Strategic Thinking by John A. Warden III

By John A. Warden III

In the past I have stressed the importance of thinking strategically before acting and have emphasized the idea that any strategy must address The Essence of Strategy-four critical questions based on single words:

• Where-do you intend to be at a time point in the future? (Future Picture)
• What-are you going to put your resources against? (Systems and Centers of Gravity)
• How-and in what time span are you going to apply your resources? (Parallel Attack)
• Exit-for every part of your plan? (Finish with Finesse)

In addition, it is imperative to decide in advance how you intend to behave (Guiding Precepts) and to commit to following smart strategy principles (Cardinal Rules).  One of these Cardinal Rules especially important to follow in geopolitical strategy development is “Execute Good Enough Plans.”  The near universal tendency is to try for perfect plans and perfect Future Pictures; as nice as it might be to realize a perfect Future Picture, the likelihood of doing so is vanishing small while the cost will almost certainly be prohibitive.

As Afghanistan is much in the news today with senior NATO officers opining that there is no military solution and that it is necessary to talk to the Taliban, I thought it would be useful and interesting to do a strategy outline using the ideas just summarized.  As the purpose of this Blog is not so much to provide answers as to illustrate strategy principles, I will try to show the range of options in each strategy area-to the extent that there are options.

Nations develop strategy for situations that concern them in some way.  The greater the concern, the more important is the strategy.  It is useful, then, to consider for a moment why Afghanistan is of concern to the West.  Historically, its importance lay in its geographic position between east and west.  In the 19^th Century it became a key player in the “great game” between Russia and Great Britain where for nearly a century Britain worked hard to keep Russia away from warm water ports into the open oceans and to prevent her from standing athwart the land route to India.  The importance of Afghanistan from this standpoint decreased substantially in the period between the World Wars only to reemerge as the Cold War began in the late 1940’s.  Subsequently, the United States assumed the British role and actively supported uprisings against Soviet occupation in the 1980’s.  For two hundred years, then, American and British interest in Afghanistan was almost exclusively confined to preventing it from falling into Russian hands.  When the Soviet empire collapsed, the United States no longer had an interest in Afghanistan.  It was certainly not pleased when the Taliban took power, but its displeasure was far from sufficient to suggest armed intervention.  It was only after Al Qaeda used Afghanistan as a base of operations for attacks such as those of September 11 that the United States decided to go to war against the Taliban who had supported Al Qaeda.  Note that the casus belli was exclusively Taliban support for Al Qaeda; in the absence of that support, the US would never have gone to war in Afghanistan regardless of how nasty the Taliban might have been to its fellow Afghanis.  Our war operations led rapidly to replacement of the Taliban and destruction of the Al Qaeda organization in that country.  In the intervening years, our operations initially focused on hunting for Osama Bin Laden who, along with any surviving cohorts, is most likely in the tribal areas of Pakistan.  NATO now finds itself supporting the Afghan government in a civil war against the Taliban.  In short, the US accomplished its objectives in 2002 when it destroyed Afghan government support for Al Qaeda.  The question that needs to be addressed now is:  what is our interest in Afghanistan?  Is it the same interest that led us to war in the first place, or have we now decided that our mission is dramatically different and more expansive than it has ever been in the past?  With this as background, we can now suggest two alternative strategies that begin with two very different Future Picture options.

Future Picture (Where?):  Option 1– Afghanistan becomes a successful, democratic, secular state that does not export opium.  Option 2-Afghanistan is responsible for its own internal affairs and government, but does not permit Al Qaeda or its assigns and successors to operate or use its territory as a base of operations. It is extraordinarily important to get the Future Picture right, to understand why we want it, to be certain we would like it if it happens, and to understand the costs and risks associated with it.  Without a good Future Picture, every action stands by itself and produces a random path that may lead anywhere with the majority of the outcomes likely to be worse than the starting conditions.

Centers of Gravity (What?):  For Option 1, it would be necessary to create a new class of leaders within the nation, wean religious leaders away from Sharia, develop an economic system that among other things replaces at least $2B in opium income (half the country’s total income), build a transportation infrastructure, convince several different tribal groups to see themselves as Afghanis instead of tribe members, lead many Afghani demographic groups to drop the xenophobia that defeated British and Russians alike, and to build an apolitical military and police force.  For Option 2, key leaders must agree to stop Al Qaeda-like organizations from using Afghanistan as a base for external operations. 

Time and Parallel Operations (How?):  Regardless of the option, it is essential to establish a timeframe, for time is an indispensable part of strategy.  No timelines, no strategy.  In addition, time is money which is in short supply so the duration must be short, probably not more than a couple years from a US and NATO standpoint.  Option 1 may take generations as it requires fundamental changes in the way an ancient people thinks and acts, whereas Option 2 can reasonably be attained rather quickly.  We don’t normally think about working back from the future from a time viewpoint, but doing so is invaluable.  It is reasonable to assign a certain amount of time and money to be involved in any project; if it is not possible to achieve a Future Picture with acceptable risk and cost in that period, it is necessary to change the Future Picture or not participate at all.

Finish with Finesse (Exit?):  Exits take place when the Future Picture is realized or when plans are progressing poorly.  Exit following success with Future Picture Option 2 is straight-forward and may also be for Option 1 unless too many dependencies exist.  There is also, however, a need for a plan to exit if things don’t go well.  After all, nothing could be less strategic than to continue pursuing something that is not working and that it prohibitively expensive.  Option 2 is easier in this case, because we always have the ability to use our asymmetric force capability to check effective Al Qaeda use of Afghanistan in the event the Afghanis fail to do so.  Development of exit plans in the event Option 1 does not progress well is more challenging for it requires very clear strategic measurements of progress that would be valid over a long period.

Risk:  The Option 1 Future Picture is very risky in terms of probability of success as well as in costs for several reasons:  it necessarily takes a very long time (perhaps generations) and the experience of past occupiers, which include many since Alexander the Great two thousand years ago, has not been peaceful or easy.  In fact, the British suffered a humiliating defeat in the 1800’s as did the Russians two decades ago when both tried to rule Afghanistan’s fiercely independent tribes.  The British actually gave up occupation and settled for the good enough Future Picture of just managing Afghan foreign affairs-an arrangement that worked reasonably well for both parties for nearly a half century.  The risk for Option 2 is dramatically less because Afghan leaders do not have to change or compromise any of their tribal or religious beliefs and in all likelihood; their cooperation would be personally remunerative.  In addition, Option 2 requires no foreign presence.

This cursory strategic review would suggest that the best course would be to end the war in return for an agreement from the Afghan government not to allow any foreign group to operate against the West from Afghanistan.  Verification would be easy and deviance could be addressed with tactics ranging from increased payments to Afghanistan to air operations against strategic targets within the nation.

By Mike Cline, VP Operations, Venturist, Inc.

Understanding and applying the fundamental rules or Cardinal Rules of strategy as John likes to call them is essential for success as a Strategic Thinker, Strategic Planner or Strategic Organization.  One of those Cardinal Rules is Go To Rome.

Is your organization “Going to Rome”?  I went to Rome several times in the 1980’s and found it to be quite an interesting city.  Lots of history in and about Rome.  You may not have plans to Go to Rome but you should-strategic plans.

A long, long time ago in a land faraway, there was a great General-Hannibal.  A Carthaginian who had successfully fought the Romans in southern Europe for many years, Hannibal fought what he thought to be the decisive battle of the Second Punic War (218-203 BC) at the Battle of Cannae (216 BC) some 200 miles southeast of Rome.  In a remarkable tactical achievement, Hannibal used double envelopment tactics to defeat a superior Roman force.  To this day, the battle of Cannae is studied as one of the most important tactical battles in military history.  Outnumbered at least 2 to 1, the Carthaginians inflicted devastating casualties on the Romans and their allies with an estimated 50-70,000 killed or captured-probably at least 90% of the Roman force.  Hannibal’s casualties were extremely low by comparison.  Rome was undefended.

At the conclusion of the battle, Maharbal, one of Hannibal’s senior commanders, implored Hannibal to begin the march to seize Rome.  Hannibal resisted, citing the great victory they had just achieved.  “We’ve just defeated the Roman Army in a great battle, there is nothing to be gained by going to Rome.”  Maharbal famously replied: “No one man has been blessed with all God’s gifts. Hannibal you know how to gain a victory; you do not know how to use it.”

Years later in 202 BC, a Roman Army, under the generalship of Scipio Africanus, a survivor of the Battle of Cannae, defeated a Carthaginian army at the Battle of Zama in the Third Punic War in North Africa.  Eventually Carthage was sacked, completely destroyed and its citizens placed into slavery forever. In 196 BC, merely 20 years after the Battle of Cannae, Carthage was gone forever.

Twentieth Century examples of not knowing “Where is our Rome?” are many, but sometimes a bit harder to see.

One example might be the U.S. Auto Industry in the in later half of the 20th Century.  Ford, Chrysler and General Motors battled it out amongst themselves trying to out market share each other and lost sight of the true Rome for the American Auto Industry-the American consumer.  By contrast, Japanese automakers, although initially not tactically superior to Detroit knew where Rome was-the American consumer.  One example of this is this objective statement from a Nissan-USA strategic goals document in 1971:

NMC-USA distributes high quality vehicles tailored to the American consumer’s needs at a competitive price.

Nowhere in that document did Nissan talk about the competitors, market share or tactics.  They knew where Rome was-the American consumer.  Toyota and other Japanese automakers were equally aware of their Rome in the US.  Alex Taylor III, Fortune Magazine Senior Editor captures this idea very well in: America’s best car company! (Fortune Magazine, March 2007). A once powerful Detroit auto industry may have won many tactical battles in the 20th Century, but today they are a bit like Carthage, suffering because they failed to “Go To Rome.”

Are your business and organizational strategies taking you to Rome or are you merely finding ways to win those tactical battles in front of you.  Are you caught up in winning market share and price battles while the market, your Rome, eludes you?  Where is your “Rome?”  Are you headed there?  Do you understand the difference between battles and wars?  Focus on your strategy, not your tactics.

“All men can see the tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” - Sun Tzu

By Mike Cline, VP Operations, Venturist, Inc.

While the Strategic Thinker is well versed in the Essence of Strategy-WHERE, WHAT, HOW and EXIT, there is an element of strategy that all successful strategic enterprises understand and apply well.  That is the moral or behavioral element.  We’ve all heard the mantra that The Ends Don’t Justify The Means.  It is a mantra that applies to Strategy as well.  However desirable or imperative the strategic goals are, the behaviors an enterprise tolerates in achieving them are just as important as the strategy itself.

The concept of Guiding Precepts being applied to any endeavor is not new.  In fact, Benjamin Franklin, in his autobiography listed 13 precepts or virtues necessary to achieve a happy and prosperous life.  Franklin called this achieving moral perfection.  Within an enterprise, Guiding Precepts, whatever they may be, tell the people in the enterprise what they may and may not do while developing and executing strategy.  The framework for Guiding Precepts when applied to an enterprise is designed to accommodate flexibility of execution, while instilling absolute behavior norms that must be followed regardless of the strategic situation.  The framework under which we like to develop Guiding Precepts is simply stated as Prime Directives and Rules of Engagement.

Prime Directives

The term Prime Directive derives from the Star Trek television series and is defined as a Guiding Precept that is a transcendent guideline–behavioral norms to be followed at almost any cost (and rewarded accordingly).

A contemporary Prime Directive from a major pharmaceutical client of ours went like this: Take risks with technology, but not with drugs or end-products.  In other words, as this enterprise executed it strategy to develop more and better pharmaceutical products, its technicians, researchers, doctors, chemists and biologists were free to make risky decisions relative to the technologies employed to develop and test new drugs, but not free to do so with the drugs themselves which might jeopardize patient health.

Rule of Engagement

The term Rule of Engagement is adapted from the military’s use of the term to define acceptable behaviors by soldiers and military units in combat or hostile situations.  Rules of engagement are subordinate to prime directives, may exist at multiple levels within an enterprise, may be situational, and may change over time as the strategic situation dictates.

Typical Rules of Engagement look much like these 1999 rules from United Airlines Customer Manifesto:

• Offer The Lowest Fare Available
• Notify Customers Of Known Delays
• Provide On-Time Baggage Delivery
• Handle Bumped Customers Fairly, Consistently

If Guiding Precepts are to be effective, everyone in an enterprise must know them and the precepts must be enforced-either positively to celebrate adherence or negatively to punish violations.  Failure to enforce Guiding Precepts will render them meaningless.

When developing and executing Strategy-regardless of context– the behavior leading to the realization of strategic objectives should be as important as getting there.  Does your enterprise have any Prime Directive or Rules of Engagement you would like to share?  Can you think of examples where Prime Directives and Rules of Engagement have been violated?

By Mike Cline, VP Operations, Venturist, Inc.

Most of us that are older than 15 probably know where the Balkans are, in some context or another.  The former Yugoslavia experienced a tragic war of disintegration and genocide in the 1990’s and many pundits and politicians in America and Europe thought we should stay out of the Balkans for any number of legitimate tactical and strategic reasons.  But that’s not the thrust of this post.  Stay Out of The Balkans is a Cardinal Rule of Strategy.  If you are in business, oversee an association or run a government agency, do you know where your Balkans are so that you can stay out of them?

“Stay Out of the Balkans” is an oft used mantra or cardinal rule of strategy and strategic planning.  It is useful vocabulary to help you identify those expensive energies devoted to things of less than strategic value.  The following history from World War II illustrates the Balkan’s concept well.

In October 1940, Italy, an ally of Germany invades Greece expecting a quick victory. The Greeks however were reinforced by the British. This allowed Greek forces to hold their own and later attack the Italians in Albania.  Germany, partly because Mussolini asked and partly because they were uncomfortable with the British in Greece, successfully occupied Greece in April 1941 kicking the British off the peninsula.  To do so and sustain their occupation of Greece, they needed to forcefully establish extensive supply lines in Yugoslavia.  This did not sit well with the Yugoslav citizenry who proceeded to wage guerrilla warfare against the German forces.  Within months of the occupation of Greece, Germany was forced to reinforce and deploy over 1,000,000 men in Yugoslavia to protect German supply lines.  They hold the Balkans until almost the end of the war.  However, there was a consequence.  Two months after the successful occupation of Greece, Germany embarked on one of the monumental invasions in modern history—the June 1941 invasion of the Soviet Union from the West—Operation Barbarossa.  However, as we all should know, that invasion was unsuccessful.  The Germans failed to take their first strategic objective of the campaign—Moscow.  Because of weather, some of the worst winter weather in decades, the Germans fell 19 miles short in December 1941. By January 1943 they were in full retreat and the rest they say is history.

So why is this bit of history important to your business?  Consider the following:

German planning to move and support 1,000,000 troop in the Balkans effectively delayed the planned invasion of the Soviet Union by several weeks.  It was a distraction that was aggravated by unforeseen winter weather.  One can never tell if the Germans would have taken Moscow had they started Operation Barbarossa in the spring instead of the summer of 1941.  But this much is clear, they would have been able to devote a far greater amount of planning and resources to operations against the Soviet Union had they not been pacifying the Balkans.

Where’s the lesson here?  Ask yourself these three questions?

1. Had the Germans completely and successfully pacified the Balkans (As they did) in 1941, does that ensure they win World War II?  NO 
2. Had the Germans been unsuccessful at or unwilling to pacify the Balkans, do they lose World War II? NO
3. If the Germans are unsuccessful with a monumental invasion of the Soviet Union, are they likely to lose World War II (As they did.)? YES

Balkans, metaphorically, are endeavors that are not strategically important, yet they consume command time and resources without any regard to their real value.  All organizations have them—Balkans.

Too many times, organizations are like the Germans and become mesmerized with projects or operations which in themselves are fine, but which have no true connection with the strategic aims of the organization.  Spend some time thinking about the projects your organization is working on that have little or no real connection to strategic objectives.  The first step in withdrawing from these projects is recognizing them for what they are–good in themselves perhaps and with people working very hard on them, but simply not relevant when measured against organization strategy and resources.

The true Strategic Thinker is quick to recognize the Balkans, acknowledge them and quickly refocus energy and resources on strategic objectives.

Stay out of the Balkans!  (And if you are already in them, get out!)

Are there Balkans in your organization? Why are they Balkans and what are you doing about them?  I want to hear from you.

By Mike Cline, VP Operations, Venturist, Inc.

Strategic failure is not uncommon in business, government, geo-politics and personal enterprises.  The latest example might be Earthlink’s exit from its WiFi scheme in Philadelphia. An important element of The Essence of Strategy is recognizing that Strategic Failure is common and having plans to deal with failure are imperative.  It appears that although Earthlink will lose some money on the Philadelphia scheme, their timely EXIT from it will benefit them strategically in the long run.  How many other strategic enterprises are failing, but refuse to EXIT? When the WHERE, WHAT, and HOW fail you, EXIT.

 By John A. Warden III, CEO, Venturist, Inc.

Recently, the city of Montgomery, Alabama began installing cameras at key intersections to photograph red light violators.  The objective, or Future Picture, relative to these cameras was recently stated in the local newspaper as:

The city has said repeatedly that the ultimate goal of the cameras is to highlight a problem in Montgomery and change driving habits in order to make the roads here safer. (Red Light Fines Start Today)

In Strategic Measures–Crucial for Success, I used the example of the fast food restaurant that considered speed of the drive-through to be a strategic measurement.  That didn’t work because drive-through speed is really a means (a tactic) to realize a strategic objective like profit.

Strategically measuring your strategy

Making the roads safer is certainly a laudable goal and is almost certainly strategically important.  The question then comes down to measurement.  The Montgomery program, which has just finished its “warning” period and is now moving on to real fines for transgressors, focused on the number of warning citations issued during the test period.   City officials said they thought the number would go down when people understood real money was at stake.  In other words, the city was using citations as their strategic measure of success.

At first glance, a decrease in citations (which we will assume is a good proxy for actual red light running violations) seems like it might be strategic.  But if it is, is it primary or secondary?  The stated strategic objective was to make roads safer.  If actual violations fell by half, could we assume a commensurate increase in safety? Maybe, maybe not.

If accidents remained the same or possibly even increased, we might conclude that the roads were not safer because of the cameras.  Could accidents happen at the same rate or increase if actual violations fell dramatically?  The answer is very definitely affirmative.  Let’s assume for simplicity that there are two major types of red light violations:

• 1) The red light violation where a driver continues a left turn or goes straight through as the last car in a line as the light is going red.
• 2) The red light violation where a driver is not part of a line but speeds up to beat the light or maybe even deliberately runs it.

In the first case, because the transiting line is solid and the last car is part of the line, drivers coming from another direction are not too likely to enter the intersection until it is clear even if the light is green.  However, in the second case, drivers coming from another direction have no visual cue and assume that a green light means it is safe to proceed.  Thus, it would be entirely possible to see a dramatic drop in violations without a corresponding increase in safety.  Maybe citation rates are not strategic-but we need to go further to find out.

There is also the possibility that red light cameras even increase the likelihood of some types of crashes while decreasing the likelihood of others.  And indeed, a fairly recent federal study: (Safety Evaluation of Red Light Cameras) suggests that is exactly what happens:  when red light cameras are installed, the incidence of 90 degree (t-bone) crashes goes down while the incidence of rear-enders goes up.  It is easy to see why this might be the case.  But even the number of accidents might not be a primary strategic measure.  A better measure in this case would probably be the total cost of accidents (injuries, property loss, and dollars).  The federal study actually concludes that there is a small decrease in overall costs of accidents as a result of red light cameras.  In other words, to some extent, red light cameras make roads (intersections) a bit safer.  In that regard, measuring the total cost of accidents instead of number of violations seems like a decent strategic measure if improvement in road safety is the goal.

So, if red light cameras provide a modest improvement in safety when measured by the somewhat reduced cost of accidents, does that mean they make sense strategically?  They might or they might not.

To further examine the intersection of strategy and strategic measurement, ask yourself this question: why is the red light there in the first place?  The answer is twofold:

• 1) Traffic lights improve traffic flow (Road Efficiency)
• 2) Traffic lights decrease the risk (cost) of going through an intersection. (Road Safety)

However, what if red light cameras actually impaired traffic flow because people were stopping too soon in order to avoid a camera-caught violation?  If this were the case, we might conclude that the real overall cost was actually higher with the cameras.  If we were to measure the value of people’s time, perhaps the passage times for emergency vehicles, and the increased consumption of fuel generated by longer trip times and more stop and go, both the road efficiency and road safety objectives might be impeded, rather than promoted by red light cameras.  Unfortunately, the federal study did not evaluate this aspect of the strategic question.

So if the strategic contribution of red light cameras can be questioned, then one might also question the overall strategic objective.  Remember this Future Picture:

The city has said repeatedly that the ultimate goal of the cameras is to highlight a problem in Montgomery and change driving habits in order to make the roads here safer.

What if the city’s real strategic objectives for road traffic read as follows?

In Montgomery, vehicles move through the city as quickly as possible at the lowest cost in time, fuel, and accidents.

Now, we might discover that intersections were poor solutions that should be avoided when feasible.  If there was no good alternative to an intersection, we might explore intersections where traffic was self controlling such as through roundabouts or four-way yield signs.  Indeed, there are a number of locales that have reduced or eliminated traffic lights and signs and have found accidents to decrease while efficiency has increased: (European Cities Do Away With Traffic Signs) In other words, the traffic light is not necessarily a strategic part of road safety or efficiency.

Sound strategic measurement depends on sound strategies-a sound Future Picture.  Are we sure that we are talking about ends rather than means?  Once we have decided that we really have a desirable end (something strategic) we need to decide what would measure realization of that end or progress toward it.  Much farther down the pike (mild pun intended) we can legitimately begin looking for means (tactics) to get there.  But even here, we must ensure our measurements are strategic and not measures of the tactics we are employing.  Additionally, we must ensure that our tactical actions and measurements do not produce unwanted or unintended strategic consequences.  In the case of red light cameras, we find that they reduce some kinds of accidents while increasing others.  We may accept the increase, but we owe it to ourselves to think it through-and maybe even conclude that being less aggressive with the violation point would help to mitigate the camera induced accidents.

Unfortunately, the real strategic measure for those installing red light cameras may have nothing whatsoever to do with improving safety or efficiency.  Instead, the real strategic measure may be revenue for the operating entity.  That in turn ought to raise the strategic question about the purpose and measurement of the operating entity.

The Intersection of Strategy and Measurement is not easy and really doing it well may make your head hurt.  Better, however, to experience a short-lived headache than to live with the potentially fatal consequences of strategically deficient measures.

By Mike Cline, VP Operations, Venturist, Inc.

Understanding and applying the fundamental rules or Cardinal Rules of strategy as John likes to call them is essential for success as a Strategic Thinker, Strategic Planner or Strategic Organization. One of those rules is:

Think like an Architect, Not like a Bricklayer

Bricklayers are nothing to be ashamed of. As a profession in the trades, bricklayers and stone masons are superb tacticians constructing beautiful facades, strong walls and other intricate brick and stone structures.  On the other hand, architects are designers, planners, visionaries.  The consummate architect considers all aspects of a new structure or development-feasibility, cost, functionality, engineering and structural integrity, social and cultural impact, innovative materials, environmental impacts and harmony and most importantly, the long-term desires of the stakeholders in the new structure.  Architects paint robust Future Pictures for their ideas.  In other words, Think like an Architect, Not like a Bricklayer is a metaphor for Thinking Strategically, not Tactically.  

Every enterprise has both architects and bricklayers. If the architects of the enterprise are truly Strategic Thinkers, then they will want everyone in the enterprise, including the bricklayers to Think like Architects-To Think Strategically.

Why?  Bricklaying, metaphorically, is a bottom’s up, tactical approach to any problem.  It’s not that good tactics aren’t important, but solving problems requires strategic thinking and an understanding of that strategy by the bricklayers in the organization.  When the bricklayer identifies a strategic problem with the plan because they understand the overall strategy, the bricklayers must be free to communicate with the architects about the error.  The architects should welcome and encourage this communication so that strategies are executed successfully.  Failure to do so will leave the bricklayers with little interest in the organization’s strategy.  They will just lay bricks as they know best without consideration of strategic success.

Think Like An Architect, Not Like A Bricklayer is a Cardinal Rule of Strategy.

By John A. Warden III, CEO, Venturist, Inc.

The Essence of Strategy, at the highest level, consists of asking yourself (and answering!) four one-word questions before embarking on any enterprise that entails risk or reward.

• Where? Where do I want to be in the future (and am I sure I will be happy with that future)? In other words, the Future Picture I want to achieve.
• What? What am I going to put my resources against?
• How? How am I going to apply my resources?
• Exit? How am I going to end and under circumstances am I going the end the whole enterprise or any part of it?

The order in which you ask yourself those questions is paramount. If you don’t think the WHERE through very clearly, the answers to the remaining questions will have little value.  The Strategic Thinker knows this and will use the Where, What, How and Exit framework to evaluate the strategy (or lack thereof) behind the myriad of tactical proposals that confront business, governments, politicians, societies and the military every day.  In many enterprises, the Where is a relatively simple question to answer, however, in complex enterprises such as nations, international organizations and global communities, the Where can be extremely difficult to formulate, decide and agree on.  Nevertheless, doing so for any enterprise is essential if the What, How and Exit elements of strategy are going to have any meaningful impact on the future.

To illustrate not only the difficulty in deciding the WHERE, but the imperative to do so before proposing tactical options (”solutions”), I want to tackle, at least superficially, the WHERE as it relates to Global Warming or Global Climate Change (the new term designed to accommodate global cooling?).  Think of Global Warming as a hypothesized change direction of climate, and most if not all, the tactics being proposed today are attempts to either slow down the rate of change or as some have said, stop it all altogether. Thus, it is useful to think about the strategic WHERE of an ideal global climate which we all would find desirable.  The rules for the WHERE or Future Pictures as I choose to label them are simple: A Future Picture is high resolution, clear, concise, compelling, measurable and desirable statement of the future state of any enterprise or entity.

So, without getting into the complexities and controversies associated with climate science and climate data, how could we describe the most desirable Global Climate at some point in the future?  It is a very difficult, but essential strategic question.

A Future Picture for the Global Climate

You must describe the Future Picture in high-resolution, measurable terms.  In other words, it wouldn’t help much to choose very low resolution statements like “a better world” or “less risk” or not “warmer.”  For the highest possible level of measurable resolution, one really needs to go beyond average global temperatures and carbon dioxide levels. Both, in themselves, are close to being abstractions (at least within the ranges currently under discussion).  So thinking more about the net effect that temperature and carbon dioxide level changes have on climate, will lead to a Future Picture with a higher, more measurable resolution.

There are many consequences commonly hypothesized for higher temperatures and greater carbon dioxide concentration.  I’ve chosen five to illustrate the difficultly, yet importance of describing a clear, concise, compelling, measurable and desirable WHERE for Global Climate Change.  Note that all of these are interlinked in some way, but to start at least, we will look at each individually.

• human mortality rates (health)
• agriculture production (enough to eat)
• useable land (places to live and produce)
• storms (threats to safety and production)
• biodiversity (number of species)

There are obviously others but these seem to be of primary concern.  Let’s now take each one and convert it into Future Picture (WHERE) statements and then explore climate possibilities that would help us get there.

Of course, we could take the Panglossian approach from Voltaire’s Candide that we are in the best of all possible worlds so we should not change anything-or that we should stop change.  The latter idea, however, might be self-contradictory in that the world has been in constant state of change so trying to freeze (pun intended) the change at the current state would suggest that we are not in the best of all possible worlds.

Is the Global Climate Better or Worse?

As a slight excursion before beginning the strategy analysis, let’s take a look at the state of the Global Climate as it might be today if humans had magically disappeared in 1890-a popular date from which to start showing a warming trend.  Of course, our first observation might be “who cares?” for if there were no humans, there would be no knowledge as we humans know it.  That aside, assuming standard claims for anthropogenic global warming, the earth might be: colder, warmer, or about the same.  If it was much colder, the climate might be in a new version of the Little Ice Age which might have led to extinction of species unable to adapt to a colder world.  The climate might even have already entered an overdue new period of glaciations. If the climate had stayed constant, conditions would be as they were in 1890.

the year was marked by a mild winter and hot, dry summer. In spite of a moderate cold wave in mid-January and a strong cold wave the end of February, the winter was unusually mild. Compared to official records, this would be the warmest winter on record, a pattern widespread over eastern half of the country. (NOAA Annual Weather Review: 1890’s)

If it had warmed by a degree or two, conditions might be very similar to today.  In all three cases, there would be less carbon dioxide by whatever amount mankind would have added, so plant growth would be reduced with concomitant strains on many species.  Very simply, there is no way to know whether “the earth” would be in better or worse shape than it really is today.

Now let’s put humans back into the equation.

Human Mortality Rates:  Do we desire higher or lower rates?  Mortality rates are reasonable indicators of overall health.  If we wanted lower rates than now, should we make it warmer or colder to achieve that effect?  Mortality rates are higher in the winter than in the summer in temperate zones so if we could make it warmer in the winter, we might reduce mortality. (Winter Mortality-Excess winter mortality falls)  Major plague outbreaks also seem to be historically correlated with drops in European temperatures.  There also seems to be a correlation between colder temperatures and social disturbances such as wars over the last 1000 years where their highest incidence from China to Europe was in cold periods when, among other things, crop yields were down and prices were up.[i] Now let’s put Human Mortality in a Future Picture form (always written in the present tense for the date chosen):

In 2050, human mortality rates are 25% lower than they were in 2000. Is a warmer or cooler global climate better to achieve this end state?  From the data above, we might suppose a warmer climate would help with this factor.

Agriculture Production:  Do we desire more food in the world or less?  If we wanted to increase available world per capita calories while maintaining or lowering costs, we might want higher temperate zone temperatures to increase growing seasons and make more land available for crops, or make existing land more productive.  For example, much of the Sahara Desert was lush and productive (Sahara Desert Was Once Lush and Populated) during the middle Holocene when it was warmer than now.

Likewise, higher carbon dioxide levels spur plant growth (Elevated carbon dioxide changes soil microbe mix below plants).  If we want to make it colder (perhaps to 1890 values), we might need to increase land in production and raise fertilizer usage to compensate for lower temperatures and carbon dioxide levels.

In 2050, sufficient food is available for everyone in the world to meet recommended daily nutrition needs at real costs 25% lower than 2008 levels.  Is a warmer or cooler global climate better to achieve this end state? We might need warmer temperatures and more carbon dioxide to achieve this-or significantly more land in production accompanied by higher fertilizer use.

Useable Land:  The use of this label allows us to deal with sea level change in a meaningful way as it probably doesn’t make too much difference what the sea level is outside of its impact on useable land.  Land is essentially unusable when it is underwater or permanently covered by ice.  It may become almost impossible to use economically if it is desert or tundra.  Do we want more or less land?  If we want land that is currently underwater, we need to lower temperatures as we know that sea levels were hundreds of feet lower at the end of the last period of glaciations.

If we want to put land into production that is currently inaccessible or uneconomical because of permafrost or because it is desert, we probably need to make it warmer.  Much of the Alps were ice-free during the period of the early Roman Empire^[ii] and many towns and fields in the Alps were lost to advancing glaciers in the late Middle Ages.  Agriculture in Greenland thrived in the Middle Ages but vanished as it became cooler.  Warming temperatures might inundate coastal areas but would presumably open large tracts in the higher latitudes for economical human habitation so the net effect might be positive.  In any event, barring draconian measures to reduce population growth or to reduce land per capita, more land will be needed or desired (at least by most individuals) in the future.

In 2050, there is 5% more useable land for human use and agricultural production than in 2008.  Is a warmer or cooler global climate better to achieve this end state? This is difficult as we might need cooler temperatures to reclaim land from the sea and warmer temperatures to reclaim lands from deserts and permafrost.

Storms:  Atlantic hurricanes may be a useful proxy for storms and the data is fairly good for the last 60 years.  Since 1945, there have been an average of about 7 hurricanes in the Atlantic each year with years as high as 15 and as low as 2.  There is also some evidence of a cycle.  How many annual hurricanes are desirable?  The first inclination might be to suggest none but hurricanes have beneficial aspects as well as destructive.  For example, hurricanes may clean up reefs and wetlands, mix water levels, bring up nutrients, and help species which might be overcome if conditions remain stagnant in the absence of hurricanes.  In other words, hurricanes, apart from there adverse impacts on humans, apparently play a critical role in global ecosystems.  (Even Hurricanes Have Silver Linings)  After deciding how many hurricanes we wanted, we would need to determine the climate conditions that promote or demote them.  We know from historical records that there were more inundations in England and the low countries from Atlantic storms (not hurricanes but we might assume a degree of correlation) during the Little Ice Age.  Some people believe that warmer sea temperatures produce more storms while others point out the fall in hurricane incidence in the last couple years despite a warmer ocean.

In 2050, there will be seven (7) +/-3 (the average for the last 60 years) hurricanes in the Atlantic (as a proxy for global storms). Is a warmer or cooler global climate better to achieve this end state? If storm incidence is associated with temperature, then the answer would be to try to maintain the temperature at its average for the last sixty years-but note that during that period, there were as many as 15 hurricanes in a season including many that were quite devastating.

Biodiversity:  According to some sources, 99% of all the species once on earth are now extinct largely as a result of at least five major extinction events.  Estimates of the total number of species today range from two (2) to 100 million which would mean that in the past, 200 million to 10 billion species existed.  Do we have too many now?  Would it be better for some if suddenly many disappeared?  How many is the right number?  Do we want more or less than we currently have?  Are there species we don’t want? Why?  If we want more we probably want a much warmer climate as total speciation and species survival seems to be correlated with periods in the earth’s history when it was far warmer such as what followed after the Cryogenian period and the carbon dioxide content of the atmosphere was far higher (20-30x current values).  If we want fewer species, we might want to see it much colder such as it was during the hypothesized snowball earth episode (or episodes).  Additionally, if we wanted to eliminate disease causing or destructive species, we might need it to be cooler or warmer depending on what species we wanted to eliminate.

In 2050, species extinction will not exceed the average background rate over the last 1,000 years.  Is a warmer or cooler global climate better to achieve this end state? Warmer is probably the right answer.

One’s point of view complicates

One could easily complicate this climate Future Picture exercise even more by looking at it from the viewpoint of people who live in different places around the world.  People in San Diego would probably like to see the temperatures remain about the same, but would appreciate more precipitation.  People in Seattle might prefer less precipitation with slightly warmer winter temperatures.  People in Yellowknife, Canada, would probably like to see winter temperatures much warmer than today’s.  People in Florida would like to see slightly cooler summer temperatures while those in Maine (who go to Florida in the winter) would appreciate warmer winters and summers.  People in Libya are well acclimated to very hot temperatures but would be delighted with more precipitation even if it became a little hotter.

Thinking Strategically about the Global Climate is Difficult

To Think Strategically about Global Climate Change is a difficult and complex task.  If the United States and the global community are going to expend billions of dollars of resources and risk the impacts of tactical solutions such as carbon offsets, carbon taxes, bio-fuels, etc., then there should be a clear, concise, compelling, measurable and desirable statement of the Future for the global climate. If the global community cannot make that statement with reasonable resolution, then we really don’t know what elements of the climate producing system should be altered, either by how much or in what direction.  These are tactical things one needs to think about very carefully before spending a lot of money in ways that may create other and more serious problems.

The Strategic Thinker knows that if you don’t know where you want to be in the future–a Future Picture, the tactics you employ may take you anywhere but where you really want to be! 

[ii] The Alps with little ice: evidence for eight Holocene phases of reduced glacier extent in the Central Swiss Alps. Anne Hormes,* Benjamin U. Muller and Christian Schluchter Quarta¨rgeologie, Geologisches Institut, Baltzerstrasse 1, CH-3012, Bern,Switzerland

By John A. Warden III, CEO, Venturist, Inc.

A strategic measure is one that tells you that you are either on a path to realization of your Future Picture or that you have arrived.  My recent Essence of Strategy post clarifies the concept of Future Pictures.  As I have said before, measurement is hard, but necessary work that is filled with pitfalls.  Among the most dangerous and most beguiling of these is substituting or confusing tactical for strategic measures.  In other words, whenever you are deciding your measures of success, make sure that you are measuring the right things–the strategic things related to your objectives–and haven’t confused them with the wrong, tactical measures so often relied upon.

Measuring success in the world of Fast Food

To illustrate the problem, I frequently ask my students and clients to imagine they were running a fast food restaurant with a drive-through window.  I ask them to think about that drive-through window and identify the most strategic objective associated with it.  The overwhelming majority answer that speed is the strategic element-how long it takes a car to get through the line.  I then ask if all the cars got through in a few seconds, would they be happy.  At this point, brows begin to wrinkle but the majority still answers affirmatively.  I then ask if they would be happy if the speed through the drive-through led to customers only having time to buy a soft drink.  As the discussion continues, people come quickly to realize that maybe speed is not strategic.  Speed might be the wrong measurement.

Then the issue arises of what is the right, strategic measurement.  Some will say quality, customer service, and repeat business.  Now although these are all important, you could conceivably have great success with all three while going bankrupt.  Finally, the group realizes that restaurant profit properly measured is a real strategic necessity and that something like speed through the drive-through is merely a means to an end.  You could even conceive of cases where you would like to slow the traffic down in order to provide customers with more time to buy higher margin products or to provide employees with enough time to deliver quality, accuracy, and good customer service.  At this point, everyone sees the necessity of identifying what is truly strategic (an end in itself) as opposed to the means to get there (the tactics).

The moral of the story:  carefully identify your real strategic objectives and then create measures that will tell you whether you are progressing or have arrived. Don’t start with the tactics!  In the case we just discussed, we know that measuring profit is complex but at least we know we are directly measuring something of strategic value.

By John A. Warden III, CEO, Venturist, Inc.

Oil and gasoline prices up, riots over food shortages, food costs up, and energy company profits strong.  

Politicians, activists and pundits alike are posing all sorts of new short-term and long-term energy policy solutions-federal gasoline tax holiday, drilling in ANWAR, windfall profit taxes on energy producers, more nuclear plants, higher fuel efficiency standards, repeal  of ethanol subsidies, alternate energy, increased drilling and exploration in other parts of the US, lifting of the ethanol content mandates, higher gasoline taxes, and lower speed national speed limits.  Although there may be interesting arguments for each of these policies, evaluating their efficacy is hamstrung by the lack of an Energy Strategy.

To stimulate some discussion, I want to apply the Essence of Strategy framework, more specifically, the WHERE element to the Energy issue.  In what terms could we describe a clear, compelling, and measurable Future Picture for Energy in the United States?  Again, for the sake of discussion, let’s try and describe the Future energy state in 2015, about seven years from now.  Energy is a complex subject with a lot of nuance and competing interests.  But complexity, by its very nature, is the challenge for Strategic Thinkers.  It is a difficult-but necessary–task to describe at the highest strategic level, a clear, compelling and measurable Future Picture for United States Energy that would be acceptable and desirable for a majority of Americans.  So here are a few rules for this exercise:

• 1. Write the statement in present tense as if it was a fact in 2015
• 2. Don’t include details on how we get there (those are tactics)
• 3. Don’t demonize any of the participants in the energy system-consumers, producers, advocates or policy makers
• 4. Consider the entire energy system and its contribution to the United States-in other words keep it strategic.

It is always good to have an example or strawman to work with, so here’s a quick idea of what I mean.

In 2015, the United States has access to energy resources sufficient to support good growth in the GDP, has resources sufficient that they are not an obstacle to an increase in real mean per capita income, has adequate energy for national defense emergencies, accesses energy without creating global political instability, and acquires its energy with due regard to cost-effective, economically viable environmental considerations. 

Whether you agree with the statement or not, the hallmark of a strategic future picture statement is its clarity, its conciseness, and its measurability.  The above statement meets those criteria.  Its desirability can always be and should be debated because the strategic future being described may or may not be desirable for any number of reasons.  However, if the majority of Americans thought the above or any other strategic future for Energy was desirable, the politicians, the producers, the consumers and the advocates would all have something to base their policy positions on-and something against which they could be measured.  Strategy-and a real Future Picture–before policy!