Exploiting Analogy

The Underdeveloped Strategy Skill

Source: Andrew Toos, 2013 CartononStock.com

The subject of this Playing to Win/Practitioner Insights (PTW/PI) piece is a pet peeve of mine. It is an underappreciated and underutilized capability, which is an important vector for the personal development of any strategist: the inclination and ability to exploit analogy. That is why my 22nd Year II PTW/PI is on Exploiting Analogy: The Underdeveloped Strategy Skill. You can find the 74 previous PTW/PI here.

The Dominance of Literality

My thinking on the subject started with the observation of a phenomenon — which developed into a pet peeve over time. I began to notice it whenever I provided an illustration of a strategy concept in action — e.g., this is how Company X built a Must-Have Capability, or this is how Company Y generated Strategy Possibilities. Almost automatically, I would get the question: But does this apply to B2B or to start-ups, or to technology companies, or to Asian companies, or to absolutely any context other than the one from which this example is drawn? And the question always has a hint of “because the illustration isn’t exactly my situation, I dispute its relevance to me.”

For a long while, I didn’t understand why the question appeared to be so reflexive. To me, it was always obvious that while their context wasn’t identical to that of the illustration that I used, it was analogous and yes, Playing to Win principles do apply to B2B, start-ups, tech, Asia, etc. But for the questioner, it had to be literal: “I am a start-up, and unless you illustrate with a start-up example, I can’t understand what you are talking about and therefore am going to reject its applicability.” And the person never seems to consider the fact that if I use a start-up as illustration, pretty much everybody else in the room not in a start-up will have the same reflexive reaction.

It took me a while to figure out what was going on, but in due course I realized that these questioners lacked the capacity for productively utilizing analogy. To be understood by them, a concept had to be literal.

That understanding triggered me to wonder from where did this dominance of literality arise? I have come to believe that a key causal factor is the formal education background of most business executives, which is an undergraduate degree in either business, engineering, or economics, and, if they have a graduate degree, an MBA or a graduate engineering degree. Of course, there are lots of other educational backgrounds, but no other background has enough market share to shape cultural norms in business.

These forms of education focus much more on teaching applications than on exploring the underlying foundational reasoning behind them. For the graduates of these programs, that bias makes it more foreign and intimidating for them to engage in exploration outside the strictures of an application — i.e., if I don’t have the variables I need to plug into the Black-Scholes Option Pricing Theorem formula, I am completely stuck. Or I can only tell you something useful about your industry if I use the Five Forces Model to do so. I am not arguing that there is no instruction given on the foundational disciplines behind the applications. There is certainly some in engineering (e.g., math and physics). There just isn’t a lot in these educational backgrounds. The overall educational message is that the applications are what you, as the student, should take away. I think that creates an unease in venturing outside the strictures of the prescribed applications, which in turn encourages obsessive literality.

I further think that this obsession with literality bled over into the strategy consulting industry, an industry that has had a major impact on the practice of strategy. From its inception in 1963, through the 1970s and 1980s, the strategy consulting business was not structured around industries. But during the 1990s, the entire business moved to industry practices and then even narrower product practices (e.g., post-merger integration in financial services). This move was both influenced by the growing literality and drove more literality still.

Clients embraced it. They got to talk to someone who had deep fluency with their industry and who would talk about nothing but their industry. They got to hear about things that the consultant had done to help, literally, their direct competitors and then get the consultants to do, literally, that exact thing for them. No analogizing was necessary for either the client or the consultant. It was all literal.

This worked well for the consultants, who also had the same literal training. All they had to do was learn one industry and then take their learnings from one company in the industry and apply them in the same way to another company that looked pretty much like the first one. It was all terrific. It only took about a decade for the strategy consulting industry to transform into a set of industry/product delivery silos into which young consultants were hired and lived their careers.

As a result, strategy has a closed loop system that reinforces literality. The system produces students who feel most comfortable with literality, who go into firms that love and are structured to promote literality, who are hired by executives who are most comfortable with literality, and who practice applying literality in their daily work. This is by no means without utility. It is a system that works to optimize what currently exists.

The Analogy Gap

However, this literality produces a roadblock to creating what does not now exist. At the crux of the gap is the centrality of data. Data is literal. We are taught to seek out data that is fully representative of the phenomenon that we are studying. It is rejected if it is not literal — i.e., if interpretation of any kind is required. For example, your answer needs to be a nine on the Net Promoter Score question. It can’t be: “I really, really enjoyed my experience.” “Nine” is literal, while “really, really enjoyed” is open to interpretation. But as I have pointed out in this series, all of that that literal data is from the past. And when we crunch it literally, the only thing it can tell us is what currently exists — including what my direct competitor is successfully doing right now.

This literality is utterly incapable of creating a future that does not now exist. A critically important thinking skill for creating the future is analogizing — taking non-representative, statistically-insignificant examples from one context and applying them creatively to another. Samuel Colt famously got the idea for the Colt 45 revolver from working on a ship in his youth and noting the valuable operation of the clutch on the ship’s wheel. George de Mestral got the idea for Velcro from burrs sticking to his clothes on his hunting trips. James Dyson got the idea for his vacuum cleaner from a sawmill dust cyclone. Jonathan Ive got the idea for the iMac from the Imperial Camera Corporation’s frame-breaking colorful Savoy cameras that took the consumer market by storm in the early 1960s. None of these ideas was truly new-to-the-world. Each was borrowed from one context and applied powerfully and successfully to another.

But before I get the ‘but those are old examples that don’t really apply today’ response, let’s consider three of the ten most valuable companies on the planet. What is Amazon? A bookstore (originally) but online. What is Google? An online Dewey decimal system. What is Facebook? A face book. The power of analogy explains why it feels like every venture capital pitch is framed as, we will be the Uber of X or the Airbnb of Y or the Warby Parker of Z. Analogy is a powerful creative tool.

However, it is anything but a new idea that analogy — a unique example from one context utilized in another — rather than data-based literality is the key to innovation and creativity. Aristotle, the 4th century BC Greek philosopher and father of science pointed this out. He focused on the power of analogy and metaphor (a subset of analogy) in the creation of new ideas: “Ordinary words convey only what we know already; it is from metaphor that we can best get hold of something fresh.” And he viewed the skill as of the highest order: “To be a master of metaphor is the greatest thing by far. It is…a sign of genius.” Aristotle does not make an argument that the most important developmental goal is the enhancement of your literal data analysis skills in your narrow field of expertise. He argues that “the greatest thing by far” is your development of metaphorical/analogical capacity.

But to do that, you need contexts from which to analogize. On this front, I have been intrigued by office furniture giant, Herman Miller, ever since I worked with the company in the early 1990s during the launch of the frame-breaking and massively successful Aeron chair. The company is legendary for its furniture design, especially for its collaboration with Charles Eames, who is considered by many to be the greatest furniture designer of the 20th century. Despite being acknowledged as such, Eames considered himself first and foremost an architect, who also designed furniture, made films and, during the World War II, designed medical tools including the beautiful (lightweight and stackable — perfect for battlefield medics) Eames Splint that I have hanging on my office wall beside me, above my vintage Eames Lounge Chair and Ottoman.

As such, he was a prototypical Herman Miller collaborator. The firm has always believed that the best designers of furniture are not furniture designers but rather broader designers like Eames. And that it why the company works with outside designers, like Eames before his death in 1978, and Bill Stumpf & Don Chadwick more recently on the Aeron chair. If instead its designers worked as fulltime staff at the company, they would become furniture designers, not designers who could bring analogies from other fields to bear.

For this reason, I believe that if you work only in one company or industry, you have an extra challenge becoming a great strategist. If you have that singular experience, it is really important to seek out the raw materials for analogy by studying companies in far-flung industries. Otherwise, you will be drawn to literality and won’t have a repertoire from which to draw creative analogies. Similarly, I also believe that the structure of the current ‘strategy consulting’ industry is producing decent strategists, but not great ones as it once did when strategy consultants worked across a variety of industries as a matter of course.

Practitioner Insights

Practice analogizing all the time. Never ask: Does this other thing apply to my situation? Always ask: How might I apply this other thing to my situation? Sometimes, the answer will be that it doesn’t apply in any way. But even thinking about the question will provide you with practice utilizing analogy. And the answer often will be that there are useful aspects that can be applied to your situation.

If you are in one industry for a protracted period, be proactive in seeking out potential analogies from other industries.

The more practice you get, the more comfortable you will be with exploiting analogy as an important creative tool. You will look to it everywhere you can. And as you do, you will stop being so literal. Both the use of analogy and suppression of literality are critical to your development as a strategist.

BTW, as a Playing to Win/Practitioner Insights reader, you may want to check out my live virtual strategy course, which builds on this PTW/PI series to provide a comprehensive view of how to Create Your Winning Strategy. The inaugural program in February was a smash hit and the second program in May is taking sign-ups now. Check it out and snap up one of the limited spots!

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