1: The DNA of Competitive Advantage
The author draws an analogy to DNA: human genes that store information. It's also at this level that evolution takes place: changes are made that enable the organism to adapt, survive, and grow. And while evolution may be in reaction to an increase in resources (an abundance of light or food), it is most often done in adverse conditions. There's really no "trick" to getting by when the things you need are easily available in abundance.
Another biological principle is competition: different species with the same needs compete for scarce resources, and in the long run, the creatures that are most responsive to change (adapt themselves) are more successful than those who are merely aggressive (kill or drive off others) - though admittedly, an organism must survive the short-term conflicts long enough to adapt.
This is hardly a breakthrough theory. For years, the biological metaphor has been known, and the metaphor of a business that failed to adapt as a "dinosaur" is already well-known. Were only it as well heeded.
In some situations, the decision of what to do is straightforward, and all that remains is simply to do it. However, decisions are made in the "cold, dark face of uncertainty" where making the correct choice is not so straightforward. Decisions must be made with incomplete information.
The author disputes the maxim that "if it's not actionable, it's not useful." A conclusion that no action is necessary is no less "strategic" than a decision to act. It can also be reassuring that the present strategy is valid, which is at least good for morale and productivity.
So how do organisms, companies, and nations survive such rapidly changing conditions? Is it random? Is it divine intervention? Or is there a plan hidden from outside view, a methodology to ensure, or at least prepare, for an enduring future? If so, what would such a plan look like? How would it work? And how can other organisms make their own similar plans?
Survival requires adaptation to changing conditions, and "strategy" describes the process of planning those changes: of making right choices in the face of uncertainty. Good strategy, in turn, requires reliable information and sound thinking.
Bad intelligence can be worse than none at all, in that a decision that acknowledges uncertainty is more adaptable than one based on false certainty. Meanwhile, good intelligence is critical, and is grossly undervalued by firms that focus on the tactical decisions that affect the here-and-now.
The author mentions the intelligence cycle: tasking, collecting, analyzing, and disseminating (and it must be done in exactly that order). Some details provided on each of these - but nothing more than should be self-evident by the nomenclature.
Fire in the Belly
A common remark, in many firms, is that "we always seem to be putting out fires" - often in the context of failure to develop strategy (budget, resources, and attention is spent on immediate problems). The irony of this is that "fires" arise because of lack of attention to strategy - and companies that dedicate themselves to putting out fires to the detriment of strategy will find themselves with a constant supply of fires in future as a result. It's also noted that businesses can be run in reactive mode, though seldom with much long-term success. Nothing happens until a crisis arises - and when it does, it's pandemonium.
The author considers the firefighter analogy in more detail: it's actually a thoughtful process. The firefighter must assess the situation and take decisive action, and quickly, to minimize the damage done to life and property. One doesn't run into a burning building without any sense of the situation (where is the fire, how hot is it, what's fueling it, are there hidden dangers). As a result, firefighters are highly trained and are quick thinkers.
(EN: but at the same time, they are troubleshooters. The do not build anything, they don't make anything better, and they don't generally leave a building in better shape than they found it. They merely minimize the damage - which is important enough when problems arise. Btu it is far better for the long-term survival of the building and its residents to act in advance, in a way that prevents fires from occurring.)
To stay with the analogy: firefighting begins with knowledge (a fire is extinguished by denying it heat, air, or fuel), continues with a situation assessment (observation and information gathering about the current blaze to reduce uncertainty), then to a plan of action (what needs be done to control and extinguish it), and finally to execution (taking the actions prescribed by the plan).
Back to the business environment: competitors do not behave as predictably as a fire, and are not governed by the relatively simple rules of physics. They may not even behave in a rational manner, which compounds the uncertainty, making the need for intelligence (as well as the effort required to gather good intelligence) all the greater.
The Intelligence Cycle
The author returns to the intelligence cycle (tasking, collecting, analyzing, and disseminating), and mentions that it is neat and rational, but doesn't often work that way in practice - largely because there are too many moving parts.
The author uses the analogy of baseball, a game in which the majority of the time, one person is acting, in a fairly predictable manner, and there are rules an procedures that tightly constrain what they might do at any given time. He then contrasts this with football: in which all 22 players are in motion most of the time, and there are fewer constraints. Trying to keep track of all 22 moving players at any given time, and predict what they might do next, is overwhelming.
Even so, we gather intelligence as best we can, learning as much as we can about where all the moving pieces may be going, and knowing that there is much that we are unaware of. We cannot be rigid about strategy, because it must adjust for things that are unknown and, ultimately, unknowable.
So in addition to intelligence about the future, we must also gather intelligence about the present, to gather feedback so that we can adapt accordingly rather than blundering forward, ignoring all the warnings.
Managing Versus Leading
The role of the decision-maker is not a solitary one. To make good decisions over long periods of time, requires having a support system in place to provide information and expertise the leader is lacking, as well as to coordinate and manage the activities of those who implement the plan.
The author specifically counsels against the stereotypes of leader as autocrat and follower as doormat. The leader who shuts subordinates out of the decision-making process is deprived of their expertise and, ultimately, has a harder time fostering their cooperation and assistance, or get them to speak up when they have plausible and reasonable objections.
(EN: the author continues on in this mode for a while, describing the nature of a healthy superior-subordinate relationship. It's important, but not germane to the topic of this book, and I don't believe he adds any new insight, so I'm skipping the rest of the section.)
Stages of Conflict
The author indicates there are three levels of "conflict" - strategic, operational, and tactical. These seem to be differentiated by time: strategic being a plan that takes years to implement, operational being a campaign executed over months, and tactical is more immediate and interactive. Intelligence is necessary at all levels in order to make sound decisions - and the longer the range, the greater the uncertainty, and the greater the need for intelligence.
Given the contemporary environment, in which global communications speeds the flow of information, industries are rapidly evolving, and competitors are nimble, decision-makers have less time and less information than in previous generations. There is often a demand for a fast response to a crisis situation before the leaders can fully understand the situation itself, and there is little time for deliberation and analysis of the details.
As such, it's a common misconception that small firms are better equipped to react to changes in the environment, because their smaller size makes it feasible for them to make faster decisions. But a more significant factor is having good intelligence at the right level of an organization, and providing decision-makers with sufficient authority to act and react without bureaucratic delays.
Another common misconception is that a fast decision is seldom a good decision. This sound bite is based on the assumption that deciding quickly means being rash - relying on gut feelings and superficial details, not being sufficiently diligence. However, if the information at hand is sufficient to proceed without the need for further research, decisions can be made quickly without cutting corners.
And especially since the pace of change is rapid, the ability to act quickly and decisively, to be the first mover, has considerable advantages for the company that can do so.
Rallying the Troops
Returning to the military analogy: military planners spend an inordinate amount of time reading over intelligence assessments and making plans. Moreover, if the right skills and tools are not available, they don't execute the plan - it will fail, and because the cost of failure is significant, they must come up with a different plan.
The author mentions conflicts such as Afghanistan and Vietnam, in which a "regular" army found itself opposed by an insurgent force that didn't play by the "rules" of warfare, and used unconventional tactics. Military strategists, trained in conventional warfare, have significant difficulty dealing with an enemy that behaves in unexpected ways. This is the effect of uncertainty on decision-making.
Lead time is important in planning: the more lead time exists, the more research can be gathered, the more careful the planning process, and the more uncertainty can be eliminated, mitigated, or accommodated. A positive outcome is never guaranteed, as conflict is chaotic by nature, but the chances of success are significantly improved by reducing uncertainty - and, if possible, increasing the uncertainty of your opponent.