On strategic perception II: problems

November 20, 2013 § Leave a comment

On strategic perception II: problems

My perception journey to strategy turned out to be somewhat longish so I decided to post it in three parts. But first, I felt it fair to present already here the summary of the implications from my ‘intelligent perception’ –analysis and its relevance to strategy thinking. A comprehensive strategy process model is not realistic here and of course, various perception-analysis driven strategy process designs are possible. But if you happen to find these thoughts interesting I hope the background explanations in part III will inspire you.

What would a perception theorist ask a strategist?

I have put the perception implications in a question form and as you will see I keep repeating – on purpose – the word ‘perception’ instead of measurement. In addition I use the term ‘firm’ when I actually refer to any form of organization, public, private or other.

Furthermore, I do not make a separation between cognitive, emotional, motivational and experiential aspects of perception in any way. I assume and I’m convinced that they are always tightly integrated and inseparable. Only experimental maniacs and brain speculators separate them in their laboratories and top-science publications. The takeaway questions as I see them, considering the perceptual system theory in the strategy context, are the following:

  1. How does the firm understand the meaning of’ ‘intelligent perception’ in its business/behavior environment? What are its domains of perception?
  2. What is the perceptual (measurement, observation, action) architecture through which the firm relates to its environment and itself? Who and what processes in and outside the firm are at the center of this and why?
  3. How is intelligent perception-action implemented in the firm?
  4. How does perceptual learning and related action take place?
  5. How are the perception processes linked with the strategy process and decision making?
  6. How are the critical invariances recognized (e.g. on the market, competitor activities, customer behavior, in technology development, business environment in general, financial developments) in its environment and within itself?
  7. How does the firm find its own one-world interpretation? How are the alternative and changing worlds derived and dealt with in the perception processes?
  8. What is the firms ‘operating system’ and bandwidth solution in connecting the perceptions with action? How are the perception processes given the right to action and system control when something critical happens?
  9. How does the firm increase the efficiency of early observations and the intelligence of the higher levels in interpreting the perceived information?

10. Is there a cost/benefit analysis of the firm’s perception system?TopScience

Spanning the perceptual architecture

Intelligent perception systems are not designed for observing and reacting to everything.  Instead, they have the capacity to form a relationship with relevant external and internal events. Biological systems use these systems to direct the perceptual, neuro-hormonal, evaluative, and motor resources accordingly.  Furthermore, perception systems are multi-dimensional (cognitive, emotional, motivational etc) in nature and involve both the pleasures and pains of perception and they are always intimately linked with behavioral control.

We don’t know how much of the world we can actually perceive and it has been a matter of popular discussion how much of the environmental visual information humans really  ‘see’. Due to the eye movements we are actually blind about twice a second. Furthermore, I believe we see less that 1/1000 000 of what there is to be seen in the whole visual field – even if it is within the sensory range or our senses. These aspects of perception demonstrate well how biological and artificial perception systems have a design and architecture that optimizes between the system economy and functional value. We are blind most of the time but do not see it. Strategic perception is no different: in the middle of the continuous blindness, intelligent perception is necessary for survival.

Perception is spontaneously agile

Perception without action is nothing: when we accidentally burn our fingers, the incoming signal pathways do not have to ask for permission from the ‘brain management’ to recruit the motor system. Or when you triple and are about to fall down, your sensory-motor balance-maintaining system not only reacts to the surprise but it is also ‘allowed’ to take full control over your external and internal behavior – for the moment – in order to regain balance. After that, control is swiftly transferred back to the base behavior and the relevant context is recovered  (cf. https://gotepoem.wordpress.com/2010/11/16/human-real-time-operating-system-theory/).

We could characterize this smooth perception-action behavior ‘agile’ as is now fashionable in talking about ‘fast strategies’ and agile ict development projects using scrum methods, for example (cf. http://en.wikipedia.org/wiki/Scrum_(development). In scrum, as in the above human examples the full (distributed) project control is momentarily transferred to individual (planned and interactively allocated) people or teams that have a relevant task to accomplish at that specific phase of the project.

This is accomplished and secured by forming a holistic project entity, including a dynamic team structure and multiple-level feed-back system. In this way the continuously interacting and evaluative collaboration project avoids the pitfalls of the rigid waterfall approaches. In one sense, as a system the scrum model resembles the human perception-action system: it includes specific actor roles (purpose-driven) and continuous interactions among the participants, and it proceeds according to fast and effective planned sprints (during a week, for example), guided by the continuous feed-back and evaluation processes.  As its best, a scum organization is fast, adaptive and can orient to new situations according to the internal and external project requirements.

In part III where I explain the core principles of the perception system behaviors, it becomes clear how they closely tangent the scrum methodology principles. But even scrum depends critically on its ability to gather relevant perceptual information about its distributed environment. This is especially challenging when the participants come from different disciplines, having their own stakeholders and operation domains with their limitations.

I’m not an experienced scrum master, although I participated in a short scrum education and have been involved in numerous spontaneous scrum-like processes. However my experience from one formal scrum project was that from the start it was unclear what was the perception architecture and how it was spanned. Of course everyone in the scrum project had a saying on the ‘perceptual background’ but not everyone was aware of its relevance in what was to come. Over the exercise it then became evident when conflicts of interests started to occur and hidden problem were revealed and discussed: it was clear that the perception architecture had not been optimally spanned and it did not fully serve its purpose. This seemed to be one of the repeating weak points of the scrum system.  However, at the moment I believe a scrum-like approach could perhaps best benefit from the perception lessons I will present in part III.

Organizations relying on the classic strategy model – mission-vision-strategy-resourcing-implementation are slow and have much to learn in trusting and avoiding the risks of giving the full control to its sub-systems. A recent Finnish example of extremely sow performance in reacting to the incoming perceptual data is our Government, remaining hesitant on how to respond to the perceived problem data, as I describe it in part I. It is not rare to hear similar stories from firms’ personnel. Indeed, a firm trusting its perception must arrange access to organized action when the perception system so requires. As far as I understand it scrum has not yet made a breakthrough in wide scale strategy work and it is absent from governmental –level strategy forums.

The illusion of a kind strategy world

We are destined to rely on extremely strong assumptions about the world. Only rarely can we hear CEOs and other high-level company representatives to explicitly describe what these assumptions actually are in their own strategy contexts. In everyday life we typically assume the world to be relatively kind to us – so that we don’t have to observe everything. It would take all our efforts and it would not be enough. As humans we do have moving eyes, which we could whirl around all the time, but luckily we have developed the swift ability to shift attention according to relevance and without moving the eyes or ears. This is a good metaphor to any firm: how to avoid excess ‘organizational eye movements’ in order to perceive (measure) important events and objects and to build intelligent perception systems that can direct attention by using the existing resources optimally?

Together the selectivity of perception and its ecological success show how valuable intelligent perception is for any system, biological or artificial. The strategic capabilities of the perception systems deserve our full admiration.

Strategy as the home of the firm’s perception system

Not unlike artificial and biological systems most organizations, public and private, orient to their world and are guided by a strategy. It is their de facto perception system and process and includes a perceptual action architecture – although firms do not typically use these terms. In the classic strategy process the perception system is used for collecting relevant internal and external forecast information and the current situation is analyzed in order to make the best possible decisions. Information sources are numerous and can be anything from the cash flow, competitive performance, competence, market, financial, and competitor data to the technology situations and trends. SAP and other similar integrated systems are trying to be the technological implementations of organizational perception: in the extreme case (imaginary only, I hope) such systems can be the only eyes to the world by an isolated manager or a bureaucrat.

I do know of firms whose strategy process is built on effective and relevant perception-action systems and architecture – and I’m lucky to have a friend, a true professional, Jaakko Ahonen  (http://www.ahonenpartners.fi/) who applies this kind strategy guiding approach in his customer (b-b or b-c) oriented growth consultancy. Interestingly, he has combined the analysis of the perceptual architectures of firms to collect data on relatively complex but relevant, multi-dimensional customer decisions and behaviors. Not surprisingly, even after many discussions with him, he does not use the term ‘perception’ in his context at all, but the results of his approach have been just impressive, to say the least. I’m convinced that there are others who think alike, but the concepts used vary.

Firms differ in how they collect strategic information: the way it is done is an expression of how they think about their perception mechanisms in scanning the external environment and the firms themselves. The initial phase of a strategy building cycle includes the declaration (either design or inventory) of this architecture and the perception resources are then spanned accordingly. This includes e.g. knowledge acquisition, measurement, and analytics, and can be seen as part of the firm’s knowledge management process. In this way the firm defines the true relationships it has with itself and its environment. Nothing else can achieve that. This may sound like loose philosophical talk but it is not: in building artificial vision systems, for example, the architectural approach is a necessary and critical ‘win-or-loose’ design phase.

Organizational perception can be implemented in the form of customer, market, sales and forecast data analysis, various data representation forms, discussion forums, person-to-person interactions – any big or small data process and it can also occur in various knowledge and customer relationship activities of the management and other personnel. However, it is not an extremely complex task to map and model this architecture in a company, or a government, for that matter, and to describe the basic components and the inherent perceptional relationships, but I have never seen it done.

Scorecards – bureaucrat perception?

Balanced scorecard models (e.g.http://www.hbs.edu/faculty/Publication%20Files/10-074.pdf) come close to the perceptual approach in how they define the metrics for the firm’s progress on financial, customer-, growth, and business process sectors.  The BSC system spans a ‘measurement architecture’, but it differs from the perception approach where the emphasis is on intelligent perception aspect: I use the ‘perception-action lens’ to look deeper into the nature of the measurement and data collection as part of the strategy. Perception is more than measurement as it has its own domains of activity and forms of engagement.  No measurement happens without some human engagement.

A simple example is the employees responding to various questionnaires probing their work or the firm atmosphere. It is not rare to hear them complain that they lack the real means to express their relevant observations and at the right time, for example on quality, coordination, or management communication, even when it would be of utmost value for the firm. The problem is not a lack of data, or lack of personnel inventory it is a problem of a distorted perception-action system.

For company strategists the design of measurement metrics is crucial: ignoring the perception mechanisms can entertain unfounded faith in the data sources and measures or simply cause neglect of relevant information.

Distorted perception architecture is disastrous

A curious example of a distorted perception architecture concerns the investigation panel of the Challenger accident in 1986 where one member of the panel, Richard Feynman, the famous physics Nobelist could not get his strong and clear message through and had to find his own ways to express his opinion about the accident causes. The panel was reluctant to accept his simple and practical observations, which inspired him to demonstrate them on a televised hearing. He took a glass full of ice and water and put a real O-ring from Challenger into it and then showed how he could break the cold ring by hand; this made it impossible to neglect the valid observation and his arguments. For an unknown reason, the panel had spanned its perception mechanisms in a way that made Feynman’s observation invisible in the investigation process. To many the arguments by Feynman had remained weak or silent signals but the demonstration changed the situation. It is a good question, why this happened and just like in the 2008 crisis, various explanations, political, social-psychological, institutional and others can be given but the outcome was the same: the distorted perception architecture determined which perceptions were possible.

Another educational example is the US financial crisis in 2008, which was sharply analyzed by Charles Perrow in his 2010 talk at CISAC/Stanford. He described in detail, with names of the relevant persons why the approaching disaster was not perceived by the Government and by those responsible individuals and organizations, which should have seen it. As is now well known, also a number of firms had good short-range, economical reasons to hide it and make it difficult to perceive.

A feasible interpretation is that the perceptual architecture of the Government and its analysts network was significantly biased, for a number of reasons. It did not include the players, especially banks and insurance companies, the main actors who were in continuous lobbying contact with politicians and other stakeholders. Information about the subprime problems had been visibly accumulating and a few specialists had been explicitly warning about it, but they were excluded – perhaps on purpose – from the perceptual architecture. Indeed some of them have later complained about improper treatment and behavior they received to their warnings (http://rwer.wordpress.com/2010/05/13/keen-roubini-and-baker-win-revere-award-for-economics-2). Sparrow described in delicious detail how the available observations on these actions and behaviors were neglected, left outside the perceptual architecture, which should have contained the underlying influential persons and their organizations. There were no weak signals – only very strong ones but they were neglected.

Why the lack or perception?

Is it a matter of sensitivity? Yves Doz, for example (http://www.strategicagility.com/) discusses strategic perceptions in terms of the need for strategic sharpness.  As these crisis examples show, there is much more to perception than meets the eye.  There seem to be at least two, almost orthogonal ways to interpret these architectural perception-problems. On one hand, some futures researchers argue (Ansoff, Hiltunen, for example) that it is a question of weak signals, which are simply difficult to observe. Because of that methods like the Delphi method are used to probe the best imaginable information sources (people).

I have questioned this by suggesting that it is a matter of a distorted perceptual architecture, which does not include relevant perception mechanisms and processes (https://gotepoem.wordpress.com/2011/03/19/weak-signals-or-weak-theory-of-observation/). The observed signals may appear weak, but only because the sources have not been properly identified and included in the perceptual architecture. Of course it would be possible to combine the Delphi with the architecture approach but there is the challenge that the best sources may not be the members of the establishment or have the fame to be recognized as valuable sources.

Another explanation is related to what a colleague of mine Professor Leena Kasvio once described several years ago: an accident where a landing passenger airplane crashed against a car driving on the runway. Her description of the causes was that the air traffic controllers had a distorted (she did not use this term) idea of what was their core task and consequently, what to monitor; it is not only managing the air traffic and finding the right landing window and process etc. for the planes but especially to help them land safely. The latter view would span the perception architecture accordingly and had naturally included the runway traffic, be they cars cats or bulldozers.

An alternative, cognitive-theoretical explanation to poor organizational perception is the notion of cognitive dissonance according to which denial and distortion of perception or even blindness can be caused by a person’s – or an organization’s – observation and experience that reality appears to challenge her deepest and most established beliefs about the world (Kessler, 2010, in real-world economics review). At first sight this feels like loose psychoanalytical thinking to me and not very convincing.  

However, I have just read an interview from a Danish economist predicting that Netherlands and Finland will be the next ones on line to cause economical problems in Europe (Kauppalehti 12.11.2013). There is strong statistics to support this view. Finland having been among the best pupils in the European economy class, the claim has surprised many Finns and indeed, it seems like it is threatening our deep national (positive) views of ourselves. Hence, almost as a support for the cognitive dissonance view his comment has not had a serious predecessor in the dominant Finnish economical discourse although the possibility has appeared on the strategy charts of firms preparing for the near future.

One is tempted to claim that due to the cognitive dissonance our (public) national perceptual architecture has not included sources, which would reveal such negative phenomena. Hence, we just remain passive, as if waiting for an external and forceful attentive signal or even instruction (from economists, EU politicians, rating organizations etc) to include such perception sources – when the situation becomes undeniably threatening. After that, the new perception mechanism will be span and in open public use, but time has been lost again.

Is it possible to perceive a ‘black swan’?

In his books “The Black Swan” and “Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets” Taleb described the ‘black swan’ metaphor used to describe significant but rare and ‘outlier’  – improbable, difficult to predict with traditional methods – phenomena. Interestingly, hindsight is also included in the black swan concept, that is, the tendency to offer explanations to its occurrence retrospectively. My colleague Hannu Tuomisaari from Aalto University reminded me of Taleb’s work in this context and the possible challenge it is to the perceptual architecture concept – and made me think:

The retrospective explanation of the ‘black swan’ carries an interesting perceptual aspect, although imaginary: retrospection itself is a demonstration of the possibility to envision what has caused the unexpected phenomenon to occur. Illusory or not but the imagination is also based on spanning a (imaginary) perceptual architecture that includes the relevant observations. How else could such phenomena be explained? A question remains, though, is it ever been possible to span a relevant perceptual architecture for catching a black swan?

A distorted perceptual architecture can sink ships

Disastrous consequence of a biased perceptual architecture is not a novel phenomenon. One of my favorite historical examples is the stability test of the famous Swedish Vasa warship, which sank outside Stockholm on its maiden cruise in August 1628 (http://faculty.up.edu/lulay/failure/vasacasestudy.pdf). It was built in a hurry and with the largest investments ever in order to make it the most glorious warship in Sweden. King Gustav had hurried its building and put the shipyard management under royal pressure. By doing this, he seriously distorted the perception-action mechanisms at the shipyard.

The construction process was problematic from the beginning and there were early doubts about the ship’s stability. Aware of these problems, the shipyard management had Vasa tested at the harbor by ordering a group of 30 men to run from side-to-side of the ship: already on the third run Vasa was rocking dangerously. The warning signal was strong enough for them and the test was halted. Curious enough, no information of this result could reach the critical decision makers, and Vasa prepared for her celebrated maiden cruise. One could say that the warning signal remained ‘weak’ from the system – surely from the King’s – perspective. Then on the first celebrated cruise, a mild wind outside the harbor was enough to heel Vasa over and she sank after a 1300 meter cruise, taking 53 seamen with her. Today the well-preserved Vasa, raised in 1961, can be admired at the amazing museum in Stockholm.

One could consider Vasa either as a simple case of bad communication or a combination of bad management, fear for the Royal power of the King and his subordinates – and a communication failure.  But there is more to it; the catastrophe bears a close resemblance to the preceding events of the financial crisis in USA. Had the perception-action architecture been spanned according to the core national strategic goals, untouched by local interests, lobbying, political, and other perception masking factors, the early warning signs would have been early, strong and loud enough within this architecture.  In both cases, many seemed to ask, after the disaster: “Why didn’t we see it coming?”, but it is the wrong question – it should read: “Why didn’t we tune our perception-action architecture right?”

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On strategic perception I

November 11, 2013 § 1 Comment

 In the short discussion on “The art of strategy” (October 2013) two well-known McKinsey specialists do not refer to strategic perception at all, although their comments touch on physics, resourcing, analytics, rigor, and even psychology as important concepts and metaphors in strategy discourse. Their view on perception is quite different from the famous swordsman Musashi’s who had a saying (my very free translation): “Seeing is weak, perceiving is strong”. In his world a misperception at a critical moment would cost his life and so it is with organizations – a difference in time constants perhaps. Vision without intelligent perception would be fateful for a samurai. Indeed, it is not rare to forget ‘perception’ in strategy considerations although ‘vision’ is ever present.

Here in this first part,  I will first introduce my thoughts on the fascinating topic of perception and then take up some familiar problems of the classic vision-strategy processes and finally start relating these two worlds.  This may be an unorthodox linking of the apparently separate worlds but I have been fortunate to live in both of them during my academic and not-so-academic career, and Musashi is no stranger to me either.

What is perception – in this context?

Intelligent perception could be an essential component of any vision-strategy model. The term ‘perception’ does occur in organizational studies but it is my general impression that it is typically misunderstood, hidden under trendy disguises like sense-making, sensing, framing, or awareness building, for example, its relevance underestimated, or it is just used in a popular-psychological sense and as such of not much use.

Perception is not an easy topic: the theory of perception is an evolving and moving target itself. For example, it may come as a surprise to many that there is no general theory of the observer (perceiver) even in classical or modern physics (cf. my article related to this at http://arxiv.org/abs/1309.3633). No wonder then, that such a serious theory does not exist in the organizational sciences either. I’m convinced that it will soon evolve because of the fast increase in the complexity of the organizational environment, where perception skills and capabilities become – they already are – necessary assets.

Perception is a fascinating phenomenon. It is not about recording the world or oneself – it is acting in them. The ‘in’ here is not a spelling mistake, I really do not mean ‘on’ – I believe I use the language right here: perception-action cannot be separated from the world and the perceiver without damaging the knowledge of either of them. Further, perception is directed outwards and inwards – simultaneously. Because of this intelligent perception is a most intriguing biological capacity and has a huge ‘strategic’ value when it drives the internal and external ‘behavior’ of an organism, human experience, or the behavior of a machine or an organization.  You would expect strategy researchers to be seriously interested in it.

What I talk about when I talk about perception (I borrowed this title from Haruki Murakami’s book title which he borrowed from Raymond Carver)

Perception – human, animal, artificial – is necessary in building an intelligent relationship, a symbiosis, with the unknown environments – the internal and the external. It constructs (internal) images, scenes, and many unknown mental activities related to these worlds, to recognize and represent the inherent invariances (behavior-strategically most important and informative relationships between the perceived objects or internal states), in order to plan, guide and be entangled with actions accordingly.  Intelligent perception means being sensitive both to opportunities and obstacles in reaching for something valuable; to learn and adapt to these environmental changes quickly and to learn from them, to generate intelligent perception structures (hard-,  soft-, inherited or culturally wired)  that help automate perception and action processes. This is necessary because both need to be fast and focused. In doing all this intelligent perception makes it possible for the actor-observer to release its limited resources for ever higher-level and valuable functions, and finally – it allows the organism’s full trust on its perception so much that any action can be accomplished with full power and accuracy. It may be good to repeat here that perception is not directed to the outer world only. Beneath all this lies the world of pain and pleasure, colors of mental life, aesthetics, culture, and love – which I only can imply here.

We can admire the amazing perceptual abilities in human sports and performance arts and in animal flight and fight. Of course we can experience them in our everyday life, but most of its wonders remain hidden from our awareness because we live our perceptions. Robots are still ignorant: in war they can accidentally kill anyone and they are practically useless in trying to recognize peace. Having said all this, is there anything in this description of perception that should not be an essential aspect of any strategy considerations? Could this insight be useful in the analysis of strategy processes and perhaps inform their design in organizations?

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Strategy discourse – problems and opportunities

Strategy researchers discuss the need to extend strategy analysis and views to better cover what they call “demand (D) or consumer/customer side” of strategy research (and practice).  This is in contrast to the resource-based view (RBV) emphasizing the production side (cf. Priem, Butler, Li, 2013, for example; thanks Mikko Laine from Aalto DVN team, for sharing this J). This may not appear novel at all, especially to a human-centric worldview and in the familiar matters of our global, digitally driven life. However, it is a way to turn the perceiving senses to the world outside the organization. But a burning practical question remains, how to best conceptualize and organize the strategy process of firms, large companies and even nations. The vision-strategy process as it is typically applied today hides an increasing number of problems, one of them being the neglect of strategic perception.

The most amazing flaw in the organizational vision-strategy process is that it is practically never impossible to formulate a vision. In Finland, for example, we already have several national vision-strategy documents but we are in trouble. We have the national brand vision and the Team Finland strategy for 2014 (http://team.finland.fi/public/download.aspx?ID=115910&GUID={5F2A2D13-C30D-40A0-B71A-A4E2B5ADF6C0} and a recent futures document from our Government (which b totally underestimates scientific matters).  Every firm has it, even the third sector communities, universities and the minuscule departments have it.  I have never met an organization that would openly say that it was impossible for them to build a shared vision.  What a wonderful tool that works everywhere, in any conditions, and by anyone?

Vision can make the strategy process blind

Imagine an organization or a national government with a vision-strategy process actually masking the perception of its environment and adapting the strategy accordingly. Under changing circumstances this can be more typical than not in many of the present-day organizations, especially the large ones.  We Finns could sense something like that happening over the years following the collapse of Nokia – practically blind to its crucial market life – and we are now following another major scale strategy dance: the Finnish Government Program from June 2011 that has met a similar risk of slow deterioration. Again, like Nokia with its “connecting people” vision, it describes our wonderful national vision to be a “caring, open, responsible, globally aware and prosperous well-fare society.”

The way our national vision is defined in the Governmental program and has been guarded by various stakeholders and situational factors has actually fixated this vision on business-as-usual targets, blocking a perceptive, smooth, adaptive and novel way towards the national vision in the changing circumstance. Right now, as a nation we suffer from the lack intelligent perception inwards and outwards.

Strategic tools as weapons of internal destruction

Like all strategy programs, the Finnish one includes an analysis (perception) of the current environment and the foreseeable futures, and then looks at the politically agreed strategic means for reaching the goals. It is a standard process, based on difficult party negotiations after which the feasible or compromise policies are chosen to work towards the vision goals.

The worst of such strategy versions I have seen implemented are almost identical: from the higher education and university context in Finland, especially in my own ex-institute. Only about 10 or more years ago such strategy processes at universities were mostly harmless and academically eloquent exercises on discourse and documentation that could go on in parallel – with little interference – with effective real-world work and activities. Now with new power structures at our universities the situation has changed profoundly and the process has become an essential tool of both progress and survival.

I’m not arguing for the old system, but this has made the strategy process a de facto internal weapon of academic mass destruction: the power relationships dictate how different organizational units, dominant individuals, and research groups must struggle for resources and their ‘strategic position’ necessary for survival. Those who make it and succeed will be the ones defining the new strategy and gain more power – not much interest is given to the rest of the resources or the organization. In this specific context strategy process has a dissonant audience.

Many seem to think that the ‘fittest’ will survive, but a question remains, ‘in what sense the fittest’ because after destruction the weaker ones have no voice. Self-perception has not much role in these considerations when perception is fixated at external and formal outcomes. Businesses are no different, the metrics used and the weight given to different measures only vary, but they can have shared aims, often economically grounded.

Of course the classic strategy model is meant to be dynamic, sensitive, relevant, creative, and adaptive by using intelligent data, analysis, excellent leadership, and modification or re-evaluation during the vision-strategy cycle, every year or so. “Fast strategy” has even been the title of the book by Doz and Kosonen (2007) emphasizing the need to build a sensitive and fast or ‘agile’ strategy process. But ‘fast’ is relevant only when perception is intelligent. The McKinsey discussion above describes this well.

Change and volatility challenge strategy dynamics

Our Government case is no exception among the organizations suffering from the unstable environment and massive changes. The financial crisis in 2008 happened too fast for many. From the beginning, it was a challenge of perception – but it was not recognized as such. In Finland, already by 2010 we could perceive, by looking at our falling export data and its trend that something was seriously wrong: the export did not show any signs of recovery, unlike in Sweden and Germany, our two best reference countries in this context. The relative data looked scary.

In US the financial crisis was, most of all, a problem of intelligent perception but this became clear only after the crisis. The real predecessors of the 2008 events were vividly described at CISAC/Stanford on April 1st, 2010 by Charles Perrow:  “Markets, Information, and the Spreading of Risks: The Economic Meltdown and Organizational Theory”. The talk confirmed the problem of biased and weak organizational perception that had prevented many from seeing what was coming although the real signs were not weak at all. It was not a problem of misbehavior or strategic sensitivity only but a true lack of intelligent strategic perception. (https://gotepoem.wordpress.com/2011/03/19/weak-signals-or-weak-theory-of-observation/ ). This is an excellent example of the conceptual difference between the concepts of perception as recording and perception as an intelligent process, directly linked with action.

Of course, strategies are meant to meet any positive or negative futures. Despite observing the heavy economical consequences of the crisis, our Government’s perception remained separate from its action; it had the vision and it did receive the environmental information but lacked the perceptual intelligence to support action.  Furthermore, it had a grounded strategy, produced with difficulty and in addition, the backing parties were willingly or unwillingly freezing it. As a result, the Government remained not only blind but also the hostage of its own public vision-strategy process: there was no quick way out or even a chance to perceive new strategic opportunities which would have been desperately needed.

Media and the public have learned to ‘know’ what a strategy is

The situation was not made easier by the media that loves to remind of the strategy (plan) and its ‘promises’ made in 2011. Now the Finnish Government had effective and willing guards in the media – and opposition, of course. As if to strengthen the friction effect, the visible public opinion and the news-hungry media had together become significant stakeholders treating the national strategy and its vision as promises – not as an imaginary future and the means to reach it. The media and its audience had obtained the power to inhibit any strategic changes from happening. In the discourse produced, the strategy adaptation process was transformed into a ‘breaking promises’ discourse.

Lack of intelligent perception has real consequences. An example I followed closely how our dominant print media were reluctant to turn its perception on the export and innovation problems in 2011: Finland had been unable to build economically large-scale firms during the last 20 years. For a colleague of mine, it took nearly two years to get published an analysis based on these nationally significant perceptions.  Our leading business magazines and the main newspaper were not interested to write about it: they did not perceive what professor Eero Byckling had clearly perceived. Finally Eero could publish his analysis on the Finnish export and innovation system failure in a journal focusing on cultural matters (!) (cf. Kanava 1/2013). Today, these topics have become public knowledge in the media discourse, but we lost valuable time. Why does this happen in ‘broad daylight’? Is this only a specific perception problem of Finland?

The standard explanation to the national-level problem is that we are currently suffering from the same ideological and democratic crowding problem as the US.  There the democrats and republicans block each other’s way to what the opponent sees as progress: the two parties perceive totally different and divergent opportunities to reach for the national vision. The scope of the damage possible due to such a process has been a real surprise to many.

Interestingly, the same thing as in US has happened in Finland, but in slow motion – it has been the outcome of the unanimous, multi-party Government remaining true to its vision and strategy statements – being passionately guarded by the media.  Changing the original vision and strategy had been ‘breaking the promises’, a failure and not intelligent adaptation.  Now we are ‘forced’ to adapt. Surprising enough, a recent poll in Finland showed that about 50% of the citizens have been ready for significant policy changes related to taxation and retirement age, for example.  Can a strategy process be weaker than this, frozen in front of its perceptive audience, willing to change? (http://www.eva.fi/blog/2013/03/19/evan-arvo-ja-asennetutkimus-2013-kadonneen-kasvun-metsastajat/). An amusing and inspiring example of a similar adaptation by workers to the strange US Governmental shut-off situation was observed at NASA Mars project (thanks Michael Sims for sharing this: http://online.wsj.com/news/articles/SB10001424052702304500404579129810090504206).

Lack of passion for the vision

Only rarely does the formal organizational vision evoke a true passion in its audience, in the employees, and in those responsible for reaching it or among the citizen. It is no surprise that our Government has turned to a national guru who has the rhetoric and media fame and who can so re-formulate or translate (perhaps even transform) the formal visions and programs for their audiences to enjoy. Our national guru Dr. Himanen and his co-author, the famous Manuel Castells published a book in November 2013 on our national vision where they lifted dignity as a core element for our national vision. Of course, nobody is, or can be directly against such a valuable thing and many seem to accept it as a promising vision.

This is not a rare situation in companies that regularly invite charismatic speakers and showmen to ignite the audience for the implied by boring vision. In Italy, a clown became a significant political actor. Such performers and gurus are hoped to act as apostles with the ability to offer an inspiring vision – or the criticism of it – that is actually derived from the organizational situation and documents but to which they are hoped to breath signs of life.

The need for gurus has led to a curious recent event in Finland, the one now called “The Himanen case” where a visibly weak-quality national strategy-project application was accepted without open competition by the Head of Finnish Academy and the Head of Tekes, our leading and the most prestigious organizations for the national management of science and technology. The process was totally and bluntly against the standard evaluation practices and ethics in Finland.   The leaders of the two organizations willingly explained that they had been under pressure from the Prime Minister to accept the offer.

Some might think that the public process has been unfair to the guru in question since Dr. Himanen was only offering his help and (expensive) consulting business to the Prime Minister Office where they really needed help to give life to the dead-appearing Government vision-strategy plan. It became a total failure of trust in the strategy process – even before the final report of the work has become public. Now that the strategy report has appeared, it has received a chaotic reception and – to me – it seems that it will block our national perception for a year or two at least.

Organizational vision is not perception

Recently I browsed through a list of popular strategy tools in a local business magazine (Optio, 16/2013) introducing their core elements: scorecards, swots, blue ocean, lean systems, neo-taylorism, scenarios, weak signals, co-creation, change management, vriq, benchmarking, portfolios learning organization, and so on. While they do include a plethora of means to observe, analyze and model the environment, they have no serious interest in organizational perception. ‘Vision’, however, remains their basic component.

Interestingly, the term ‘vision’ actually has nothing to do with human or any other vision systems or perception. It is a definition of what an organization wants to see to happen to it, internally or externally, and it is not a matter of perceiving something. A better term would indeed be organizational imagination or dreaming – with the requirement that it must be – in some acceptable way – grounded and realistic in the eyes of its presenter or the audience.

I the next part, I will explain my view on why I believe the classic strategy process paradigm fails and suggest an alternative, opportunity perception-based concepts for supporting an effective strategy process that can match the demands of the complex and changing world. 

Where Am I?

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