspend judgment, and to consider as many different viewpoints as possible.
Another key skill is to push yourself to see what is not there. As Sherlock Holmes would (likely) have said: "The answer is not usually found in what you see, but what you don't see."
The main idea of this book, i.e. the process of identifying salient features and building a causal map is a great framework for creative thinking. "Creativity loves constraints", and this framework is what provides the input constraints.
The other mantra that is worth oft repeating is to "Question Everything" when trying to come up with creative solutions.
Our "factory setting" is to simplify problems to avoid overloading ourselves, such as invoking the 80/20 rule. However, this leads to narrow thinking and can force us to make undesirable trade-offs instead of finding more creative and optimal solutions.
When IDEO was asked to design Amtrak's premium Acela passenger railcars, they recognized that the cars were just a fraction of the product, and undertook to redesign the entire rail travel experience instead, with successful results.
When Moses Znaimer's local-focused Citytv came under siege from global channels, traditional thinking would choose between staying local and becoming like the global channels. Instead, Citytv increased its local focus, leveraging short inter-program segments, and at the same time licensed it approach globally, and approach he called "Glocalization".
The real world is non-linear. Linear models are very useful, but all of them are ultimately limited. The important thing is to always be mindful of their limitations when using them.
Patience is also a key virtue, along with a determination not to jump to conclusions. Wait, reserve judgment, and build data over time. Don't act until you've mastered what you need to carry out your intention. -- Bob Young.
The reason why the top-heavy IQs had so much trouble formulating a profitable business strategy was that it's all about pattern recognition and they had no experience.
"We shape our tools and afterwards our tools shape us." -- Marshall McLuhan, paraphrasing Winston Churchill.
Your personal knowledge system - your stance, tools, and experiences - is under your control and can be used to put yourself on a beneficial, or detrimental spiral towards success, or failure.
Victoria Hale founded the Institute for OneWorld Health (IOWH), the first non-profit pharmaceutical company, and successfully found a solution to visceral leihmaniasis, black fever.
Six common attributes of an integrative thinker's stance:
1. Current models do not fully represent reality, and are merely the best constructions made so far.
2. Conflicting models, styles, and approaches are to be leveraged, not feared.
3. Better models exist that are not yet seen.
4. They are capable of bringing better models into reality.
5. They are comfortable wading into complexity to find better models.
6. They give themselves time to create better models. "You can't rush it".
"If you are swimming on the surface you are very unlikely to find pearls. You have to go into a fair amount of depth on any particular issue that you take up." -- Ramalinga Raju, founder of Satyam computer Services.
"Contented model defense" vs. "Optimistic model seeking". The latter doesn't believe there is a single right answer, only the best answer available now - aka. the fallibilist stance (all models are fallible).
"If you look for the fundamental, underlying, unquestioned assumption that everybody in the industry grows up with and then question it, you will start seeing opportunities." -- Rob McEwen, Goldcorp.
We tend to rationalize unexpected outcomes. The only way to defeat this is to record our thinking, assumptions and expectations leading up to our decisions, and compare them to the actual outcome. This gives us insight into our own thinking and characteristic errors - errors which are usually products of our stance.
A useful technique is to "reverse engineer" a model: Ask "what would have to be true for this model to be valid" in order to uncover its salient data, causal relationships, and architecture.
Reflect upon the sequence of: Thinking -> Actions -> Outcomes. "What were we thinking?" - poor outcomes are usually caused by missing vital considerations in our thinking, such as the effect of competition on a business.
Complexity is hard (but important not to ignore).
Taddy Blecher founded CIDA, an innovative business university in South Africa where costs are kept low by leveraging the student body to work on the school and provide outreach by "adopting" high school students.
Tool #1 - Generative (or abductive) reasoning: Inquires into what might be rather than what is. It attempts to find the best model to explain new or novel data. The process is to iteratively generate new models, then work backwards to fit its causality architecture with the data at hand.
Generative reasoning sounds awfully like applying the scientific method.
Tool #2 - Causal Modeling:
Material modeling: x (press button) causes y (shut down reactor).
Teleological causation: Why do we want y to happen?
A primary focus of system dynamics is on multi-directional feedback loops, which accelerate relationships between variables. E.g. A premium product that enters into a price competition can accelerate the demise of its image and margins.
Tool #3 - Assertive Inquiry: A sincere search for other's views ("please help me understand how you come to believe that?"), and an effort to fill in gaps in understanding ("Could you clarify with an example?"). It seeks common ground ("How does what you say overlap with what I proposed?").
The idea of integrating two different (potentially opposing) views reminds me of the Mask of Eternity (best described by Joseph Campbell): All temporal existence is duality - good vs. evil, up vs. down, etc. - represented by two faces looking away from each other, one to the left and one to the right. However, there is a third face, looking straight at us, perpendicular to the other two. This is the face of eternity, which transcends all duality.
A.G. Lafley started out managing the Navy's retail store in Japan during the 70s. He was big on mining customer data. His experiences strengthened both his mastery and originality.
At P&G, Lafley went up through the ranks in the detergent division (P&G's largest). He recommended using the name of Liquid Tide instead of a new line name (the norm). His biggest gambit was to push ahead with compact powdered detergent as a big cost saver despite neutral customer research.
"I trust judgment. Research is [only] an aid to judgment." -- A.G. Lafley, P&G.
As president of the Asia region, Lafley successfully introduced a focused campaign on concentrated Joy in a market where diluted dish detergent was the norm. The two incumbent local competitors made the strategic mistake of rapidly introducing a similar product and promoting that heavily, thus validating the new product category where P&G had an advantage in.
The concentrated Joy case makes a point of not investing in your competitor's success. New product lines require tremendous investments to "cross the chasm", and a foolish incumbent can do this where an upstart would not be able to afford to. Examples include open source software and software as a service.
Mastery comes from planned and structured repetition of a consistent type of experience. Experiences by themselves don't necessarily deepen mastery.
Experience + Reflection = Learning.
Learning x N = Mastery
You need to be a student of your life, and actively study your experiences.
Mastery AND Originality: Mastery is like the strong trunk and roots of an oak tree. Originality is like it's many new leaves. Mastery gives us a firm grounding, while originality allows us to experiment with new endeavors, some of which may be wildly successful.
"We never see the obvious as long as we take it for granted." -- Peter Drucker (1965)