All posts by mallagher

si: introduction

Step by step we are building a model that enables us to upgrade strategic decision making and that encompasses the various packages of decisions that confront us in life. At the most basic level is the package that OPENS THE DOOR TO ACTION  ( the basic strategic thinking course). It is critical to become active in order to unleash our creativity, so it is easy to see why moving from an inactive or passive to an active pose makes sense. Taking a step up, is the package of decisions that enables us to connect our agendas with others USING COMMUNICATION as a tool (the strategic communication course). No one lives in a vacuum, so mastering these tools is a must. We can take this a step further by addressing this question – how do build our capacity to ADD VALUE  through what we learn and share in life? That is the focus of this short course. It challenges to play the STRATEGIC INNOVATION GAME.

Where to start? As always, our intellectual adventure starts with a question. What do I mean by “adding value”?

In order to answer this, we need a model of “value” that enables us to distinguish value from its opposite. First, let’s agree on a very simple observation – value is not a tangible thing itself. It is instead an interpretation of what tangible and intangible things offer us in a given context.

value = relative importance

For example, while we trudge under the hot sun through a vast desert, water may offer more value to us than a huge block of gold that  is too heavy to carry..  Building on this example, we can see that value has several dimensions. One dimension is in the effect things have on us. Big effects or more precisely, critical effects add high value. Trivial effects add less value. When we are thisty, water offers a critical effect and value. And as I have already alluded to, there is one more dimension. These effects are important because of the certain context that they fit into. So a a renowned artist, let’s say Rembrandt, would seem to be highly valuable. That might be because of the pleasure one gets from viewing it or perhaps just the knowledge that it be sold for quite a tidy sum that might increase even more. Or both.  The key point is that understanding the context is critical to being able to see possible substitutions and hence, more precise value measurements.

value depends on effects in context

So how to measure effects in context? If we can do that, we can make more effective decisions that add effects that match contexts at the highest levels. That will preoccupy us in our first session of strategic innovation.

So what goes into those measurements? This is something that entrepreneurs must learn. They offer goods and/or services that they believe are highly desired by others in a given context. To do that, they must be highly sensitive to valuations of those goods and services. How do entrepreneurs learn what is needed in various contexts? Asking the question that way illuminates that this is learned by connecting with people in those contexts. It is a social process. We will be taking a close look at that social process later on in this course. As we will see, satisfying those needs using the best knowledge and skills available at that given moment is the last phase of the innovation process.

For now, let’s assume for a moment that we have learned what is needed in a given context. We cannot produce the effects that are needed without a thing that does that for us. We call those things products or services. Using shorthand, we might think of this next to last stage of strategic innovation as creating those products or services. that includes building prototypes and upgrading products to meet demand.

So what is needed to build a prototype? Before we do that, we need to know what capacities match what people want. The capacities will be translated into the thing the product or service does. The demand measures the effect of that thing that fits what others do or want to do.

This can be a subtle thing. Henry Ford, foer example, believed that he understood the capacity that matched what people wanted from cars – cheap transport. In fact, Ford missed another capacity — status of ownership. The car as part of lifestyle. Ooops!

so where do we find these capacities? This is found through a process of discovery. The discoveries may be of new ideas or in how to combine existing ideas in new ways. Think of discovery as the fuel that powers all of the above. We want to open to and good at discovery.

Now we know what we need to learn about.

1. How to maximize our potential to generate discoveries?

2. How to maximize our capacity to translate discoveries into desired capacities?

3. How to translate our desire capacities into prototypes?

4. How to build business models that squeeze out the value added from the products and services that we offer?

lets start with discovery.


Building Short Courses

You can think of strategy as the key to learning new knowledge The best way to learn is to teach.

With that in mind, you might ask yourself, how many courses have you built and taught — about the things you are trying to learn?

Good question! Most of us would answer, “none”.  Mea culpa. I am starting on a new path in this blog, where I will be building courses around some core ideas

  • What – what do I want to learn
  • Structure – how do I structure the course to teach it
  • Materials – where do I find the core knowledge that I need to apply
  • Content  – how do I fill out the course with great content
  • Test – How do I test myself to level up

You can remember this by What Smart Man Can Teach?


Are You a Slave to Process?

I have heard this many times — “I know that X doesn’t work that well, but there is no other way to do this.”


This is the type of statement made by folks who are “slaves to process”. They are completely wedded to one way of looking at what they need to get done. As a result, they will not learn from what they do. And if there is a better way to get things done, they will never see it.

The problem is worse than it appears. It is worse because the longer you are married to a single way of doing things, the harder it gets to change. That is the message Jeff Bezos is giving to his shareholders. I couldn’t agree more. That is the message that United should hbe listening to after its fiasco in customer relations.

Playing the Confidence Game

Social advantage is an interesting phrase. It describes that thing that gives us power or leverage over other people. What is it though?

Good question. We know that certain people have more of it. They are more “influential” or “persuasive”. And yet it is difficult to isolate a single thing that gives them that capacity.

You might say it is money. A rich person can buy influence. But while money can buy things, it is less obvious that it can buy people. The reason has to do with confidence. The more confidence that we project, the more others are drawn to it. That is why we tend to fool ourselves into believing that we are more than we really are.

Psychologists have identified several ways of fooling ourselves: biased information-gathering, biased reasoning and biased recollections. The new work, forthcoming in the Journal of Economic Psychology, focuses on the first—the way we seek information that supports what we want to believe and avoid that which does not.

Is there a strategic value to this insight?

Von Hippel offers two pieces of wisdom regarding self-deception: “My Machiavellian advice is this is a tool that works,” he says. “If you need to convince somebody of something, if your career or social success depends on persuasion, then the first person who needs to be [convinced] is yourself.” On the defensive side, he says, whenever anyone tries to convince you of something, think about what might be motivating that person. Even if he is not lying to you, he may be deceiving both you and himself.

Watch Out for Bouncing ideas!

We labor under a great misconception about group dynamics. That misconception is that groups need a strong leader.

In fact, strong leaders do only one thing. They set the vision and enforce it. The group then needs to work on its own to bring that vision to reality.

This works best when members of the group know how to talk to one another.  That knowledge is not intuitive. To the contrary, it must be learned. Greg Satell offers a glimpse of this.

Most important — we need to mast the art of making high-powered exchanges.

A Critical Distinction: Certainty v. Conviction

We need conviction because it empowers us to act. Without it, we stare out the window doing nada. Indeed, great strategy is based on conviction.

But conviction and certainly different kettles of fish.  Certainty precludes investigation. It closes the mind and forces one into a defensive intellectual posture. If you are “certain”, for example, that it is 2;00, you will tend to argue with someone who says that it is 1;55.

By way of contrast, conviction implies sufficiently strong belief to act. It is less than certain until the action (as a test) produces a result that either confirms or contradicts the conviction at hand.

Thinking about Behavioral Triggers

One of the problems we all face in life — and it is a whopper — is how to stick to a strategic direction. The classic example is knowing how important it is to maintain a healthy weight. But to do that, we need to stick to a healthy routine that balances activity and calorie intake. Most people fail to do this.

We tend to think of it as a weakness. We lack will! In fact, we lack the knowledge that we need to modify our behavior. And we can get that knowledge. It is available. It is just something that we are not taught in school.

We are taught, for example, that discipline is important. That makes it sound like discipline is a good in itself. Wrong. Discipline is just the word that we use when we want to say that our behavior is under control.  We are “disciplined”. In other words, discipline describes a result, not the process.

To see how commonly we fall into this cognitive problem, consider the word gravity. You know what it is, right? Wrong. No human on this planet knows what gravity is. We just know its effect – when we let go of a ball, it descends to the ground. Why it does that, we have no idea.

So what process can lead to behavioral change? BJ Fogg offers us a glimpse. It all has to do with our sensitivity to triggers. All of our behavior is triggered by something. And we can master how to trigger behavior, as long as we do not exceed our capacity in a given moment.

Think about it!

Strategy and Diagnosis


The word “diagnosis,” he reminded me, comes from the Greek for “knowing apart.” Machine-learning algorithms will only become better at such knowing apart—at partitioning, at distinguishing moles from melanomas. But knowing, in all its dimensions, transcends those task-focussed algorithms. In the realm of medicine, perhaps the ultimate rewards come from knowing together.

The key point is that to think strategically, one must step back from the fray – to think apart. At the same time, it helps tremendously, if while you are in that position, you get great input.

Whether that is from a machine, or another human or a book or whatever, be on the lookout for sources. You never know when you will need them.

Two Takes on Building Ecologies

An ecology is a place that evolves out of shared learning. How do we build ecologies?

It is not a topic that you will find in a school curriculum. Indeed, you will not find its underlying ethos — strategic modeling — there either.

Here are two takes on it

Communal Foundations for Proprietary Ventures

This quote from DT got my attention today

incredible value can be unlocked through communal effort and that value can be used for proprietary purposes. In the years to come, that’s something that every industry will have to learn. Here are three key aspects what makes open source communities valuable.

The article focuses on the communal effort in the “open source2 movement. But why would this be true? The answer appears to be that collaboration in the “pre-competition” phase can more rapidly create a framework that everyone needs. With that framework in place, every can build on it whatever they want.

Very interesting.