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How the Very Best Strategists Decide

https://hbr.org/2016/10/how-the-very-best-strategists-decide

hbr.org

How the Very Best Strategists Decide
When it comes to setting strategy, which is more effective: one great thinker or a wise crowd? To find out, I turned to my ongoing Top Pricer Tournament, in which 884 people - managers, consultants, professors, students - make pricing strategy decisions for a generic business competing against other generic businesses.

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Two strategies

Two strategies

When it comes to setting strategy, there are benefits to both popular and loner strategies.

  • Popular strategies are those that are identified by the crowds. The more people that choose a strategy, the better the strategy performs.
  • Loner strategies are those that are identified by only one person. If you want to outperform the crowd, you've got to do something the group isn't doing.

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Outperforming the crowd

Outperforming the crowd

If you want to outperform the crowd, learn the following two essential skills.

  • Generate ideas by broadening your decision frame.
  • You must be able to distinguish between good and bad loner strategies. It is best done by embracing critical thinking.

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Broadening the Frame

When we need to make a decision, we tend to ask "What should we do?" However, it narrows our thinking to one right decision.

If we ask the question: "What could we do?"  it broadens our decision-making frame, because we can consider multiple futures. Could ask what if, what else, and why not.

For example: Ask what would be the equivalent in your industry of something that’s working well in another.

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Embracing Critical Thinking

Strategy development and internal reviews often center on precedents, trends, and due diligence. They address"what will happen."  Change the question to "what may happen" :

  • Role-play other parties.
  • Listen to assumptions in the way a strategy is supposed to work.
  • Watch out for confirmation bias, overconfidence, survivor bias, and groupthink.
  • Forecast your competitors' results.
  • Beware of missing pieces in the tools you use.

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