| How strategists really think. Tapping the power of analogy. | |
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MedLine Citation:
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PMID: 15807039 Owner: NLM Status: MEDLINE |
Abstract/OtherAbstract:
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Leaders tend to be so immersed in the specifics of strategy that they rarely stop to think how much of their reasoning is done by analogy. As a result, they miss useful insights that psychologists and other scientists have generated about analogies' pitfalls. Managers who pay attention to their own analogical thinking will make better strategic decisions and fewer mistakes. Charles Lazarus was inspired by the supermarket when he founded Toys R Us; Intel promoted its low-end chips to avoid becoming like U.S. Steel; and Circuit City created CarMax because it saw the used-car market as analogous to the consumer-electronics market. Each example displays the core elements of analogical reasoning: a novel problem or a new opportunity, a specific prior context that managers deem to be similar in its essentials, and a solution that managers can transfer from its original setting to the new one. Analogical reasoning is a powerful tool for sparking breakthrough ideas. But dangers arise when analogies are built on surface similarities (headlong diversification based on loose analogies played a role in Enron's collapse, for instance). Psychologists have discovered that it's all too easy to overlook the superficiality of analogies. The situation is further complicated by people's tendency to hang on to beliefs even after contrary evidence comes along (a phenomenon known as anchoring) and their tendency to seek only the data that confirm their beliefs (an effect known as the confirmation bias). Four straightforward steps can improve a management team's odds of using an analogy well: Recognize the analogy and identify its purpose; thoroughly understand its source; determine whether the resemblance is more than superficial; and decide whether the original strategy, properly translated, will work in the target industry. |
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Authors:
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Giovanni Gavetti; Jan W Rivkin |
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Publication Detail:
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Type: Journal Article |
Journal Detail:
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Title: Harvard business review Volume: 83 ISSN: 0017-8012 ISO Abbreviation: Harv Bus Rev Publication Date: 2005 Apr |
Date Detail:
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Created Date: 2005-04-05 Completed Date: 2005-05-12 Revised Date: - |
Medline Journal Info:
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Nlm Unique ID: 9875796 Medline TA: Harv Bus Rev Country: United States |
Other Details:
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Languages: eng Pagination: 54-63, 132 Citation Subset: H |
Affiliation:
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Strategy Unit, Harvard Business School, Boston, USA. ggavetti@hbs.edu |
Export Citation:
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| MeSH Terms | |
Descriptor/Qualifier:
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Administrative Personnel
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psychology* Decision Making, Organizational* Humans Leadership* Logic Planning Techniques* Problem Solving United States |
From MEDLINE®/PubMed®, a database of the U.S. National Library of Medicine
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