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Strategic Thinking Games

Editor's Note: Take a look at our featured best practice, Strategic Planning: Process, Key Frameworks, and Tools (79-slide PowerPoint presentation). This document provides a holistic approach for undertaking strategic planning. While covering the traditional strategic planning approach, the document touches on adaptations that may be used in an unpredictable environment. Contents: 1. Strategic Planning Overview - Key questions and [read more]

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Organizational leadership can draw on 3 Strategic Thinking Games to master Business Strategy and apply in varied scenarios and organizational structures.  The Strategic Thinking Games provide Decision Making models for senior executives to choose from and use as per the situation.

The Strategic Thinking Games are based on mathematics and statistics, particularly Probability Theory, and exhaustive research into the Business Strategy realm.  Probability Theory is actually a branch of mathematics that deals with analysis of random phenomena.  The basic element of Probability Theory is an experiment that can be at least hypothetically repeated under identical conditions, but may lead to different outcomes on different trials.

Each of the Strategic Thinking Games warrants employing a different mindset and decision-making approach to confront the challenges presented by a particular problem.  Executives can apply these Strategic Thinking Models to control their future:

  1. Planning as Positioning
  2. Organization Learning
  3. Constructive Transformation

Let’s discuss these Strategic Thinking Models in detail.

Planning as Positioning

The 1st Strategy game allows the players to make 40 blind draws from a pot holding 25 black and 75 red balls.  It costs $10 per draw—which has to be paid beforehand—and it allows the players the opportunity to win $20 on drawing a red ball but naught on drawing a black ball.  The game imitates a scenario where managers make informed bets about the future based on data and insights into the level of uncertainty encountered.

The Planning as Positioning Model enables the executives to learn about their industry and competition, gauge ambiguities and uncertainties, and select markets that have the potential to generate a positive Return on Investment (ROI).

A classic example of a company operating on the Planning & Positioning Model was the International Telephone and Telegraph Corporation (ITT).  For 17 years, the company was led by Harold Geneen (from 1960 to 1977).   Harold Geneen was unrestricted by any company mission.  He expanded in multiple industries, acquired around 350 enterprises from varied industries, including auto parts, cosmetics, hospitality, insurance, and technology.  As a formal accountant, Harold considered facts as indisputable, final, and a foundation for making strategic decisions.  He would travel to far-flung regions to meet his business unit managers, who were free to make their own strategic decisions but were responsible for their unit’s performance and objectives’ achievement.

Organization Learning

The 2nd Strategy game allows the players to blind draw from a pot containing an unknown mix of red and black balls.  This time it costs $5 per draw.  Players have to bet on either color before each draw.  They can draw up to 50 times, or stop whenever they want, and win $20 if they draw the right ball.  This game imitates a scenario for training managers to dynamically respond to upcoming events with unpredictable degree of uncertainty.

Through the pot filled with balls experiment, it was revealed that when people are given complicated choices, they behave in manners conflicting with their beliefs.  In his famous Ellsberg Paradox, Ellsberg hypothesized that people make illogical preferences in order to avoid ambiguity.  The Organizational Learning Model underlines that in a world full of uncertainties instead of spending too much time predicting the future, planning and positioning, organizations should devise and implement an evolving strategy, take one step at a time, search for viable patterns, and then adjust the course based on results.

An example of successful implementation of the 2nd Strategic Thinking Model is Corning Inc. that embraced Organizational Learning to develop a healthy product pipeline.  The company developed Pyrex, TV tubes…..

Interested in learning more about the 3 Strategic Thinking Games?  You can download an editable PowerPoint on Strategic Thinking Games here on the Flevy documents marketplace.

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About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

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