Your friend is entering a chess tournament and turns to you for advice.
Let’s assume your friend knows more than just the basics of chess and has already won a few games against others. What they’re looking for now is guidance about how to win on a bigger stage.
The first thing you might advise them is to be clear about how they intend to play each game. It’s rarely a winning strategy to make up moves as you go against stronger, better-prepared players.
This doesn’t mean planning all your moves in advance. For chess, like any competitive situation, is a democratic game where your opponent also gets a say. Your friend will need to adapt as they go.
Therefore, they’ll need a theory about how to play the game, and a way of anticipating how their opponents will. Done right, this will put them into position where their chances of winning improve dramatically.
When advising clients on being strategic, my approach is similar.
First, you need to see the board — the current situation. A Wardley Map shows how your organisation creates value today and how evolved each component in your value chain is.
Components are controllable assets — things you do and how you do them. These are your leverage points — the pieces you move around the board to deliver victory.
On the map below you can see a ‘solution’ being provided by the organisation on the left of the map in the ‘uncharted’ space. This means it’s a potentially high-value component — but also full of uncertainty.
The ‘key capability’ and ‘process’ being used are in the ‘transitional’ space in the middle. There’s more certainty about these components. But, as rivals are doing the same thing, they’re potentially less valuable.
The ‘platform’ on the right in the ‘industrialised’ space is something your entire market uses (e.g. cloud). There’s no advantage to be gained from doing this yourself. Simply consume it and pay as you go.
This map is now similar to the situation on a chessboard after the opening moves and counter moves. What you need to do next is anticipate how this situation will unfold in the middle-game and how to exploit that.
In the same way that a physical landscape is changed by overhead climate conditions that you have little control over, your business landscape is being changed by climate patterns, or ‘economic rules of the game’.
Once you have a map, you can apply these ‘economic rules’ to anticipate how your landscape is changing next. You may have no choice about change, but you do have a choice about how to respond to it.
The rules of the game cover the impact of economic forces on:
Components — how your controllable assets are changing
Financial — how the value of those components changes
Speed — where change will be slower or faster
Inertia — where you, or rivals, might get stuck resisting change
Competitors — how the actions of rivals influence the game
Prediction — what will happen next, or when it will happen.
Just as you'd show your friend entering a chess tournament a few openings and counter-openings, I show my clients the 'rules of the game’ — so they’re not blindsided by change.
The first economic rule is: supply and demand competition forces components to evolve. Demand increases the value of components, but it also attracts rivals. This increased supply forces down marginal value.
Competition forces you to keep incrementally innovating — making slightly-better versions, or copying others who get ahead of you — to keep your product in the game.
However, not everyone responds well to change. Some resist it — pointing out ‘this is the way we’ve always done things around here …. and if it’s not broken, it doesn’t need fixing’. This inertia is marked on the map.
Resistance to change creates internal friction and hinders the organisation’s ability to adapt to emerging opportunities and threats in time. Left unchecked, inertia can kill an organisation (another rule of the game).
Those with maps are able to anticipate how the landscape is changing, giving them a competitive advantage. The ‘componentisation effect’ (a rule of the game) shows what happens if an industrialised platform appears.
Platforms are efficient, reliable and cost effective. So others start to build new sources of value on top of them. You can now predict when ‘new sources of value’ will appear, even if you don’t know what they will be yet.
Many of these new innovations will fail. But some new, higher-order systems will find a market and evolve through supply and demand competition. This makes the older ways of working inefficient in comparison.
Creative destruction (another rule of the game) predicts that capital will flow to these new sources of value, away from the old. And those who remained stuck behind barriers of inertia get washed away.
Being strategic means accepting that, while you don’t have a choice about the rules of the game you’re playing, you do have a choice about how to play the game.
Playing to win starts with situational awareness — seeing the truth of the current situation on the board or in your landscape, anticipating change and learning how to exploit this to your advantage.
This is why I advise clients to start with a Wardley Map — to see your current landscape clearly: the position on the board. Then apply ‘middle-game’ theory to anticipate change and discover your next best moves.
In the next post, I'll show you how to turn situational awareness into winning moves — the equivalent of checkmating your opponent.
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