Analogical Strategic Reasoning (PowerPoint PPT)

Strategy is about choice. Oftentimes, executives use analogies to make strategic choices, known as Analogical Strategic Reasoning. Using this technique plays a role in strategic decision making that is large, but largely overlooked. Strategists who pay attention to their own analogical thinking will make better strategic decisions and fewer mistakes.

Analogical Strategic Reasoning is described in the HBR article "How Strategists Really Think," authored by Giovanni Gavetti and Jan Rivkin. Much of this document is based on the thinking proposed by these authors. Analogical Strategic Reasoning is often used by strategists for the following purposes:
•  The amount of information available in many strategic situations is similar to the information required to draw analogies.
•  The wealth of managerial experience matches the need for that experience in analogical reasoning.
•  The need for creative strategies can be fulfilled through analogy's ability to spark creativity.

Successful strategy consultants and firms are known for their ability to draw lessons from one industry and apply them to another—i.e. apply Analogical Strategic Reasoning.

This document discusses the merits and methodology to Analogical Strategic Reasoning, including its strengths, common pitfalls, and other problem solving methods: Deduction and Trial and Error. This document also contains case examples and PowerPoint templates to be used in your own analyses and presentations.

This document also delves into the psychological principles that can impact analogical reasoning, such as anchoring and confirmation bias. It highlights how these cognitive biases can skew strategic decisions if not properly managed. The four-step approach to forming an analogy—recognizing the analogy, understanding the source, assessing similarity, and translating the analogy into action—is meticulously detailed. Templates included in the document facilitate the practical application of these concepts in real-world scenarios, making it an indispensable tool for strategy consultants and executives aiming to leverage analogical reasoning effectively.