Strategy & Integrative Thinking
I received such positive response to Strategy & Design Thinking — thank you — and specific encouragement to replicate the linkage between my body of work on strategy and yet another body of work, that I have decided to make my 12th Playing to Win/Practitioner Insights (PTW/PI) piece on Strategy & Integrative Thinking. (Links for the rest of the PTW/PI series can be found here.)
A Bit of History
I kicked off my work on Integrative Thinking in 1991 when I became curious about why giant global companies would hire an upstart firm like Monitor Company, led by 30-somethings (I was 35 at the time), to solve their most difficult problems when there were plenty of much larger firms staffed by much more senior people. I came to the conclusion that they hired us when they had a problem that slopped across traditional categorical boundaries. That is, it wasn’t a sales force effectiveness problem or a marketing problem or a relative cost position problem. Both the problem and the symptoms that it generated were unique, apparently multi-faceted and vexing.
That led me to further explore what we did (at our best) that made Monitor worthy of their trust in tackling such critical problems. The answer was that we thought differently. Our instinct was not to attempt to quickly categorize the problem, go to the case database, look for the most similar previous case, and apply that template to the client’s problem.
That hypothesis — a different way of thinking — was a start, but it was far too abstract to satisfy me. So, I set out on what turned out to be a long journey to figure out what that way of thinking entailed. My approach was to attempt to reverse engineer the thinking patterns of highly successful leaders. That took another decade or so and culminated in me writing The Opposable Mind in 2007, from which the quote above is drawn. The central thing that those Monitor clients sought, and highly successful leaders naturally did, was to find creative resolutions of tensions and those solutions arose out of thinking across established models and categories, not within them. I spent the next decade working with colleagues on a practical methodology for finding such creative resolutions and wrote a follow up book with Jennifer Riel, Creating Great Choices in 2017.
I think that students long to find gotcha-type contradictions in the thinking of their professors, so I routinely get the question: how can you be for making choices that embrace tradeoffs in your work on strategy but in integrative thinking you advocate refusing to accept tradeoffs? The answer is that I don’t want leaders to accept a fundamentally unpleasant tradeoffs but rather only accept tradeoffs that allow them to accomplish their strategic goals. Southwest Airlines co-founder Herb Kelleher was perfectly happy to accept the tradeoff that offering only economy seating with no pre-assigned seats would alienate all business and first-class fliers. But he didn’t care. He wanted to serve passengers who saw his airline as a substitute for taking a bus. Thus, he didn’t need to find a creative resolution of the tension between offering coach class only versus multiple classes. He happily chose and that strategy choice made Southwest monumentally successful.
In contrast, Four Seasons Hotels & Resorts founder Isadore Sharp found the tradeoff between the comfort of a small motel and the amenities of a large hotel to be too painful to accept. So, he thought hard and created a Four Seasons model that incorporated both comfort and amenities in a classic Integrative Thinking move. But he still made numerous either/or choices in that new model — just choices that he was happy to make. For example, he was happy to get out of hotel development and ownership, and just participate in hotel management. He was happy to have a much smaller chain of luxury hotels than the giants in the mainstream market.
Strategy is and will always be about making choices. Integrative Thinking is about pushing yourself to get past unpleasant tradeoffs to positive tradeoffs of the sort that define and strengthen your strategy.
Integrative Thinking in the Strategic Choice Structuring Process
In terms of its link to strategy, Integrative Thinking is a tool that can be productively used in the possibilities generation stage of the Strategic Choice Structuring Process.
The key to creating a winning strategy is to come up with a unique and hard-to-replicate cascade of winning aspiration, where to play, how to win, capabilities, and management systems choices. The limiting factor on the quality of an eventual strategy choice is the quality of the possibilities from which the strategy is drawn. Often, during the process of generating possibilities, tensions between possibilities arise — tradeoffs that are truly unpleasant. This is the point at which Integrative Thinking can be utilized.
The exercise is to utilize the two opposing possibilities to creative a new possibility that overcomes the truly unpleasant tension. Piers Handling’s integrative possibility that turned the Toronto International Film Festival (TIFF) from an obscure, struggling festival to the most important film festival in the world provides an illustration. The two opposing possibilities were to maintain the inclusive community approach that TIFF had always embodied or to move to the exclusive industry approach that had long succeeded for the Cannes Film Festival. However, these two possibilities presented truly unpleasant tradeoffs to Handling. He loved the inclusivity of the festival, but the model caused it to endure unrelenting financial struggles. The exclusive industry model was financially attractive but entailed alienating the Toronto festival-going audience that Handling wanted to continue to embrace.
To come up with an integrative possibility, Handling needed to understand how the two opposing models worked and what he loved about each.
Handling loved what the inclusive community model did for the community, the industry and the festival but longed for the sponsorship revenue that arose out of the international media buzz that Cannes’ exclusive industry model provided. That gave him the insight to explore ways in which he could utilize attributes of the inclusive community model to generate the one thing that he wanted from the exclusive model.
That became the People’s Choice Award, an award that doubled down on the community aspect of TIFF by having the community serve as jury, not a group of industry elites as with Cannes’ Palm d’Or and leveraged the city of Toronto as a diverse multicultural test market for the global prospects of a film. Interestingly, the People’s Choice Award already existed but was not leveraged effectively as a game-changing tool.
Once a new, integrative possibility is generated, it is treated like every other possibility. It is reverse engineered by asking what would have to be true (WWHTBT) for it to become a success. The things that would have to be true but are most worrisome are identified as the barriers to choosing that possibility. And a testing and transformation pathway is created to assess whether the barrier(s) can be overcome.
In the case of the Four Seasons integrative possibility above, the only way Sharp could test it was by creating a hotel that embodied his possibility. If that single hotel failed, it wouldn’t kill Four Seasons. And if it succeeded, it could be replicated across the world. That hotel was the Inn on the Park in Hyde Park, London and, as Sharp says, it was an instant success, the chain’s most profitable hotel for decades, and the model for all future Four Seasons hotels.
In the case of TIFF, the festival played up the People’s Choice award and when its winners started to succeed globally and win Academy Awards, the buzz generated by TIFF skyrocketed and Handling got more in the way of sponsorship revenues that he ever dreamed. If anything, the People’s Choice Award made TIFF more inclusive and, in due course, became the most sought-after award in the entire film festival season and a key to TIFF’s rise to prominence.
Creating Great Choices lays out the methodology for creating such integrative possibilities in much greater detail. There are three pathways of exploration for finding an integrative possibility including the ‘double-down’ pathway of TIFF, the ‘hidden gem’ pathway that Sharp used at Four Seasons, and a pathway we call ‘decomposition,’ exemplified by P&G’s innovative Connect & Develop approach to innovation. I was very pleased to see Creating Great Choices recently named one of the 100 best decision-making books of all time.
Coming up with a truly winning possibility is a difficult task — a creative act. One way to come up with better possibilities is to use Integrative Thinking. The way to do so is to see conflicting possibilities that come up naturally in the process, not as the poles of a choice that needs to be made between incommensurable options, but rather as the raw materials necessary to create a better possibility still.
To tease out those precious raw materials, do the exercise of figuring out how each model works for the relevant stakeholders. Identify what you would love to keep from each. Then work on how you could combine them in a novel way to produce a new model that contains elements of each but is superior to both. Then follow the Strategic Choice Structuring Process from there to bring the new model to life.