Theory of Constraints Handbook - James Cox Iii [384]
Many companies use an annual strategic planning cycle, meaning that they have a predetermined yearly schedule for reviewing and updating their strategic plans. In other words, they set their strategy for at least a year, then don’t formally revisit it until the same time next year. But how responsive is that practice to surprise, catastrophic events? How well would such a practice have served the commercial airlines after September 11, 2001, or commercial industries that depend on bank financing after September 2008? If strategy directs a journey from the current state to some desired future state, it’s critical for it to be flexible enough to react immediately to such unexpected surprises. If you were navigating a ship across the ocean and discovered that you had been blown seriously off course, would you wait until the next strategic planning cycle to take corrective action? What if, for some reason, the destination had changed, even without a storm to blow you off course? Would you in any way delay resetting your direction? If not, why would anyone with responsibility for guiding organizations behave any differently?
FIGURE 19-3 Strategy as a journey.
Orientation and Observation
According to Boyd, the orient step is the most critical of all, despite the fact that it appears second in the sequence (Safranski, 2008) That’s one reason why he made it more prominent (see Fig. 19-2) than any of the other steps. The orient step is the amalgamation or synthesis of the sum of our knowledge about ourselves, our system, values, customs, culture, experiences (heritage), and the environment (Osinga, 2007). One might oversimplify by saying that our orientation represents our worldview, hard won and tightly held. It’s the lens through which we filter sensory inputs of things happening around us or, in other words, the observations we make in real time.2
The orientation step is the one in which a divergence from our expectations is detected. Part of our orientation is the paradigm (Kuhn, 1962) in which we live, the view of the world we create for ourselves based on the factors previously mentioned. These factors all conspire to form our assumptions about the way we think things happen (or should happen). When we observe phenomena or events that don’t fit into our orientation, we have what Boyd referred to as a mismatch. The existence of this mismatch is determined when we analyze and synthesize our observations with the basis of our orientation or paradigm. In other words, we examine what is happening in light of what we expect should be happening. This continual analysis-synthesis process is an integral part of maintaining a robust current orientation.
How does observation happen? Sometimes, as in the case of 9/11 or the sub-prime mortgage meltdown, events are thrust upon us in ways that we can’t ignore. However, sharp system leaders actively look for changes in the environment and evaluate what effect their observations might have on their orientation—in other words, what mismatches might be emerging. The more this active observation is practiced—and the observations synthesized—the more sensitive one eventually becomes to small changes, which may be indicators of more dramatic changes yet to come. This has relevance to competitive advantage, which will be discussed in more detail shortly.
As Fig. 19-2 indicates, observations include new outside information, such as research or technology breakthroughs. Unfolding circumstances include the entry of new competitors into the market, new laws or regulations, or world events such as skyrocketing crude oil prices, increased activity of Somali pirates in the Indian Ocean, financial chaos in one sector of the economy, or other international geopolitical developments. Unfolding action with the environment specifically refers to the environmental effects of actions the system might take—the other side of the equation from the impact of environmental changes on the system.