15: Step 3 - Expand
One limitation to strategic planning is overcoming the limitations of human memory. The more options you explore, the greater your chances of finding a superior solution - but people can only consider a few options at a time, and not in very much detail.
Most people can only retain between five and nine unrelated items in short-term working memory - which is the reason we make lists: go to the grocery store to buy fifteen things without a list, and chances are you will forget something.
Consider the game of chess: a player who considers only three options for his next move is going to be defeated by a better player who considers twelve - because the best move might be the sixth or seventh option, or even the twelfth.
Comparing chess to checkers, chess is a far more complex game because there are far more moves to consider: when the board is set for play, the checkers player has only seven possible moves whereas the chess player has twenty - and the game only gets more complicated as the pieces are moved and others may move.
Business is a highly complex game, with options that are infinite, and there may be a few hundred options that are germane to a specific situation. The human mind simply cannot consider them all at the same time.
But there are a number of clever ways to overcome this limitation, namely categorization: the hundreds of moves on a chess board can be broken down into 16 categories: move the queen, move one bishop, move the other bishop, etc. for easier consideration. Then, as you consider moving each piece and eliminate some, you recognize there are only three pieces that are most advantageous to move.
Doing so can help de-clutter thinking and help you think through a large number of possible approaches to solving a strategic problem.
The 36 Stratagems
The author has used a Chinese text called "Thirty-Six Stratagems" in his business planning, and includes them as an appendix. (EN: I've studied them before and will not preserve the appendix.)
In brief, these stratagems present six tactical situations and provide six strategies for each - which overcomes the problems of working memory by allowing you to consider them in manageable sets. Being an ancient manuscript about battle, it tends to be rather vague and allegorical: "stomp the grass to scare the snake" and "cast off the cicadas golden shell." But even so, they can be applied to any competitive situation and are vague enough to provide a great deal of latitude. Consider them more in the nature of inspiration than a playbook.
The author suggests that five of these items are particularly good for innovative approaches to problem solving:
- Await an exhausted enemy at your ease. Being the first to make a change means that you can do so carefully whereas others will make mistakes in their haste to catch up.
- Deck a dying tree with false blossoms. Misdirecting the enemy to think that a market that is dying out is actually thriving will lead them to waste resources in pursuing it.
- Besiege Wei to rescue Zhao. The original context here was attacking a weak fort to create a break in the defenses of a strong enemy. This can be translated into finding a niche market that they are ignoring.
- Hide a knife behind a smile. This originally meant attacking after pretending to be an ally. The author mangles it a bit to suggest it means being genuinely helpful to the customer.
- Create something from nothing. This was also a deception strategy, suggesting that you create an illusion of strength to hide your weakness. The author again twists this to mean putting a new piece on the board to change the game.
(EN: In all, my sense is the author is struggling to match ideas against this ancient text and mangling the original in the process - but that seems of no importance, except to indicate that no book of strategies is quite complete - and that ideas that don't quite conform may be useful.)
Case Study
The author presents a case study that is only vaguely related to the topic above: a computer firm that enabled customers to finance purchases. It did so as a convenience, but its financing was not well thought-out, and the finance department was an afterthought: their main business was selling systems.
However, it was later discovered that the information in the finance department was a goldmine for leads: because they knew when a customer purchased computer hardware, they also knew how old their hardware was, and could predict when it would need to be replaced. This enabled them to reach out to the customer prior to that time and secure their repeat business, before they had a chance to consider switching to another vendor.
Offering financing at all was a strategic advantage - other firms who were not willing to finance lost business to them, even if their technical solutions were superior customers wished to finance them. Consider how well a car dealership would do if it did not offer loans - people could get loans from other sources, but at great inconvenience. Hence all dealers offer it as a convenience, and because they're not looking to make money from lending, their rates can often beat competitors.
Using the financing data to plan customer retention efforts also became a strategic advantage because many competitors failed to keep accurate records of past purchases - so they did not know when their former customers' systems would need to be replaced and had no contact with them between sales.
Brainstorming Exercise
The author suggests a brainstorming exercise that can be helpful in sorting through a large number of ideas.
The first step is open brainstorming itself - to come up with as many ideas as possible without pausing to evaluate or criticize them. If you do this on post-it notes and get many people to participate, you may generate many ideas. The author suggests iterating through this until you have between 50 and 250 ideas.
Next, categorize them. You may find that many ideas have a similar nature and the categories emerge on their own, or you may be able to use a pre-existing categorization system (such as the 36 Strategem) by which they can be categorized.
Alternately, you may begin with the categorization system: feed the team an idea such as "take the opportunity to pilfer a goat" and ask them how it might be applied in their business situation. You may require the team to come up with five ideas for each stratagem, which will result in 180 ideas (36 times 5) - which may be more than they could have imagined if they had not been seeded.