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October 24, 2007

Beyond the Five-year Strategic Plan

In his new book, Bill Duggan reveals how to cultivate strategic intuition to drive innovation, solve problems and capitalize on unforeseen opportunities.


What is strategic intuition, and how does it work?

Strategic intuition is a flash of insight in which you have a very clear thought about a solution to a problem and a path to action. Recent advances in neuroscience and cognitive psychology explain to us how it works: your brain connects the dots from your experience and knowledge, and tells you what to do.

How is it different from a snap judgment?

Science recognizes three kinds of intuition: ordinary, expert and strategic. Ordinary intuition is like an instinct with its own mysterious origins: “I don’t know why I thought that.” Expert intuition kicks in so that you instantly recognize something familiar. When a tennis pro reacts to the arc and speed of a tennis ball, for example, that’s expert intuition. It’s based on being very familiar with a field, so it’s quick. Malcolm Gladwell wrote about expert intuition in Blink.

But for new situations, or to innovate, it’s important not to use expert intuition. Unlike the blink of expert intuition, strategic intuition happens slowly. People typically say that they have their best ideas in the shower or stuck in traffic or on the train. And it can solve a problem that’s been on their minds for a month. It feels sudden because at last things come together in the mind, but that’s only the last step, and it doesn’t happen in the heat of action.

An example I use in class that’s not in the book is how Henry Ford created the moving assembly line, which changed manufacturing for all time. First, he imitated the stationary assembly line of Oldsmobile, which made the first mass-produced cars, by the way; Ford wasn’t the first to do that.

But Ford was the first to get the idea of moving the chassis from station to station, instead of having the assembly teams lug all their gear from station to station. Where did he get that idea? From the Chicago stock yards. A slaughterhouse uses a moving disassembly line, where the carcass moves along a rail from station to station. Ford put that in reverse and made a moving assembly line.

Note that he didn’t just steal or imitate ideas from within the car industry. Nor was it simply a matter of the social and economic forces of his time being ripe for Ford’s innovation, which is often how official accounts portray great new ideas. Ford searched his mind for everything he had ever seen and hit on the stockyards. So where should you look for elements to combine? Everywhere.

Why is strategic intuition important?

You’ve probably heard that today you need creative, entrepreneurial or innovative thinking to compete in the modern world. These amount to the same thing: how to figure out what to do in a new situation. That comes from flashes of insight, as strategic intuition. It’s how you solve all kinds of problems in today’s fast-moving world, and it’s at the core of human achievements from the beginning of time.

Scholars have written about flashes of insight for centuries. The best description comes from Carl von Clausewitz in his classic on military strategy, On War, where he outlines the four steps of how strategic intuition happens: One, take “examples from history” and put them on the shelves of your brain. Two, cultivate “presence of mind,” to free your brain of all preconceptions about the problem at hand and what solution might work. Three is the actual flash of insight itself, when a new combination of examples from history connect in your brain. Four is resolution, where you not only see the way forward but resolve to go ahead and do it.

There are currently three massive misconceptions about how strategic thinking works. I call them plod, plot and play. Plod means you go beyond your usual routines to analyze a much wider range and depth of information, and advanced technology means there is essentially no limit to the amount of data you can and should plod through. Plot means you spend a lot of time defining your mission, your goals, your objectives, your subobjectives, and so on. Play means you give up your usual ways of thinking to build a race car out of duct tape or toss frisbees across the office or throw random words onto a Velcro board.

But the plodders and plotters and players are all wrong. The trick is to plod and plot and play at the same moment. That’s what a flash of insight does. It’s how the brain makes something new out of real information and projects it as a strategy. But you get there, not through plodding or plotting or playing, but through understanding how strategic intuition works and how to do it better.

The four elements that von Clausewitz introduced have been around for a while. Why don’t we see more examples of strategic intuition at work in business?

I think people really have the wrong idea about what strategy is. They think strategy is a plan — usually a five-year plan — that they have to stick to. Then when some unpredictable event happens, instead of changing the plan, they pass up an opportunity to do something better.

For example, Puma started out as an ordinary athletic-shoe company. CEO Jochen Zeitz inherited Puma when it was dying. He came up with a five-year plan to save the company by cutting costs, mostly by shifting production from Germany to Asia.

A year into his five-year plan the Beastie Boys wore Puma’s Clyde sneaker at a concert. The Clyde is a shoe that Walt “Clyde” Frazier of the New York Knicks wore, so the shoes are called Clydes. They don’t look much fancier than the usual athletic shoe, but after the concert, they flew off the shelves — they suddenly became a hot fashion item. This was a big disruption to Zeitz’s five-year plan. He hadn’t meant to make so many Clydes.

And suddenly, he realized, he was in the fashion business, not the athletic shoe business. So instead of sticking to his plan, Zeitz threw it out and started changing Puma into the fashion and lifestyle company we know today. Today Puma sells $300 fashion bags to carry to and from your yoga class or gym.

It’s very difficult to throw out a five-year plan. People don’t want to do it, because they think that means they’ll be changing their plan every five minutes. But a flash of insight on the scale of Zeitz’s doesn’t happen every five minutes. When strategic intuition gives you a big idea, you make a big change. That’s the right way to be flexible.

Most people think of strategy as a military or business idea. But you say strategic intuition applies to many other fields too. How does that work?

Strategy applies to all human endeavors, to any pursuit where you take action to achieve something you consider worthwhile. Strategic intuition is a way to do that. It’s a philosophy of mind, of strategic thinking rather than strategy for any particular discipline. Strategy simply asks, “How do you figure out what to do?” You ask that question in all fields, including how you lead your life.

William Duggan is associate professor of management at Columbia Business School.

Read more

Duggan, William. Strategic Intuition: The Creative Spark in Human Achievement. New York: Columbia University Press, Columbia Business School Publishing, 2007.

To learn more and to discuss strategic intuition, visit www.strategic-intuition.com. Download chapter 1 of the book here.

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