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AnalysisofMindoftheStrategistBook

KeyPointsoftheMindoftheStrategist

InhisbookTheMindoftheStrategist,Japanesestrategyconsultant,
KenichiOhmae,wrote"Analysisisthecriticalstartingpointof

strategicthinking.Facedwithproblems,trends,events,orsituationsthat
appeartoconstituteaharmoniouswholeorcomepackagedasawhole
bycommonsenseoftheday,thestrategicthinkerdissectsthemintotheir
constituentparts.Then,havingdiscoveredthesignificanceofthese
constituents,hereassemblestheminawaycalculatedtomaximizehis
advantage."
"Inbusinessasonthebattlefield,theobjectofstrategyistobringabout
theconditionsmostfavorabletoone'sownside,judgingpreciselythe
rightmomenttoattackorwithdrawandalwaysassessingthelimitsof
compromisecorrectly.Besidesthehabitofanalysis,whatmarksthemind

ofthestrategistisanintellectualelasticityorflexibilitythatenableshimto
comeupwithrealisticresponsestochangingsituations,notsimplyto
discriminatewithgreatprecisionamongdifferentshadesofgray.(pp.12
13)"
Thepurposeofstrategyistomaximizeone'sadvantage.Onabattlefield,
thismeanspickingtherightplacetofight,therighttimetoattack,theright
timetoretreat,weighingandreassessingascircumstanceschange,but
alwayswithgainingmaximumadvantageinmind.Strategyisintuitive,but
itisalsoanalyticalitisanalytical,butalsointuitive.
Analysisisacognitiveprocessofbreakingacomplextopicintosmaller
partstogainabetterunderstandingofit.Analyzingmeansseparatinga
situationintopartsandexaminingthepartsinanattempttounderstand
whatisoccurring.Inbusinesssituations,analysisinvolvesidentifying
businessneedsrelatedtoasituation,identifyingcriticalissuesand
determiningpossiblesolutions.

IdentifytheMainIssue
Thefirststepinstrategyistoidentifytheoneissuethatmattersmost"
thecriticalissue".Todothis,youmustframethequestionproperly.
Supposeacompanyisincurringhighcostsforovertimework.Whatisthe
correctquestion?
1.Coulditbe:Howcanwereduceovertimeormaybe
2.Dowehaveenoughstafforperhaps,
3.Doesourstaffhavethenecessaryskillstodotheworkinatimely
manner?
Eachquestionwouldelicitadifferentresponse.Clearly,though,itis
necessarytoanswerthethirdquestionbeforemovingtothesecond,and
thenthefirst.Unfortunately,manybusinesspeoplewouldsimplyassume
awaythetwomostcriticalquestionsandfocusonthefirst.Ittakesa
certaindisciplinedcreativitytoquestionwhateveryoneelsetakesfor
granted.Somepeoplecanintuitthecriticalissue,buttheyarefew.
Analyticalmethodscanhelpanyonearriveataworkabledefinitionofthe
criticalissue.Thismethodologycanapplytoabroadspectrumof

businessissues:
1)Diagramtheissueorquestion(e.g.,Canwelowercostsonthis
product?)Askwhatarethecauses?.
2)Identifytheissuecomponents(e.g.,Fixedcosts,variablecosts,
designspecifications).
3)Questioneachissuecomponent(e.g.,Canwechangethedesign
specstousecheapermaterials?).Lookattheadvantagesand
disadvantagesofchangingthatcomponent.and
4)Offeraspecificplanofactionforeachissuecomponent.

FourStrategyPaths

Strategicthinkingandstrategyformulationisaboutachievingcompetitive
advantage.Iftherewerenocompetitors,therewouldbenoneedfor
strategy.Thisfactsuggeststhatthemostimportantstrategicissueis
competitiveness.
Acompanycantoleratecertaininternaldeficiencies,butfirmscannot
survivecompetitivedisadvantages.Allowingthecompanypositionto
deterioratevisavisitscompetitorsmeansthecompany'sfateis
determinedbythecompetition.Peoplethinkdifferentlywhentheyface
competitivesurvival.Thischangestheirfocus.
Theyrecognizethatthebestistheenemyofthegood,andpossiblythe
friendofthecompetition.GoodenoughisGOODENOUGH.There'sno

pointinlookingfortheperfectstrategyortheperfectcompetitive
situation.Theobjectistogainanadvantageoverthecompetitionata
reasonablecost.Dothatoftenenoughandyouwillwin.Thiscanbe
accomplishedinfourdifferentways:
1.Reallocateresources.
2.Focusonexploitingone?srelativestrength.
3.Redefinethekeyissueofthebusinessbytakingaboldaction.
4.Exploitanydegreesoffreedomtoact.

ReallocateResources
Everyindustryhasoneortwofactorsthatdeterminebusinesssuccess.
Nomatterhowcomplicatedtheindustrymayseem,atitsheartitis
simple.Banking,forexample,isaboutcollectingmoneyatalowcostand
lendingitatahigherreturn.Thecriticalfactorsinanindustrycanbe
identifiedseveralways.Oneistoanalyzetheindustry,lookingateach
segment,deninghowcompetitorsineachareabehaveanddrawing
someoverallconclusionsaboutthesuccessfactors.Anotheristo
examinetheconductofwinnersandloserstodefinethebehavior,
advantagesorresourcesthatmadethedifference.Onceyouhave
identifiedthekeyfactorforsuccess(KFS)inyourindustry,redeployyour
resourcestofocusonbuildingstrengthinthatkeyfactor.Ifitisservice,
focusyourresourcesondevelopingoutstandingservice.Ifproductdesign
isakeyfactor,focusonthat.

ExploitRelativeStrength
Examineyourproductandidentifyareaswhereyoucanfocuson
achievingarelativeadvantage.Thismaymeanliterallytakingyour
productapart,takingyourcompetitor?sproductapartandcomparingthe
two.Forexample,FujiandSakuracompetedinthemarketfor
photographicfilm.Theirqualitywascomparable,butFujihadan
advantageinitsname,whichsuggestedthesharpcolorsandcontrastsof
Japan?sscenic,holymountain.Sakurameans?cherryblossom,?and
connotesavague,hazysortofbeauty.Sakuraanalyzedthemarketto
ndoutwhetheritcouldreverseitslossofmarketsharetoFuji,andfound
thatconsumerswerebecomingmoreconcernedaboutcostandoften

triedtosqueezeanextrashotortwoontoarollof20exposurefilm.
Sakuradecidedtointroducea24exposurefilmatthesamepriceasFuji?
s20exposurefilm.Strategically,thischangemadesense.Sakuracould
notwintheimagecontest?Fujihadrelativestrengththere.ButSakura
coulddeveloprelativestrengthonthebasisofcost/value.Thecorporate
strategistwhoreliesonrelativestrengthshouldthinkthrough
competitors?likelyreactionstoeachmove,andpreparetodefend
againstthosereactions.

TakeBoldAction
Simplyput,thisisaboutasking?Why?totesteveryassumptionthatis
ordinarilytakenfororthodoxwisdominyourindustry.Oneofthebest
practitionersofthismethodisTaiichiOhnoofToyota.Heaskedwhycar
companieshadtokeepcostlytonanceinventoryonhand,andwound
upinventing?justintime?materialmanagementpractices.Keepasking
why.Greatbreakthroughscomefromansweringthisquestion.

ExploitanyDegreesofFreedomtoAct
Takeadvantageof?strategicdegreesoffreedom.?Havingidentiedthe
keyfactorsforsuccess,preciselyidentifywhatcoursesofactionmaybe
open.Inthecaseofanautocompany,perhapssafetyisaKFS.An
automakercandomanythingstoimprovesafety,butcan?tdoallofthem
atonce.Meanwhile,therearesomethingsthatmightimprovesafetybut
thatthecompanysimplycannotdo.Strategicplanningandstrategic
actionshouldproceedintheareaswherethecompanyisindeedfreeto
move.
Attempttoavoiderrorsofstrategicthinking,including:
Tunnelvision
Youmustkeepalternativesinviewatalltimes.
Allornothing
Infact,halfaloaf,evenaquarter,ispreferabletonone.

TheStrategicTriangle

Thinkofstrategyasatrianglewiththreesides:company,customerand
competition.Changesinanyoftheseelementsaffectsthemarketand
maymakeitnecessarytochangestrategy.However,strategicchangeis
usuallyverydifficult.Herearesomestrategicthrustexamples:
A.Companybasedstrategy?OneJapaneseairconditionercompany
withanoutstandingreputationforengineeringdecidedtocopewitha
competitivethreatbydevelopingalineofhighquality,highpricedhome
airconditioners.Theproductwenttomarketandopped.Itwaswell
engineered,butsoheavythatdistributorswerenotwillingtocarryand
installit.There?sanoldsayingtotheeffectthatwhentheonlytoolyou
haveisahammer,everyproblemlookslikeanail.Beware.Strategic
planningmustbebroadandcomprehensiveitmustaddressnotonly
immediatepossibilitiesbut?whatif?consequences.Companiesthatopt
tooutsourcesomeoperationsmakeacleardecision,acommitment,
usuallybasedoncosts,tochangewhattheircompanydoesandtofocus
theirresourcesonwhattheydobest.
B.Customerbasedstrategy?Generally,acompanyshouldidentifyone
subsetorsegmentofcustomersandfocusonthem,insteadoftryingto
satisfytheentiremarket.Thismeansknowingyourcustomersegment
verywellandunderstandingwhyyoumighthavearelativestrengthwith
thisgroup.Japanesecarcompaniesadoptedthistypeofstrategyinthe
1970s,whentheyintroducedfuelefcientcompactcarstothesegment
oftheU.S.marketthatwasthemostreceptivetothem.
C.Competitorbasedstrategy?Seekareaswherethecompetitive
situationallowsyoutodevelopaclearedge.Sonyhadagreatreputation
forqualityintheU.S.,butitsreputationinJapanwascomparabletoits
competitors?reputations.Sonyinvestedheavilyinadvertising,PRand
marketing,andsooncommandedapricepremiumoveritsJapanese
competitorsbecauseithadbuiltrelativesuperiorityontheimagefront.

Businessstrategyconcernshowbesttooperateinagiveneconomic
environmentitwouldbefoolishtoignoretheimplicationsoftheoverall
economy.Lowgrowth,forexample,canexacerbatecompetitive
pressures.Meanwhile,advancesintechnologyorchangesinindustry
structuremaywellderailstrategiesbasedontheassumptionsofthepast.

Beaware,useforesightandneverstop
asking?Why??
Rememberthatyourpurposeindevelopingastrategyistogain
competitiveadvantage.Manysmallstepscanadduptoadvantageover
thecompetition.
Strategicthinkinginvolvestryingtoanticipatewhatmight,willorcould
occurinasituationandhowitispossibletoshapeorinfluencewhatis
occuringsothatwhatonewantstooccuractuallyoccurs.Strategic
thinkinginvolvesboththinkingaboutconsequencesandchoosingactions
toachieveobjectives.Strategicthinkinginvolvestryingtoturnasituation
toone'sadvantage.Also,strategicthinkinginvolvesaskingtheright
questionsinasolutionorientedmannerandconductingappropriate
analysestoformulateplansandstrategy.Strategicthinkingalsoinvolves
anticipatingcompetitoractionsandpreparingtocounterorthwartthem.
Insummary,accordingtoOhmaethethreecharacteristicsofthemindof
thestrategistare:
1.Analysisisthecriticalstartingpointofstrategicthinking.
2.Manager?sneedintellectualflexibilityandcreativitytodeviserealistic
responsestochangingsituations.
3.Strategistsneedtoasktherightquestionsinasolutionoriented
mannerandconductappropriateanalysestoformulatestrategy.
Theobjectofstrategyisto?"bringabouttheconditionsmostfavorableto
one?sownside.Helpyourorganizationsucceedinitspurpose."

ArticleReprintfromhttp://planningskills.combyDanPower

References

Ohmae,K.TheMindoftheStrategist:TheArtofJapaneseBusiness,
McGrawHill,1982.

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