Strategy Of a Nested Doll

Strategic Thinking and System Thinking

Picture by ruigsantos on iStock

Since 2007, when Steve Jobs presented the first iPhone, customers have been buying less and less chewing gum – year by year.

If you think it was merely a coincidence, you're wrong. 

According to some findings, people used to buy chewing gum while standing in supermarket checkout lines out of boredom (in supermarkets, it is usually displayed in the checkout area). 

But now they don't get bored – they have smartphones to distract themselves. They don't watch at the displays, they watch at the screens. 

What is the connection between Taylor Swift's popularity and the sales of plastics compounders? According to many different sources, 'swifties,' as Swift's fans call themselves, wear adult diapers to her concerts so they don't have to take a bathroom break.

And plastics compounders are used in diaper manufacturing.

The world is a system, and its parts are interconnected and influence each other. And we need to take this into account when developing a business strategy. 

The world as a nested doll

Imagine a small local café in a residential area with a handful of tables. It is a small private business, and yet it is part of many complex systems. 

– A hot or cold summer can change the global price of coffee beans, and this may affect the cafe's revenue

– A new game console can become extremely popular, and it can decrease the number of teenagers hanging around in the café.

– Some locals can boycott the café because they may believe that the owner violates the rights of a particular minority because such boycotts have become a global trend. 

So, any business is a part of a system – the market.

The market is part of an industry.

And the industry is part of some other systems, from country and legislation to supply chains and global and local cultural environments. 

So, a company is a center of a nested doll. 

And these multiple systems are in intricate relationships with each other.

Notice the changes

Traditional strategic toolboxes don't offer how to analyze all these complex relations and foresee their future development. 

Plastics compounders suppliers couldn't envision Swift's songs affecting their sales. 

But thinking about systems embedded in each other is a very good cognitive exercise. 

When I was a CEO, we played a game with my team. For a month, they gathered information about all the strange, interesting, and unusual changes they encountered – from various spheres and domains of life. And then, we would come together and try to imagine how they could impact our industry. This led to very interesting ideas and insights.

Strategic thinking is the ability to look at your business as a part of a set of systems.