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Style and strategy: New metaphors, new insights
European Management Journal Vol. 14, No. 4, pp. 347-355, 1996
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Style and Strategy: New Metaphors, New Insights STEVE BARNETT, Managing Director, Global Business Network, New York
Traditional strategic planning starts from problematic assumptions about how we know attempting to predict certainty, or at least high probability, for business relevant futures. This article suggests starting from uncertainty, based on the metaphor of emergent paradigms (selforganizing systems whose evolution cannot be predicted). Planning using emergent paradigms benefits from dialogue with people whose perspectives differ drastically from most senior executives. The goal is to have higher level ongoing strategic conversations, not fixed plans, as the basis of future business success and innovation. Examples of such conversations are provided from the automobile, systems consulting, and food industries. Practical steps are suggested for replacing, or at least supplementing, a traditional strategic style with this 'dialogic' approach to business futures. Copyright © 1996 Elsevier Science Ltd
This epistemological hubris is avoidable by revising what we think we can know and how we go about knowing it. The low hubris path does not presume to be able to predict the future, but relies on unusual points of view, often from corporate outsiders, to stimulate, engage, and advance strategic conversations, developing alternate mindsets open to the discontinuities that confound most linear strategic plans (Barnett, I992).
Introduction '... a style creates the very possibility for truth or falsehood and therefore determines what counts as objectivity. 'I (Keller, I995, p.12)
Strategic planning, like economic forecasting, has had its Andy Warhol fifteen minutes of fame (well, maybe there are a few minutes left). Now, as many strategic planning functions are downsized or completely shut down, it is timely to consider what, if anything, is salvageable. I will suggest that the major failing of traditional strategic planning is a naivet6 about its own epistemology, about its program for knowing and learning about the future, resulting in overly confident forecasts accompanied by overly constrained action plans (often glorified tactics rather than revolutionary refraining of company and industry potentials). European ManagementJournalVo114 No 4 August 1996
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As a colleague of mine says, 'What is not foreseen is unlikely to be seen - in time'. The reference is about possibilities to be foreseen, not predictions. In part, the traditional view of strategic planning derives from an engineering model of the business environment that can be appropriated for thinking about business futures. The replacement of this mechanistic model with a contemporary approach to the biology of emerging forms has more relevance to the way business futures actually unfold (Maturana and Varela 1987). The new biology replaces fixed systems and functions with a dynamic view of interrelationships - evolving connections forming higher order, open-ended patterns that cannot be anticipated from an outside examination of the lower order pattern. Not only biological relations, but many other systems, like the evolution of the Net, take the form of self-organizing systems. This notion of biological development as self-organizing systems whose direction cannot be anticipated from an external perspective flees strategic thinking from the Achilles' heel of having to predict the future. Recently heard at a very senior level retailing seminar: 'I am positive that most people will continue to shop in traditional stores, not on-line. That's just human nature, we need to interact with each other face to face'. There are many paths to this certainty about the future continuity, confidence, thinking from self awareness out, defensiveness about existing shopping styles, a defining gloss on what makes us human, skepticism that the latest method will conquer all. But I want to emphasize just one: the assumption of a language of objectivity. Objectivity requires being context-flee, having an initial Archimedean Point (a place to stand that allows objectivity to get a running start). What might that Archimedean Point be for executive business managers? I think, in great measure, an historical notion of engineering science as just such a context-flee domain supported and justified by the dominance (typically, the maleness, whiteness, and age/authority) of the speaker. Put another way: we can know the future by the authoritative application of reason, information, systems logic, and common sense. We expect other rational folk to agree with us in part because our social position is proof of our objective predictions. Another view, with greater potential for daring, growthoriented insights, is to say that all domains are contextimbedded, taking one's own partial a w a r e n e s s a s the place to start. This alternate stance builds on recent postmodem thinking in the feminist philosophy of science, chaos and complexity theory altering mathematics, developmental biology, as well as other fields, and the anthropological understanding of other cultures via an ongoing dialogue. From the quote at the beginning of this section: to develop a new style for strategic thinking rather than aiming for a complete and accurate portrait of the future. 348
Imagine a path from a partial, limiting starting point to the notion of a self-organizing system (or, to use a roughly equivalent phrase, emergent paradigm) to the need for continuing conversation and dialogue to follow the surprises of self-organizing, open-ended possibilities (Varela, 1979). Contrast this with a rational, external starting point leading to a comprehensive understanding of a closed, although complex, system resulting in a definitive prediction of where that system must go. Cultivating a style that encourages creativity offers more insights about strategic options than forecasts about what has to happen. The flow of this article is first to offer a failed example of an attempt to objectify and predict the future, to explore the logic behind that and other objectives, to suggest an alternative style based on seeing the future as an open-ended, self-organizing process, to apply that style to specific cases, and to suggest some practical ways to stimulate strategic conversations based on this biological (and complexity theory) metaphor.
Illustrating Traditional Business Epistemology IBM missing the personal computer market in the '80s: a well known case, but worth reviewing just because it has become a classic of misplaced future confidence. At an IBM strategy meeting in 1980, the question was asked, estimate the total sales of PCs worldwide for the coming decade. At that time, there were only 60,000 PCs extant globally, puny machines, no match for IBM's core business of mainframes. The assembled planners reasoned that few people would want less power on their desk rather than more power connecting to a mainframe, and that most people would have no real use for a machine on their desks. What would they do with it, day after day? Extrapolating from existing PC uptake rates, IBM anticipated a total PC market for the 1980s of 250-300,000. The actual number: 60 million. Hindsight rewards us with specific reasons for IBM mortgaging its future at the moment of hopelessly miscalculating PC growth: oto Moore's Law that allowed for a very rapid increase in PC computing potential at much reduced cost, PCs would not be puny for long. o~° The cultural value of individual control, the desire to escape hierarchy, to do things for oneself in one's own way. The underlying problem was IBM's overall approach to reasoning about the future, their implicit epistemology. For IBM, the PC future was objectively knowable; it was, in effect, out there waiting to be documented. The discovery process had 2 steps; use historical data to extrapolate, then assume your beliefs about how computers will be used and human nature are true. European ManagementJournalVo114 No 4 August 1996
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And behind this is a deep feeling that power confers unique abilities to foresee and control what will happen. The opposite view is that power blinds and absolute power blinds absolutely. The future is not waiting to be revealed as the mists clear, but is created continuously in emergent paradigms. The way to prepare for these futures is to stimulate ongoing strategic conversations, not automatically implement strategic plans (Mintzberg, 1994). Learning and learning organizations are buzzwords for businesses today, but we can pretend to learn the 'real truth' or we can learn to continue learning. In the IBM example, senior managers talked to themselves and within that closed feedback loop reified existing mental models rather than challenging them. The more they talked, the more convinced they became, and the more they could not see an alternate, selforganizing future already unfolding before their eyes (Moore's Law beginning to operate, new values stressing individual empowerment and control, the beginning of connectivity). For IBM, the future had no surprises, was not a self-organizing system that had to be tracked not predicted.
The Business Epistemology of Brute Force Senior executives react badly to the suggestion that there are things, especially about the future of their business, that cannot be known in advance. Since the ultimate justification for executive salaries and responsibilities is to reduce and manage risk, certain or probable knowledge of the future seems the most direct way to contain the risks of an unfolding complexity. If a company's senior management believes the future is knowable, how do they go about actually knowing it? Typically by fitting together pieces of what they see as the puzzle to understand. This assumes the boundaries of the puzzle as well as the shape of individual pieces. One technique is extrapolation, running trends some years out and shaping strategy to match those trends. But typically there is no systematic critical revisiting of the past 10--15 years to see how prior extrapolations fared.
pushed far enough implodes, but getting the timing and direction of collapse right is anything but obvious. And preparing for the demise of currently successful products runs counter to the optimism and sense of direction that stakeholders endorse. Extrapolation is often reinforced by corporate consensus, following a Delphi or similar method of group reinforcement and collaboration. But if we subject these methods to a historical check, they are no more accurate than individually based extrapolations. Not surprising, since the agreement is based on similar perceptions of the present given broadly similar executive mental maps. Where there is disagreement, it often reflects generational-based lifestyles, as when older executives who are not computer adept clash about the impact of the on-line experience with younger, typically junior, colleagues who use computers routinely. The real challenge is to define the fluid dimensions, boundaries, and shapes of a puzzle that changes as we perceive it, not simply fitting pre-existing pieces together. To anticipate examples discussed in more detail later: If an automobile executive sees the planning puzzle as the design of individual vehicles, this will result in something quite different than if he or she sees the puzzle as a larger integrated transportation system. If a systems consultancy focuses on developing servers and software for inevitable globalization as the puzzle, this is distinct from creating systems that can be enlarged when and as globalization takes place or easily broken apart if globalization fails and regions retrench. If a cash-rich food company executive sees the puzzle as acquiring companies producing trendy food products, this is different from redefining what food might mean in the future and seeking acquisitions outside traditional food companies. In each case, the difference is determined by who is asking what kind of questions. Too often, senior executives are the only askers and their questions stay well within accepted industry definitions. They bypass outside frameworks, losing genuine dialogue that can result in the breakthroughs discussed in Hamel and Prahalad (1994).
Alternatives to Traditional Epistemology
Looking backward can be humbling. From the perspective of 1980, the Soviet Union was a formidable foe into the foreseeable future, the price of oil was $35 dollars a barrel and going higher, inflation was in double digits, PCs were a niche business, the major TV networks seemed invincible, and disco was the rage. Of course, all these reversed or drastically altered direction. The more subtle skills of perceiving discontinuities or break points, not extrapolation, were the keys to evaluating the '80s into the early '90s.
Emphasizing conversation, dialogue, uncertainty, and surprise rather than 'getting it right from the start', can be uncomfortable for business leaders who pride themselves on their ability to 'cut to the chase'. These executives try to emulate scientific method as a vector from objective fact gathering to objective confirmations of highly probable, if not inevitable, futures.
But how to see, let alone act on, a discontinuity in advance? It may be a truism, after the fashion of the Club of Rome (and Malthus), to argue that any extrapolation
Although still compelling as business metaphor, this view of scientific rationality has been challenged by feminist and other recent approaches to the scientific
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process, critical anthropology, complexity theory, and postmodem critics. Elaborating an alternative perspective on what rigorous analytics can and cannot accomplish starts with the knower or problem-solver (here business planner) - that person's position, both in and out of the company. And continues with a critique of closed-system assumptions and methods in favor of the new mindset of complexity theory. Evelyn Fox Keller, a pioneering analyst of the relations between gender and science writes: '... the division between objective fact and subjective feeling is sustained by the association of objectivity with power and masculinity, and its remove from the world of women and love ... the logical extension of the personal as political is the scientific as personal ... Judgments about which phenomena are worth studying, which kinds of data are significant - as well as which descriptions (or theories) of those phenomena are most adequate, satisfying, useful, and even reliable - depend critically on the social, linguistic, and scientific practices of those making the judgments in question' (Keller, 1985, pp. 1-13).
She goes the next step: it is precisely the relatively powerless position of women (and others) that gives them unique insights, the ability to see different connections. Interpreting Keller more generally, the increasing diversity of the workforce (especially at mid-levels) plus the experiences of corporate outsiders can provide unique insights into business futures. This inclusionary approach can innovate paths to conceptual refraining by asking new questions requiring new kinds of information and methods, which are not wed to historical business boundaries and options. Improving the quality of inquiry and conversation has moved to the center of cross-cultural research as well. Dialogic anthropology (Dwyer, 1982) responds to an enduring frustration trying to 'objectively' understand different cultures, to evaluate where a society fits in an evolutionary or other grand scheme. Anthropologists are now including their own subjectivity as a way to ask questions and to decide what kinds of answers further discourse. Dialogic anthropology replaces abstractly asserting what is true or real about other cultures in favor of conducting conversations (dialogues) with members of these cultures. In dialogic conversations, there is no privileged position, only mutual learning that deepens as the conversation continues. The importance of this dialogic perspective for business futures is the shift away from the illusion of objectively analyzing human societies to engaged and continuous learning. Other cultures are the equivalent in space of the future in time: examples of profound differences from our own daily lives that cannot be reduced to a comprehensive and satisfactory understanding. Kelly (1994) adds complexity (chaos) theory to this post350
modem recasting of what can we know and how can we know it. Rather than the future as somehow 'out there' waiting to be discovered, Kelly talks of 'emergent paradigms' where tiny, apparently marginal forces turn out to have enormous consequences, consequences that enable emergent futures to be self-organizing (to create higher order, innovative coherence as intrinsic to their development). Kelly's work extends Maturana and Varela's (1987) insights to a more general level. It is foolhardy to suppose that the critical tiny force can be picked out of the murky soup of other tiny (as well as larger) forces. Prediction is no help here, selforganization creates its own paths rather than following pre-existing paths, multiple insights developed through dialogue can best track the twists of emergent paradigms. Kelly describes these unusual implications of selforganizing complexity: °~° Distribute being (spread things out over a multitude of smaller systems). o~o Control from the bottom up (in a connected, distributed network, create low level, parallel governance, not central authority). o,*o Cultivate increasing returns (positive feedback, or snowballing). o,'o Grow by chunking (create simple modules that can act by themselves or together). o~o Maximize the fringes (vs. the center, as the source of innovations). o,'o Honor your errors (error is necessary to new creation and new ideas). o~° Have multiple goals (vs. one optimum goal, a blunt instrument has more survival potential). o~o Seek persistent disequilibrium (not flux, but not aiming for stability either, a tenuous balance in practice). °~° Change changes itself (if control is bottom up, the rules of the game are likely to change over time; this provides opportunities to fundamentally reframe boundaries and core activities). These are all disconcerting to the traditional epistemology of strategic planning. Kelly suggests that business futurists need to let experiments develop, learn and incorporate on the fly, lower radar, look to the periphery for innovation, keep shaking things up including the rules of the game (the definition of the core business), and sustain dialogue to continually reframe as emergent paradigms unfold. Not much room here for a definitive strategic plan based on objective knowledge of the future.
The Epistemology of Dialogue, Uncertainty, and Emergent Paradigms If uncertainty is the engine for strategic conversation rather than certainty being the goal of strategic planning, then productive conversations take place around European ManagementJournal Vol 14 No 4 August 1996
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emergent patterns and their implications.Consensus too early, can just mean sharing the same blindfold. And the fallback of 'gut feeling' as the final adjudicator can mask a retreat to commitment in the face of unsettling possibilities. The epistemology of understanding self-organizing systems, the art of sustaining and deepening strategic conversations that center on emergent paradigms as unfolding futures, targets these alternatives to traditional strategic planning: °~° Scenarios (multiple, plausible stories) for probable futures. °,'° Outsider perspectives for in-company closure and 'official futures'. °~° Boundary blurring for traditional core competencies within historical business limitations. °~° Uncertainty - following small events on the periphery for confidence about the future impact of major trends at the center. o,'° Self-organizing systems on a biological model for mechanical systems on an engineering model. °~o Ongoing dialogue and recalibration for the finality of a fixed plan.
Case Studies 2 Major Car Manufacturer Automobile makers see their core competence in the engine and drive train of individual vehicles, less so but importantly in marketing, even less so in the softer aspects of designing interior spaces, and no competence in creating public transportation systems. Given this ranking, assessing the future focuses on engine/drive train technology, emissions regulations that can affect performance, consumer trade-offs between power and economy, between smooth automatic gears and acceleration, between safety and sportiness, etc. Apart from a quirk in regulation, the future is seen as predictable and changing incrementally. These priorities also fit nicely with (mostly) male engineering values. If customers do not appreciate the 'important' aspects of a car, they become 'defective' customers. Along with this mindset goes the view that it is men who make car purchase decisions. While this is changing, with greater emphasis on women as buyers or at least actively involved, the continuing strategic focus is on traditional core competencies. At a series of strategic retreats I facilitated for a major car manufacturer, these views were forcefully articulated by a group of white male executives, confident that incremental improvements in the performance engineering of individual vehicles would meet future consumer needs (with one caveat - the possibility of much stricter regulations for emissions). The retreats were organized so that outsiders also European ManagementJournalVoq 14 No 4 August 1996
participated in the discussion, including women, urban planners, and ecologists. As the conversation progressed, they introduced new perspectives: o;o Focus on the interior (a peripheral strategy area) now designed from the driver's perspective, with a few gestures to passengers (like cup holders). Why, for example, is the front passenger seat almost identical to the driver's seat? The driver needs to feel the road, the passenger does not. The passenger might want to angle the seat for better conversation with the driver. The passenger needs different storage and work areas. Why hasn't the problem of where to put a woman's purse been solved? Why can't the material of the rear seats be tough and washable, able to withstand the activities of chiktren? Why haven't the needs of older people been seriously addressed? As more people think, work, and eat in their vehicles, why keep emphasizing that a car's only function is to go from point A to point B. o~° Start from the self-organizing system of vehicle mix and flow, not individual car by individual car. As urban congestion and pollution increase, thinking of each vehicle in isolation becomes an anachronism. Understanding each vehicle as part of a larger people/goods moving network requires understanding traffic flow and monitoring, flexibility in switching from one kind of vehicle to another, fitting size and functionality of vehicle to system position, new links between manufacturers and urban planners, and perhaps shifting away from vehicle ownership to a 'smart card' based usage fee. This is a system whose development will be full of surprises, not predictable by standard modeling. °~° Understand the emerging dynamics between information technology and transportation. What is the relation between an increased ability to transmit information electronically and the need to physically move from place to place? How will the rapid pace of hard and software improvement, especially the practicality of video-conferencing and ultimately virtual reality, change commuting needs for work, recreation, and consumption? These (and other) questions raised during the conversation challenge traditional thinking about vehicle strategy by: o~o Recognizing fundamental uncertainties rather than staying within the comfort zone of slow, predictable change. o~o Refraining boundaries around self-organizing potentials - individual vehicle or unfolding mix of vehicles. o~o Taking a non-engineering, previously peripheral starting point - interior features and new functionality. °~° Tracking self-organizing systems of types of vehicles and types of use. °,*° Encouraging dialogue and engagement, not simply 351
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providing neutral product 'specs'. Linking vehicles to information technologies and their impact on work, residence, and leisure.
Systems Consultants The lure of an integrated global economy structuring global production, distribution, and marketing, is compelling to many companies and their systems consultants. As companies respond to the one-way juggernaut of globalization, they perceive the need for specialized consulting assistance in developing global scale and reach. And indeed more companies see their future inextricably locked into this global momentum. Most place the biggest bets on Asia, especially China, but the Former Soviet Union and Latin America are also targeted for major market and production expansion. The challenges of globalization are profound, from integrating production to taking advantage of complex streams of parts and assembly, to marketing to new consumers. The underlying mindset of globalization is control, dominance, expansion, scale, and inevitability. There is an apparent agreement between globalizing companies and their systems consultants. To improve services, one consulting firm initiated a planning exercise to enhance their globally applicable product and consulting mix. But it soon took a different course. At that exercise, as in the example of the auto manufacturer, outside experts were included to provide flesh and unorthodox perspectives. Their backgrounds included geopolitics, anthropology (Asianists and specialists in former communist bloc countries), and software innovation. The outsiders raised troubling concerns: o$° What are the potential limits and discontinuities to the currentbandwagon of globalization? These might include regional conflicts (over resources or cultural/religious differences), regional trade associations with prohibitive barriers across regions, epidemics and diseases that block the flow of goods and people, environmental concerns that result in regulations limiting the flow of goods not complying with strict production codes, etc. In other words, what would it take to create a global self-organizing system - this may be more daunting and involve more surprises than optimistic predictions allow. °5° Could local or regional companies take on manufacturing and distribution now associated with multinationals? Examples include current Malaysian and Indonesian auto companies, pirated music and video distributors, local detergents, etc. The ability of mostly Western companies to understand nonWestem styles of business and consumption was challenged, including how to react to the rising 352
influence of overseas Chinese investor networks. Will the capitalization needed for globalization be in sync with returns? Will cost reductions in production match consumer uptake? The uncertainties of currency exchange rates, uncontrollable by government intervention, figured in this discussion. And while south coastal Chinese consumers are now rapidly buying electronic goods, there is some evidence that other Asians will be slower to purchase automobiles, housing, and other large ticket items. These questions resulted in a significant insight for the systems consultants. While they would continue to prepare for client globalization needs (not walk away from a growing market), they would innovate their systems designs to follow the example set by BMW in Germany - DFD or 'design for disassembly'. DFD is the idea that a car (or system) is designed so that while its components work together seamlessly, they can easily be pulled apart. This is especially important in Germany where recent laws mandate that the manufacturer is ultimately responsible for disposing of the vehicle. For the systems consultants, this meant creating production, distribution, and marketing system software that would facilitate globalization, but that could be separated into functional regional and local parts quickly if the globalization forecast did not materialize. DFD also fits into Kelly's framework - spreading things out over a multitude of smaller systems, creating simple modules, having multiple goals, etc. As in the automobile case, traditional thinking was challenged by: •~o Uncertainty about globalization predictions. °~° Discontinuities constraining global control, momentum, and confidence, globalization as a selforganizing system. •~" The need to think smaller as well as bigger - to track the direction of globalization rather than just predicting it. •~° Limits to the ability to control, currency exchange rates, consumer desires, etc. °~° Taking into account the 'softer' dimensions of culture, religion, and emotions.
Major Food Manufacturer The food industry is experiencing unsettling shifts in consumer preferences and brand imagery, especially for a sector that has remained stable for a surprisingly long time. A major food manufacturer needed to improve its understanding of these shifts as it developed a strategy for acquisitions. Initially, acquisitions were positioned in terms of strengthening existing growth areas like prepared meal solutions and juice-based drinks. Before deciding on acquisition candidates, a planning European ManagementJournal Vo114 No 4 August 1996
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retreat was held to fine-tune selection criteria given future consumer food desires. As with the auto and systems consulting examples, outsiders were added to the team. In this case, they included experts in aging, ethnic food preferences, bio-engineering, family and work changes, as well as nutrition and health research. The outside experts raised issues that went beyond traditional meal solutions: o;° While most consumers are not about to restrict food intake to nutrient pills, there are decisive steps toward a merger of what is eaten and general health. While this has deep roots (in the food pyramid learned in school by American children, for example), current research is highly focused, including measuring the effects of phytochemicals, anti-oxidants, trace minerals and metals, different kinds of fiber, amino acids, etc. These details are rapidly publicized via health magazines, newspapers, and TV, changing consumption patterns and creating a fast paced self-organizing system. °;" A large aging baby-boom cohort that does not accept aging as previous generations have, that pays close attention to the way foods can prolong an active youthful lifestyle into their 80s. °;" Bio and genetic engineering can produce 'mass customized' foods with molecular 'prescriptions' suited to an individual's health needs as determined by nutritionists and/or physicians. °;° Holistic styles of health care are rapidly increasing in popularity and emphasize the role of nutrition and food intake, from macrobiotic diets to lacto-ovo vegetarianism (a 'vegan' regimen) to complex amino acid combinations. The implications of holistic health practices as a self-organizing system have not been explored. The conversation moved toward supplementing a traditional acquisition strategy by: °;° Below the radar screen searching for small companies playing cutting edge roles in new areas of food categories, aging diets, and preparation; these companies can be advance indicators of how an emergent paradigm is unfolding. °~'° Blurring boundaries between food and therapy (pharmaceuticals for example) to direct attention to acquisitions that merge both - 'therafood'. These blurred boundaries track complex, emergent public perceptions of what food is and can be. o'.o Paying close attention to bio-engineering and biomolecular research for acquisition and alliance candidate possibilites. °~° Evaluating consumer-relevant solutions that go beyond usual definitions of meal solutions into health, physical activity, mental acuity, customization, etc., for acquisition candidates. European Management JournalVot 14 No 4 August 1996
Implications and Suggestions for Practical Application These examples illustrate the value of approaching strategy as an open-ended conversation, crafting the future as emergent paradigms. The best conversations include diverse insights without the goal of 'getting the future nght.' Borrowing from anthropology, I suggest the term, dialogics, for an approach to business futures based on new metaphors from biology and complexity theory. While strategic planning might be outmoded, there is no avoiding some kind of thinking ahead, if not explicitly then implicitly as a company's tacit 'official future'. Dialogics describes an approach to strategy starting from an epistemology that one's position/perspective fundamentally shapes the questions asked, the scope of those queries, the appropriate data, and the answers accepted. Frame-breaking insights emerge in dialogue with those not sharing one's position/perspective, from accepting that there is no privileged fact or viewpoint that can predict a self-organizing future. It is the quality of the conversation itself that holds the key to out-ofthe-box business insights, not the elegance or finality of a completed plan. Keller on a feminist epistemology of science is a reminder of the centrality of one's starting point and that a position of relative 'weakness' can offer critical challenges to social dominance (in the words of Quaker beliefs, can 'speak 'truth' to power'). And since new selforganizing systems render older, historically powerful systems obsolete, connecting to these outsider views can be a decisive advantage. Kevin Kelly's (as well as Maturana and Varela's) emergent paradigm insights suggest three ways that dialogics advance business future thinking and action: o~* Since almost imperceptable forces can have huge consequences, conversations and observations need to discuss apparently marginal matters; look as carefully at the periphery as at the center. o~o If rules change as well as options within existing rules, then reframing, blurring usual business boundaries, looking through wide angle lenses, are more powerful than ever-the-more-tightly defining and clinging to existing rules; self-organizing systems create new rules as they move through levels. o;" If breakthroughs emerge in unstable conditions, encouraging flexibility and learning from mistakes is the catalyst for productive strategic conversation. Make more mistakes, make them more quickly, and learn faster than competitors from them. In practical terms, encouraging and sustaining a dialogic strategic style means: o;° Targeting the importance of discontinuities, actively 353
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o~°
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encouraging organizational disequilibrium that sees breakpoints as oportunities, rather than organizational continuity that gravitates toward extrapolation. Developing scenarios, creating plausible stories (emergent paradigms) of the future as the basis for dialogic conversation, not artificially assigning probabilities to any of the stories, but keeping possibilities open (Schwartz, 1991; Ogilvy, 1992). These scenarios become the syntax for sustained productive conversation. Including knowledgeable others, outsiders, mid and lower level staff in conversations as a source of insights and to stimulate the internal organization to include strategic potentials as part of their daily work; mechanisms for inclusion can be uncomfortable for hierarchical organizations not used to heterarchical teams. Lowering the radar screen to allow earlier awareness of smaller companies and peripheral driving forces that can decisively shape emergent paradigms; many large companies mistakenly discount entrepreneurial activities as irrelevant to their need for significant market share and return. Seeing added value as 'constellations' rather than 'chains' (Normann and Ramirez, 1994), as non-linear clusters of value creating systems that change as rules change, not simply as a pre-given chain with fixed points along that chain increasing or decreasing in value; being aware that the concept of self-organization is non-linear, creative, and openended; value constellations fit with self-organizing systems that reconfigure basic rules and priorities. Looking to interstices as arenas for revolutions, blurred boundaries as the source for significant new business concepts and growth; core competence is different from core business, and even core competence needs to be loosely and creatively defined; this opens the potential for fundamental change in what a business is about, as when Adidas, Reebok, and Nike redefined a stagnant athletic shoe business. Culture and symbols as drivers - perceptions, symbols, and values are not 'soft' (just as numbers are not 'hard'), but can have decisive impacts on business potentials and self-organizing systems; perceiving cultural drivers is easier if conversation is open to women and other outsiders, Pivotal role of multiple, bottom of the S curve technologies - technology plays a decisive role in how businesses re-invent themselves. The new technologies that can redefine a business, include materials technology, nanotechnology, photon technology, bio-technology, superconductivity, genetic engineering, etc. These technologies can move a self-organizing system to the next level.
An epistemology that forecasts the future based on an external/objective, closed systems analysis (a mechanical model) has led business strategic planning down a culde-sac of prediction and artificially limited options. In its place, I offer the biological (and complexity theory) 354
metaphor of self-organizing systems that avoids prediction, sees systems creatively re-shaping themselves as they move to the next level, engages in ongoing conversation and reframing, and that generates robust possibilities for revolutions in the scope of business activities. Referring to the quote about style at the beginning of this article, these practical steps amount to changing the epistemological style of business strategic activities (van der Heijden, 1996). The style change reflects recent developments in scientific, fact-gathering methods and results, making these available as a learning tool ('dialogics') for organizational strategic processes (Barnett, I992; de Geus, 1988). By no means do I think this style shift is easy to implement, especially in large companies where size (and greater centralization) lead to higher 'rational' proof hurdles, limited contrarian views, detailed traditional rituals of planning as prediction, and the goal of producing a tidy, bound volume called the strategic plan. And where what passes for conversation is often echoing and reinforcing the opinions of those with more power. The challenge for these companies is literally to break through these constraints, not one at a time, but all at once, for decisive style changes are not timid or hesitant.
Notes 1.
2.
I would like to thank JoAnn Magdoff for suggesting the work of Evelyn Fox Keller, and for helpful readings of earlier drafts. The emphasis on conversation shares key themes with, and should be read in tandem with, 'Conversation Management' by G. von Krogh and J. Roos (1995) in European Management Journal, 13,4. These case studies take great pains to conceal actual companies, trying to guess would be pointless.
References Barnett, Steve (1992), The Nissan Report. New York: Currency Doubleday. de Geus, Arie (1988), Planning as Learning, Harvard Business Review, 66, 70. Dwyer, Kevin (1982), Moroccan Dialogues: Anthropology in Question. Baltimore: Johns Hopkins University Press. Keller, Evelyn Fox (I985), Reflection on Gender and Science. New Haven: Yale Univeristy Press. Keller, Evelyn Fox (1995,) Refiguring Life. New York: Columbia University Press. Hamel, Gary and Prahalad, C.K. (I994), Competing for the Future. Boston, MA: Harvard Business School Press. Kelly, Kevin (1994), Out of Control: The Rise of Neo-biological Civilization. Reading, MA: Addison Wesley. Maturana, H. and Varela, F. (1987), The Tree of Knowledge. Boston: New Science Library. Mintzberg, Henry (I994),The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning, Planners and Plans. New York: Free Press. Normann, Richard and Ramirez, Rafael (1994), Designing Interactive Strategy. New York: John Wiley and Sons. Ogilvy, James, (1992), Future Studies and the Human Sciences: The Case for Normative Scenarios, Futures Research Quarterly, Summer, 8, 5. Schwartz, Peter (1991), The Art of the Long View. New York: European ManagementJournalVo114 No 4 August 1996
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Currency Doubleday. van der Heijden, Kees (1996), Scenarios, the Art of Strategic Conversation. New York: John Wiley and Sons. Varela, Francisco J. (1979), Principlesof BiologicalAutonomy. New York: Elsevier North Holland. von Krogh, G. and Roos, J. (1995), Conversation Management,
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STEVE BARNETT, Global Business Network, 666 Fifth Avenue, 3 7th floor, New York, N Y 10103, USA. Steve Barnett is Managing Director of Global Business Network, and head of its New York office. GBN is a unique scenario planning network-based organization with opproximately I00 member companies and institutions. Before joining GBN, Dr Barnett was Director of Product Strategy and Product Development for Nissan North America, Founder and President of Holen North America (a consumer strategy consultancy), and Chairman and CEO of Research & Forecasts Inc. Dr Barnett received a Ph.D from the University of Chicago and has taught at Princeton, Brown and MIT. He has published books and articles on global consumer culture, American cultural trends, corporate responsibility, and Asian modernization. He is an advisor to the OECD and US Congressional Office of Technology Assessment.
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Style and Strategy: New Metaphors, New Insights STEVE BARNETT, Managing Director, Global Business Network, New York
Traditional strategic planning starts from problematic assumptions about how we know attempting to predict certainty, or at least high probability, for business relevant futures. This article suggests starting from uncertainty, based on the metaphor of emergent paradigms (selforganizing systems whose evolution cannot be predicted). Planning using emergent paradigms benefits from dialogue with people whose perspectives differ drastically from most senior executives. The goal is to have higher level ongoing strategic conversations, not fixed plans, as the basis of future business success and innovation. Examples of such conversations are provided from the automobile, systems consulting, and food industries. Practical steps are suggested for replacing, or at least supplementing, a traditional strategic style with this 'dialogic' approach to business futures. Copyright © 1996 Elsevier Science Ltd
This epistemological hubris is avoidable by revising what we think we can know and how we go about knowing it. The low hubris path does not presume to be able to predict the future, but relies on unusual points of view, often from corporate outsiders, to stimulate, engage, and advance strategic conversations, developing alternate mindsets open to the discontinuities that confound most linear strategic plans (Barnett, I992).
Introduction '... a style creates the very possibility for truth or falsehood and therefore determines what counts as objectivity. 'I (Keller, I995, p.12)
Strategic planning, like economic forecasting, has had its Andy Warhol fifteen minutes of fame (well, maybe there are a few minutes left). Now, as many strategic planning functions are downsized or completely shut down, it is timely to consider what, if anything, is salvageable. I will suggest that the major failing of traditional strategic planning is a naivet6 about its own epistemology, about its program for knowing and learning about the future, resulting in overly confident forecasts accompanied by overly constrained action plans (often glorified tactics rather than revolutionary refraining of company and industry potentials). European ManagementJournalVo114 No 4 August 1996
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As a colleague of mine says, 'What is not foreseen is unlikely to be seen - in time'. The reference is about possibilities to be foreseen, not predictions. In part, the traditional view of strategic planning derives from an engineering model of the business environment that can be appropriated for thinking about business futures. The replacement of this mechanistic model with a contemporary approach to the biology of emerging forms has more relevance to the way business futures actually unfold (Maturana and Varela 1987). The new biology replaces fixed systems and functions with a dynamic view of interrelationships - evolving connections forming higher order, open-ended patterns that cannot be anticipated from an outside examination of the lower order pattern. Not only biological relations, but many other systems, like the evolution of the Net, take the form of self-organizing systems. This notion of biological development as self-organizing systems whose direction cannot be anticipated from an external perspective flees strategic thinking from the Achilles' heel of having to predict the future. Recently heard at a very senior level retailing seminar: 'I am positive that most people will continue to shop in traditional stores, not on-line. That's just human nature, we need to interact with each other face to face'. There are many paths to this certainty about the future continuity, confidence, thinking from self awareness out, defensiveness about existing shopping styles, a defining gloss on what makes us human, skepticism that the latest method will conquer all. But I want to emphasize just one: the assumption of a language of objectivity. Objectivity requires being context-flee, having an initial Archimedean Point (a place to stand that allows objectivity to get a running start). What might that Archimedean Point be for executive business managers? I think, in great measure, an historical notion of engineering science as just such a context-flee domain supported and justified by the dominance (typically, the maleness, whiteness, and age/authority) of the speaker. Put another way: we can know the future by the authoritative application of reason, information, systems logic, and common sense. We expect other rational folk to agree with us in part because our social position is proof of our objective predictions. Another view, with greater potential for daring, growthoriented insights, is to say that all domains are contextimbedded, taking one's own partial a w a r e n e s s a s the place to start. This alternate stance builds on recent postmodem thinking in the feminist philosophy of science, chaos and complexity theory altering mathematics, developmental biology, as well as other fields, and the anthropological understanding of other cultures via an ongoing dialogue. From the quote at the beginning of this section: to develop a new style for strategic thinking rather than aiming for a complete and accurate portrait of the future. 348
Imagine a path from a partial, limiting starting point to the notion of a self-organizing system (or, to use a roughly equivalent phrase, emergent paradigm) to the need for continuing conversation and dialogue to follow the surprises of self-organizing, open-ended possibilities (Varela, 1979). Contrast this with a rational, external starting point leading to a comprehensive understanding of a closed, although complex, system resulting in a definitive prediction of where that system must go. Cultivating a style that encourages creativity offers more insights about strategic options than forecasts about what has to happen. The flow of this article is first to offer a failed example of an attempt to objectify and predict the future, to explore the logic behind that and other objectives, to suggest an alternative style based on seeing the future as an open-ended, self-organizing process, to apply that style to specific cases, and to suggest some practical ways to stimulate strategic conversations based on this biological (and complexity theory) metaphor.
Illustrating Traditional Business Epistemology IBM missing the personal computer market in the '80s: a well known case, but worth reviewing just because it has become a classic of misplaced future confidence. At an IBM strategy meeting in 1980, the question was asked, estimate the total sales of PCs worldwide for the coming decade. At that time, there were only 60,000 PCs extant globally, puny machines, no match for IBM's core business of mainframes. The assembled planners reasoned that few people would want less power on their desk rather than more power connecting to a mainframe, and that most people would have no real use for a machine on their desks. What would they do with it, day after day? Extrapolating from existing PC uptake rates, IBM anticipated a total PC market for the 1980s of 250-300,000. The actual number: 60 million. Hindsight rewards us with specific reasons for IBM mortgaging its future at the moment of hopelessly miscalculating PC growth: oto Moore's Law that allowed for a very rapid increase in PC computing potential at much reduced cost, PCs would not be puny for long. o~° The cultural value of individual control, the desire to escape hierarchy, to do things for oneself in one's own way. The underlying problem was IBM's overall approach to reasoning about the future, their implicit epistemology. For IBM, the PC future was objectively knowable; it was, in effect, out there waiting to be documented. The discovery process had 2 steps; use historical data to extrapolate, then assume your beliefs about how computers will be used and human nature are true. European ManagementJournalVo114 No 4 August 1996
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And behind this is a deep feeling that power confers unique abilities to foresee and control what will happen. The opposite view is that power blinds and absolute power blinds absolutely. The future is not waiting to be revealed as the mists clear, but is created continuously in emergent paradigms. The way to prepare for these futures is to stimulate ongoing strategic conversations, not automatically implement strategic plans (Mintzberg, 1994). Learning and learning organizations are buzzwords for businesses today, but we can pretend to learn the 'real truth' or we can learn to continue learning. In the IBM example, senior managers talked to themselves and within that closed feedback loop reified existing mental models rather than challenging them. The more they talked, the more convinced they became, and the more they could not see an alternate, selforganizing future already unfolding before their eyes (Moore's Law beginning to operate, new values stressing individual empowerment and control, the beginning of connectivity). For IBM, the future had no surprises, was not a self-organizing system that had to be tracked not predicted.
The Business Epistemology of Brute Force Senior executives react badly to the suggestion that there are things, especially about the future of their business, that cannot be known in advance. Since the ultimate justification for executive salaries and responsibilities is to reduce and manage risk, certain or probable knowledge of the future seems the most direct way to contain the risks of an unfolding complexity. If a company's senior management believes the future is knowable, how do they go about actually knowing it? Typically by fitting together pieces of what they see as the puzzle to understand. This assumes the boundaries of the puzzle as well as the shape of individual pieces. One technique is extrapolation, running trends some years out and shaping strategy to match those trends. But typically there is no systematic critical revisiting of the past 10--15 years to see how prior extrapolations fared.
pushed far enough implodes, but getting the timing and direction of collapse right is anything but obvious. And preparing for the demise of currently successful products runs counter to the optimism and sense of direction that stakeholders endorse. Extrapolation is often reinforced by corporate consensus, following a Delphi or similar method of group reinforcement and collaboration. But if we subject these methods to a historical check, they are no more accurate than individually based extrapolations. Not surprising, since the agreement is based on similar perceptions of the present given broadly similar executive mental maps. Where there is disagreement, it often reflects generational-based lifestyles, as when older executives who are not computer adept clash about the impact of the on-line experience with younger, typically junior, colleagues who use computers routinely. The real challenge is to define the fluid dimensions, boundaries, and shapes of a puzzle that changes as we perceive it, not simply fitting pre-existing pieces together. To anticipate examples discussed in more detail later: If an automobile executive sees the planning puzzle as the design of individual vehicles, this will result in something quite different than if he or she sees the puzzle as a larger integrated transportation system. If a systems consultancy focuses on developing servers and software for inevitable globalization as the puzzle, this is distinct from creating systems that can be enlarged when and as globalization takes place or easily broken apart if globalization fails and regions retrench. If a cash-rich food company executive sees the puzzle as acquiring companies producing trendy food products, this is different from redefining what food might mean in the future and seeking acquisitions outside traditional food companies. In each case, the difference is determined by who is asking what kind of questions. Too often, senior executives are the only askers and their questions stay well within accepted industry definitions. They bypass outside frameworks, losing genuine dialogue that can result in the breakthroughs discussed in Hamel and Prahalad (1994).
Alternatives to Traditional Epistemology
Looking backward can be humbling. From the perspective of 1980, the Soviet Union was a formidable foe into the foreseeable future, the price of oil was $35 dollars a barrel and going higher, inflation was in double digits, PCs were a niche business, the major TV networks seemed invincible, and disco was the rage. Of course, all these reversed or drastically altered direction. The more subtle skills of perceiving discontinuities or break points, not extrapolation, were the keys to evaluating the '80s into the early '90s.
Emphasizing conversation, dialogue, uncertainty, and surprise rather than 'getting it right from the start', can be uncomfortable for business leaders who pride themselves on their ability to 'cut to the chase'. These executives try to emulate scientific method as a vector from objective fact gathering to objective confirmations of highly probable, if not inevitable, futures.
But how to see, let alone act on, a discontinuity in advance? It may be a truism, after the fashion of the Club of Rome (and Malthus), to argue that any extrapolation
Although still compelling as business metaphor, this view of scientific rationality has been challenged by feminist and other recent approaches to the scientific
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process, critical anthropology, complexity theory, and postmodem critics. Elaborating an alternative perspective on what rigorous analytics can and cannot accomplish starts with the knower or problem-solver (here business planner) - that person's position, both in and out of the company. And continues with a critique of closed-system assumptions and methods in favor of the new mindset of complexity theory. Evelyn Fox Keller, a pioneering analyst of the relations between gender and science writes: '... the division between objective fact and subjective feeling is sustained by the association of objectivity with power and masculinity, and its remove from the world of women and love ... the logical extension of the personal as political is the scientific as personal ... Judgments about which phenomena are worth studying, which kinds of data are significant - as well as which descriptions (or theories) of those phenomena are most adequate, satisfying, useful, and even reliable - depend critically on the social, linguistic, and scientific practices of those making the judgments in question' (Keller, 1985, pp. 1-13).
She goes the next step: it is precisely the relatively powerless position of women (and others) that gives them unique insights, the ability to see different connections. Interpreting Keller more generally, the increasing diversity of the workforce (especially at mid-levels) plus the experiences of corporate outsiders can provide unique insights into business futures. This inclusionary approach can innovate paths to conceptual refraining by asking new questions requiring new kinds of information and methods, which are not wed to historical business boundaries and options. Improving the quality of inquiry and conversation has moved to the center of cross-cultural research as well. Dialogic anthropology (Dwyer, 1982) responds to an enduring frustration trying to 'objectively' understand different cultures, to evaluate where a society fits in an evolutionary or other grand scheme. Anthropologists are now including their own subjectivity as a way to ask questions and to decide what kinds of answers further discourse. Dialogic anthropology replaces abstractly asserting what is true or real about other cultures in favor of conducting conversations (dialogues) with members of these cultures. In dialogic conversations, there is no privileged position, only mutual learning that deepens as the conversation continues. The importance of this dialogic perspective for business futures is the shift away from the illusion of objectively analyzing human societies to engaged and continuous learning. Other cultures are the equivalent in space of the future in time: examples of profound differences from our own daily lives that cannot be reduced to a comprehensive and satisfactory understanding. Kelly (1994) adds complexity (chaos) theory to this post350
modem recasting of what can we know and how can we know it. Rather than the future as somehow 'out there' waiting to be discovered, Kelly talks of 'emergent paradigms' where tiny, apparently marginal forces turn out to have enormous consequences, consequences that enable emergent futures to be self-organizing (to create higher order, innovative coherence as intrinsic to their development). Kelly's work extends Maturana and Varela's (1987) insights to a more general level. It is foolhardy to suppose that the critical tiny force can be picked out of the murky soup of other tiny (as well as larger) forces. Prediction is no help here, selforganization creates its own paths rather than following pre-existing paths, multiple insights developed through dialogue can best track the twists of emergent paradigms. Kelly describes these unusual implications of selforganizing complexity: °~° Distribute being (spread things out over a multitude of smaller systems). o~o Control from the bottom up (in a connected, distributed network, create low level, parallel governance, not central authority). o,*o Cultivate increasing returns (positive feedback, or snowballing). o,'o Grow by chunking (create simple modules that can act by themselves or together). o~o Maximize the fringes (vs. the center, as the source of innovations). o,'o Honor your errors (error is necessary to new creation and new ideas). o~° Have multiple goals (vs. one optimum goal, a blunt instrument has more survival potential). o~o Seek persistent disequilibrium (not flux, but not aiming for stability either, a tenuous balance in practice). °~° Change changes itself (if control is bottom up, the rules of the game are likely to change over time; this provides opportunities to fundamentally reframe boundaries and core activities). These are all disconcerting to the traditional epistemology of strategic planning. Kelly suggests that business futurists need to let experiments develop, learn and incorporate on the fly, lower radar, look to the periphery for innovation, keep shaking things up including the rules of the game (the definition of the core business), and sustain dialogue to continually reframe as emergent paradigms unfold. Not much room here for a definitive strategic plan based on objective knowledge of the future.
The Epistemology of Dialogue, Uncertainty, and Emergent Paradigms If uncertainty is the engine for strategic conversation rather than certainty being the goal of strategic planning, then productive conversations take place around European ManagementJournal Vol 14 No 4 August 1996
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emergent patterns and their implications.Consensus too early, can just mean sharing the same blindfold. And the fallback of 'gut feeling' as the final adjudicator can mask a retreat to commitment in the face of unsettling possibilities. The epistemology of understanding self-organizing systems, the art of sustaining and deepening strategic conversations that center on emergent paradigms as unfolding futures, targets these alternatives to traditional strategic planning: °~° Scenarios (multiple, plausible stories) for probable futures. °,'° Outsider perspectives for in-company closure and 'official futures'. °~° Boundary blurring for traditional core competencies within historical business limitations. °~° Uncertainty - following small events on the periphery for confidence about the future impact of major trends at the center. o,'° Self-organizing systems on a biological model for mechanical systems on an engineering model. °~o Ongoing dialogue and recalibration for the finality of a fixed plan.
Case Studies 2 Major Car Manufacturer Automobile makers see their core competence in the engine and drive train of individual vehicles, less so but importantly in marketing, even less so in the softer aspects of designing interior spaces, and no competence in creating public transportation systems. Given this ranking, assessing the future focuses on engine/drive train technology, emissions regulations that can affect performance, consumer trade-offs between power and economy, between smooth automatic gears and acceleration, between safety and sportiness, etc. Apart from a quirk in regulation, the future is seen as predictable and changing incrementally. These priorities also fit nicely with (mostly) male engineering values. If customers do not appreciate the 'important' aspects of a car, they become 'defective' customers. Along with this mindset goes the view that it is men who make car purchase decisions. While this is changing, with greater emphasis on women as buyers or at least actively involved, the continuing strategic focus is on traditional core competencies. At a series of strategic retreats I facilitated for a major car manufacturer, these views were forcefully articulated by a group of white male executives, confident that incremental improvements in the performance engineering of individual vehicles would meet future consumer needs (with one caveat - the possibility of much stricter regulations for emissions). The retreats were organized so that outsiders also European ManagementJournalVoq 14 No 4 August 1996
participated in the discussion, including women, urban planners, and ecologists. As the conversation progressed, they introduced new perspectives: o;o Focus on the interior (a peripheral strategy area) now designed from the driver's perspective, with a few gestures to passengers (like cup holders). Why, for example, is the front passenger seat almost identical to the driver's seat? The driver needs to feel the road, the passenger does not. The passenger might want to angle the seat for better conversation with the driver. The passenger needs different storage and work areas. Why hasn't the problem of where to put a woman's purse been solved? Why can't the material of the rear seats be tough and washable, able to withstand the activities of chiktren? Why haven't the needs of older people been seriously addressed? As more people think, work, and eat in their vehicles, why keep emphasizing that a car's only function is to go from point A to point B. o~° Start from the self-organizing system of vehicle mix and flow, not individual car by individual car. As urban congestion and pollution increase, thinking of each vehicle in isolation becomes an anachronism. Understanding each vehicle as part of a larger people/goods moving network requires understanding traffic flow and monitoring, flexibility in switching from one kind of vehicle to another, fitting size and functionality of vehicle to system position, new links between manufacturers and urban planners, and perhaps shifting away from vehicle ownership to a 'smart card' based usage fee. This is a system whose development will be full of surprises, not predictable by standard modeling. °~° Understand the emerging dynamics between information technology and transportation. What is the relation between an increased ability to transmit information electronically and the need to physically move from place to place? How will the rapid pace of hard and software improvement, especially the practicality of video-conferencing and ultimately virtual reality, change commuting needs for work, recreation, and consumption? These (and other) questions raised during the conversation challenge traditional thinking about vehicle strategy by: o~o Recognizing fundamental uncertainties rather than staying within the comfort zone of slow, predictable change. o~o Refraining boundaries around self-organizing potentials - individual vehicle or unfolding mix of vehicles. o~o Taking a non-engineering, previously peripheral starting point - interior features and new functionality. °~° Tracking self-organizing systems of types of vehicles and types of use. °,*° Encouraging dialogue and engagement, not simply 351
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providing neutral product 'specs'. Linking vehicles to information technologies and their impact on work, residence, and leisure.
Systems Consultants The lure of an integrated global economy structuring global production, distribution, and marketing, is compelling to many companies and their systems consultants. As companies respond to the one-way juggernaut of globalization, they perceive the need for specialized consulting assistance in developing global scale and reach. And indeed more companies see their future inextricably locked into this global momentum. Most place the biggest bets on Asia, especially China, but the Former Soviet Union and Latin America are also targeted for major market and production expansion. The challenges of globalization are profound, from integrating production to taking advantage of complex streams of parts and assembly, to marketing to new consumers. The underlying mindset of globalization is control, dominance, expansion, scale, and inevitability. There is an apparent agreement between globalizing companies and their systems consultants. To improve services, one consulting firm initiated a planning exercise to enhance their globally applicable product and consulting mix. But it soon took a different course. At that exercise, as in the example of the auto manufacturer, outside experts were included to provide flesh and unorthodox perspectives. Their backgrounds included geopolitics, anthropology (Asianists and specialists in former communist bloc countries), and software innovation. The outsiders raised troubling concerns: o$° What are the potential limits and discontinuities to the currentbandwagon of globalization? These might include regional conflicts (over resources or cultural/religious differences), regional trade associations with prohibitive barriers across regions, epidemics and diseases that block the flow of goods and people, environmental concerns that result in regulations limiting the flow of goods not complying with strict production codes, etc. In other words, what would it take to create a global self-organizing system - this may be more daunting and involve more surprises than optimistic predictions allow. °5° Could local or regional companies take on manufacturing and distribution now associated with multinationals? Examples include current Malaysian and Indonesian auto companies, pirated music and video distributors, local detergents, etc. The ability of mostly Western companies to understand nonWestem styles of business and consumption was challenged, including how to react to the rising 352
influence of overseas Chinese investor networks. Will the capitalization needed for globalization be in sync with returns? Will cost reductions in production match consumer uptake? The uncertainties of currency exchange rates, uncontrollable by government intervention, figured in this discussion. And while south coastal Chinese consumers are now rapidly buying electronic goods, there is some evidence that other Asians will be slower to purchase automobiles, housing, and other large ticket items. These questions resulted in a significant insight for the systems consultants. While they would continue to prepare for client globalization needs (not walk away from a growing market), they would innovate their systems designs to follow the example set by BMW in Germany - DFD or 'design for disassembly'. DFD is the idea that a car (or system) is designed so that while its components work together seamlessly, they can easily be pulled apart. This is especially important in Germany where recent laws mandate that the manufacturer is ultimately responsible for disposing of the vehicle. For the systems consultants, this meant creating production, distribution, and marketing system software that would facilitate globalization, but that could be separated into functional regional and local parts quickly if the globalization forecast did not materialize. DFD also fits into Kelly's framework - spreading things out over a multitude of smaller systems, creating simple modules, having multiple goals, etc. As in the automobile case, traditional thinking was challenged by: •~o Uncertainty about globalization predictions. °~° Discontinuities constraining global control, momentum, and confidence, globalization as a selforganizing system. •~" The need to think smaller as well as bigger - to track the direction of globalization rather than just predicting it. •~° Limits to the ability to control, currency exchange rates, consumer desires, etc. °~° Taking into account the 'softer' dimensions of culture, religion, and emotions.
Major Food Manufacturer The food industry is experiencing unsettling shifts in consumer preferences and brand imagery, especially for a sector that has remained stable for a surprisingly long time. A major food manufacturer needed to improve its understanding of these shifts as it developed a strategy for acquisitions. Initially, acquisitions were positioned in terms of strengthening existing growth areas like prepared meal solutions and juice-based drinks. Before deciding on acquisition candidates, a planning European ManagementJournal Vo114 No 4 August 1996
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retreat was held to fine-tune selection criteria given future consumer food desires. As with the auto and systems consulting examples, outsiders were added to the team. In this case, they included experts in aging, ethnic food preferences, bio-engineering, family and work changes, as well as nutrition and health research. The outside experts raised issues that went beyond traditional meal solutions: o;° While most consumers are not about to restrict food intake to nutrient pills, there are decisive steps toward a merger of what is eaten and general health. While this has deep roots (in the food pyramid learned in school by American children, for example), current research is highly focused, including measuring the effects of phytochemicals, anti-oxidants, trace minerals and metals, different kinds of fiber, amino acids, etc. These details are rapidly publicized via health magazines, newspapers, and TV, changing consumption patterns and creating a fast paced self-organizing system. °;" A large aging baby-boom cohort that does not accept aging as previous generations have, that pays close attention to the way foods can prolong an active youthful lifestyle into their 80s. °;" Bio and genetic engineering can produce 'mass customized' foods with molecular 'prescriptions' suited to an individual's health needs as determined by nutritionists and/or physicians. °;° Holistic styles of health care are rapidly increasing in popularity and emphasize the role of nutrition and food intake, from macrobiotic diets to lacto-ovo vegetarianism (a 'vegan' regimen) to complex amino acid combinations. The implications of holistic health practices as a self-organizing system have not been explored. The conversation moved toward supplementing a traditional acquisition strategy by: °;° Below the radar screen searching for small companies playing cutting edge roles in new areas of food categories, aging diets, and preparation; these companies can be advance indicators of how an emergent paradigm is unfolding. °~'° Blurring boundaries between food and therapy (pharmaceuticals for example) to direct attention to acquisitions that merge both - 'therafood'. These blurred boundaries track complex, emergent public perceptions of what food is and can be. o'.o Paying close attention to bio-engineering and biomolecular research for acquisition and alliance candidate possibilites. °~° Evaluating consumer-relevant solutions that go beyond usual definitions of meal solutions into health, physical activity, mental acuity, customization, etc., for acquisition candidates. European Management JournalVot 14 No 4 August 1996
Implications and Suggestions for Practical Application These examples illustrate the value of approaching strategy as an open-ended conversation, crafting the future as emergent paradigms. The best conversations include diverse insights without the goal of 'getting the future nght.' Borrowing from anthropology, I suggest the term, dialogics, for an approach to business futures based on new metaphors from biology and complexity theory. While strategic planning might be outmoded, there is no avoiding some kind of thinking ahead, if not explicitly then implicitly as a company's tacit 'official future'. Dialogics describes an approach to strategy starting from an epistemology that one's position/perspective fundamentally shapes the questions asked, the scope of those queries, the appropriate data, and the answers accepted. Frame-breaking insights emerge in dialogue with those not sharing one's position/perspective, from accepting that there is no privileged fact or viewpoint that can predict a self-organizing future. It is the quality of the conversation itself that holds the key to out-ofthe-box business insights, not the elegance or finality of a completed plan. Keller on a feminist epistemology of science is a reminder of the centrality of one's starting point and that a position of relative 'weakness' can offer critical challenges to social dominance (in the words of Quaker beliefs, can 'speak 'truth' to power'). And since new selforganizing systems render older, historically powerful systems obsolete, connecting to these outsider views can be a decisive advantage. Kevin Kelly's (as well as Maturana and Varela's) emergent paradigm insights suggest three ways that dialogics advance business future thinking and action: o~* Since almost imperceptable forces can have huge consequences, conversations and observations need to discuss apparently marginal matters; look as carefully at the periphery as at the center. o~o If rules change as well as options within existing rules, then reframing, blurring usual business boundaries, looking through wide angle lenses, are more powerful than ever-the-more-tightly defining and clinging to existing rules; self-organizing systems create new rules as they move through levels. o;" If breakthroughs emerge in unstable conditions, encouraging flexibility and learning from mistakes is the catalyst for productive strategic conversation. Make more mistakes, make them more quickly, and learn faster than competitors from them. In practical terms, encouraging and sustaining a dialogic strategic style means: o;° Targeting the importance of discontinuities, actively 353
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o~°
o~o
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encouraging organizational disequilibrium that sees breakpoints as oportunities, rather than organizational continuity that gravitates toward extrapolation. Developing scenarios, creating plausible stories (emergent paradigms) of the future as the basis for dialogic conversation, not artificially assigning probabilities to any of the stories, but keeping possibilities open (Schwartz, 1991; Ogilvy, 1992). These scenarios become the syntax for sustained productive conversation. Including knowledgeable others, outsiders, mid and lower level staff in conversations as a source of insights and to stimulate the internal organization to include strategic potentials as part of their daily work; mechanisms for inclusion can be uncomfortable for hierarchical organizations not used to heterarchical teams. Lowering the radar screen to allow earlier awareness of smaller companies and peripheral driving forces that can decisively shape emergent paradigms; many large companies mistakenly discount entrepreneurial activities as irrelevant to their need for significant market share and return. Seeing added value as 'constellations' rather than 'chains' (Normann and Ramirez, 1994), as non-linear clusters of value creating systems that change as rules change, not simply as a pre-given chain with fixed points along that chain increasing or decreasing in value; being aware that the concept of self-organization is non-linear, creative, and openended; value constellations fit with self-organizing systems that reconfigure basic rules and priorities. Looking to interstices as arenas for revolutions, blurred boundaries as the source for significant new business concepts and growth; core competence is different from core business, and even core competence needs to be loosely and creatively defined; this opens the potential for fundamental change in what a business is about, as when Adidas, Reebok, and Nike redefined a stagnant athletic shoe business. Culture and symbols as drivers - perceptions, symbols, and values are not 'soft' (just as numbers are not 'hard'), but can have decisive impacts on business potentials and self-organizing systems; perceiving cultural drivers is easier if conversation is open to women and other outsiders, Pivotal role of multiple, bottom of the S curve technologies - technology plays a decisive role in how businesses re-invent themselves. The new technologies that can redefine a business, include materials technology, nanotechnology, photon technology, bio-technology, superconductivity, genetic engineering, etc. These technologies can move a self-organizing system to the next level.
An epistemology that forecasts the future based on an external/objective, closed systems analysis (a mechanical model) has led business strategic planning down a culde-sac of prediction and artificially limited options. In its place, I offer the biological (and complexity theory) 354
metaphor of self-organizing systems that avoids prediction, sees systems creatively re-shaping themselves as they move to the next level, engages in ongoing conversation and reframing, and that generates robust possibilities for revolutions in the scope of business activities. Referring to the quote about style at the beginning of this article, these practical steps amount to changing the epistemological style of business strategic activities (van der Heijden, 1996). The style change reflects recent developments in scientific, fact-gathering methods and results, making these available as a learning tool ('dialogics') for organizational strategic processes (Barnett, I992; de Geus, 1988). By no means do I think this style shift is easy to implement, especially in large companies where size (and greater centralization) lead to higher 'rational' proof hurdles, limited contrarian views, detailed traditional rituals of planning as prediction, and the goal of producing a tidy, bound volume called the strategic plan. And where what passes for conversation is often echoing and reinforcing the opinions of those with more power. The challenge for these companies is literally to break through these constraints, not one at a time, but all at once, for decisive style changes are not timid or hesitant.
Notes 1.
2.
I would like to thank JoAnn Magdoff for suggesting the work of Evelyn Fox Keller, and for helpful readings of earlier drafts. The emphasis on conversation shares key themes with, and should be read in tandem with, 'Conversation Management' by G. von Krogh and J. Roos (1995) in European Management Journal, 13,4. These case studies take great pains to conceal actual companies, trying to guess would be pointless.
References Barnett, Steve (1992), The Nissan Report. New York: Currency Doubleday. de Geus, Arie (1988), Planning as Learning, Harvard Business Review, 66, 70. Dwyer, Kevin (1982), Moroccan Dialogues: Anthropology in Question. Baltimore: Johns Hopkins University Press. Keller, Evelyn Fox (I985), Reflection on Gender and Science. New Haven: Yale Univeristy Press. Keller, Evelyn Fox (1995,) Refiguring Life. New York: Columbia University Press. Hamel, Gary and Prahalad, C.K. (I994), Competing for the Future. Boston, MA: Harvard Business School Press. Kelly, Kevin (1994), Out of Control: The Rise of Neo-biological Civilization. Reading, MA: Addison Wesley. Maturana, H. and Varela, F. (1987), The Tree of Knowledge. Boston: New Science Library. Mintzberg, Henry (I994),The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning, Planners and Plans. New York: Free Press. Normann, Richard and Ramirez, Rafael (1994), Designing Interactive Strategy. New York: John Wiley and Sons. Ogilvy, James, (1992), Future Studies and the Human Sciences: The Case for Normative Scenarios, Futures Research Quarterly, Summer, 8, 5. Schwartz, Peter (1991), The Art of the Long View. New York: European ManagementJournalVo114 No 4 August 1996
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Currency Doubleday. van der Heijden, Kees (1996), Scenarios, the Art of Strategic Conversation. New York: John Wiley and Sons. Varela, Francisco J. (1979), Principlesof BiologicalAutonomy. New York: Elsevier North Holland. von Krogh, G. and Roos, J. (1995), Conversation Management,
European Management Journal, 13,
4.
STEVE BARNETT, Global Business Network, 666 Fifth Avenue, 3 7th floor, New York, N Y 10103, USA. Steve Barnett is Managing Director of Global Business Network, and head of its New York office. GBN is a unique scenario planning network-based organization with opproximately I00 member companies and institutions. Before joining GBN, Dr Barnett was Director of Product Strategy and Product Development for Nissan North America, Founder and President of Holen North America (a consumer strategy consultancy), and Chairman and CEO of Research & Forecasts Inc. Dr Barnett received a Ph.D from the University of Chicago and has taught at Princeton, Brown and MIT. He has published books and articles on global consumer culture, American cultural trends, corporate responsibility, and Asian modernization. He is an advisor to the OECD and US Congressional Office of Technology Assessment.
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