Tapping the Power of Analogy
www.hbr.org
Much of the time, executives use analogies to make strategic choices. The best strategists know both the power and peril of such comparisons.
How Strategists Really Think
Tapping the Power of Analogy by Giovanni Gavetti and Jan W. Rivkin
Reprint R0504C
Much of the time, executives use analogies to make strategic choices. The best strategists know both the power and peril of such comparisons.
How Strategists Really Think
Tapping the Power of Analogy by Giovanni Gavetti and Jan W. Rivkin
COPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
Strategy is about choice. The heart of a company’s strategy is what it chooses to do and not do. The quality of the thinking that goes into such choices is a key driver of the quality and success of a company’s strategy. Most of the time, leaders are so immersed in the specifics of strategy—the ideas, the numbers, the plans—that they don’t step back and examine how they think about strategic choices. But executives can gain a great deal from understanding their own reasoning processes. In particular, reasoning by analogy plays a role in strategic decision making that is large but largely overlooked. Faced with an unfamiliar problem or opportunity, senior managers often think back to some similar situation they have seen or heard about, draw lessons from it, and apply those lessons to the current situation. Yet managers rarely realize that they’re reasoning by analogy. As a result, they are unable to make use of insights that psychologists, cognitive scientists, and political scientists have generated about the power and the pitfalls of analogy. Managers who pay attention
to their own analogical thinking will make better strategic decisions and fewer mistakes.
When Analogies Are Powerful
We’ve explained the notion of analogical reasoning to executives responsible for strategy in a variety of industries, and virtually every one of them, after reflecting,
Much of the time, executives use analogies to make strategic choices. The best strategists know both the power and peril of such comparisons.
How Strategists Really Think
Tapping the Power of Analogy by Giovanni Gavetti and Jan W. Rivkin
Reprint R0504C
Much of the time, executives use analogies to make strategic choices. The best strategists know both the power and peril of such comparisons.
How Strategists Really Think
Tapping the Power of Analogy by Giovanni Gavetti and Jan W. Rivkin
COPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
Strategy is about choice. The heart of a company’s strategy is what it chooses to do and not do. The quality of the thinking that goes into such choices is a key driver of the quality and success of a company’s strategy. Most of the time, leaders are so immersed in the specifics of strategy—the ideas, the numbers, the plans—that they don’t step back and examine how they think about strategic choices. But executives can gain a great deal from understanding their own reasoning processes. In particular, reasoning by analogy plays a role in strategic decision making that is large but largely overlooked. Faced with an unfamiliar problem or opportunity, senior managers often think back to some similar situation they have seen or heard about, draw lessons from it, and apply those lessons to the current situation. Yet managers rarely realize that they’re reasoning by analogy. As a result, they are unable to make use of insights that psychologists, cognitive scientists, and political scientists have generated about the power and the pitfalls of analogy. Managers who pay attention
to their own analogical thinking will make better strategic decisions and fewer mistakes.
When Analogies Are Powerful
We’ve explained the notion of analogical reasoning to executives responsible for strategy in a variety of industries, and virtually every one of them, after reflecting,