What is the difference between business strategy and a business model?

TLDR – The business model is a part of the toolkit used in business strategy.

Is a business model the same thing as a business strategy? Yes and no.

Business models are how you make money and how the business works. Not just “I’m going to open a coffee shop that sells to such and such demographics.” A Business Model is basically developing a Cost curve financial model based on everything you want to do, and comparing those costs to – can you make enough money to cover those costs? So using the coffee shop example, you figure out your fixed costs like rent and salary labor (how many people and what do they do?), insurance, licenses, financing, semi-variable costs like coffee machines, coffee filters, utilities and hourly labor, and variable costs like cups, sugar, flavoring, coffee, etc.

First, you have to throw out the indoor waterfall idea because you can’t afford it. Then you add all the rest up, and wow, it costs like $10,000 a month to run your coffee shop before you ever sell a cup of coffee. So you figure out the fancy flavored sugar & cream filled coffee that is popular sells about $4-$8 a cup. And given your pricing curve your coffee costs roughly a $1 a cup in costs, so given variable costs – you have to sell about 4,000 cups of coffee a month, or 1,000 cups of coffee a week, or roughly 150 cups of coffee a day with a staff of you and 3 part time people working 30 hour weeks just to break even. That model also assumes you are living in your parent’s basement. To really make a profit you want to sell close to 200 – 300 cups of coffee a day. Then you gotta figure out how to sell 300 cups of Coffee a day, how to compete with other coffee shops, etc.

Now semantically speaking – The above is a financial model as much as a business model. The complete business model from a business school perspective involves how you sell coffee, why you sell coffee, target customers, business culture, how you organize your operations. All coffee shops share effectively the same basic financial model, but may have significant differences in “business model” – different culture, branding, operations, logistics, pricing, marketing, advertising, financial controls, training, HR policies, recruiting and hiring practices. Some sell merchandise, some are bookstores, some have poetry reading or live music, some serve food, some are part of a larger business, or at your library.

Many people will argue that the cost curve has little to do with the parts of the business model that they focus on. I will tell you, without a cost curve and financial business model, it’s really hard to get a business loan or investment money. You need the financial half of the business model (which is built on organization, operations, pricing to estimate cost and revenue), the other half of the business model is how you expect to sell.

The cost curve is a financial summary of the business model is the necessary part that tells you the numbers that constrain the operational, cultural, business development, marketing advertising, etc. It gives you your realistic budget and resource limits.

At its base the Business Model is understanding what business you are in, and how you will make money. Doing that without a cost curve is certainly possible, but risky. The literature on Business Models gets really wonky and philosophical, with hundreds of definitions that can, will, and do include many parts of business strategy.

So what is business strategy?

That’s a larger subject, with even more definitions, hundreds of books and opinions on the subject. At the national meeting of the Association for Strategic Planning, I can ask a dozen strategy professionals for the definition of strategy, and get 30 or 40 different answers in a single lunch.

At the time of the writing (2017) Wikipedia does not have an entry for business strategy – it says see strategic management, strategic planning, etc..

Business strategy is knowing how to execute and adapt your business model and financial realities in a constantly changing world. Business strategy is how you grow and change your business. Business strategy is what do you do when your business model isn’t working? Business strategy is adding additional business models that work in parallel with your core business model.

Maybe your Coffee shop adds a catering service or starts selling used books. Maybe you have lots of people hanging out with personal electronics so you add charging stations. Maybe you have too many people hanging out so you remove the charging stations. The best trick I ever saw for coffee shops was to give away free coffee on opening day, and pay people to show up and make it look busy the first week – tricks everyone into going to the really popular coffee shop. But that only works if you are in a high traffic area where people will notice. Every tactic and strategy has its time and place.

Business strategy is a cycle of gathering information about your business and how it interacts in the bigger picture and the future; making plans to adapt your business model and survive in the future, and actually make those changes to your business model happen. And making additional changes and adaptation that you were not expecting when you made the plan. You keep going through that cycle in one way or another, formal or informal, until you retire or go out of business.

Business strategy is the changes you make today to give to a better tomorrow.

Business strategy is a fancy way of saying that your business will either evolve or die.

Your changing business model is simply a tool that is a part of your evolving business strategy.

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Why is it that governments (or large organizations) rarely do anything intelligent?

This is a strategic exercise in understanding how large groups of people operate.

TLDR: You try getting a large group of people to agree on anything while trying to figure out how to pay for it while keeping them all out of trouble. If you can get three strangers to agree on Pizza toppings I’ll be impressed.

Basically, the government is spending most of its time simply trying to prevent things from getting worse. Ask any parent and they can explain in detail.

One important point is trying being a tightrope walker – you have to really stay balanced in every decision or you risk going too far to the left or right and fall.

How to explain the absurd complexity of governing a country?

  • First, you have to read Plato’s Republic – 3 failing of Humans:
    • Humans are greedy
    • Humans make mistakes (are incompetent)
    • Humans abuse power

This is why most modern governments are built on a system of checks and balances. You have to spread out the power, greed, and mistakes in a balanced fashion that allows the greed of one group to balance out the abuse of power of another group that corrects the mistakes of a third group that is also limiting the greed of the first group.

You have to build the systems of government to be stable and effective in light of the fact that the majority of the people running the government are human – the will experience greed, make mistakes, and abuse their power.

Then keep in mind that the human citizens are greedy, incompetent, and abuse power. Regardless of the form of government, you still have a bunch of greedy, incompetent, power abusers trying to maintain power, maintain order, and keep the whole thing going while trying to deal with millions of greedy, incompetent, and power abusing citizens.

That’s basically why there are over a dozen civil wars going on at any given time.

If you live in a place with no civil war, no soldiers on the streets, and no obvious corruption, where you can trust the law enforcement and leave your home without fearing for your safety – you are in the minority of the human population.

Creating law and order is crazy hard, and requires basically everybody to cooperate at some level. Which is why the brute force/iron fist approach is so popular – it’s simple and crudely effective, very easy to understand.

But if you want things like freedom, liberty, independence, not having people with control issues telling you how to live your life –

  • Have you ever gotten 3 people to agree on Pizza Toppings? How about 3 million, or 3o million, or 300 million?
  • Did you understand your high school chemistry teacher? Do you understand that everything you forgot from school is actually relevant to how the world works and needs to be understood to effectively run an industrialized 21st century nation?
  • Why do intelligent people hide their intelligence?
  • Would you rather be a billionaire with vacations and privacy, or a Politician with zero privacy and spend most of your time asking people for money or apologizing for things you can’t control.
  • Politicians use the term “true facts” because they deal with statistics, lawyers, and biased presentation of information. They cannot tell the difference between scientific fact and well-argued lies. Nobody can be an expert at everything.
  • Based on GDP – the United States controls 25% of the world’s wealth, with only 4% of if population.  We are the richest nation on earth by most measurements and the US still have problems with poverty and hunger.
    • There is more demand than supply. More people than resources. Even in the magical 21st century where there is enough food for everyone, we can’t figure out how to feed the hungry, and we throw away lots of food, much after it spoils.
    • How do you deal with the simple fact that there is a scarcity of resources? More people than stuff to take care of them.
    • How do you decide who gets wealth and who doesn’t when there simply is not enough to go around?
  • Then keep in mind at any given time a portion of the population is actively engaged in criminal activity, some out of aggression, some out of desperate need – how do you deal with that? More resources you don’t have spent on people you don’t have the resources to properly help, but you have to protect the common good.

Think about how many mistakes the average person makes in a given day.

Do you get 8 hours of sleep, drink 8 glasses of water a day, eat 7 servings of fruits and vegetables, eat meat, whole grains every day? Do you never eat sugar, preservatives, or any unhealthy foods? Can you drink only one drink of alcohol per day? Do you ever speed? Are you ever late for anything? Do you procrastinate? Do you have more things to do than time to do it? Do you watch TV instead of reading a book or doing chores? Do you get exercise every day? Do you pay all your bills on time? Do you have credit card debt spent on things sitting rarely used in your home or garage? When was the last time you were tired / hungry / in pain and said something stupid that turned into an argument? When was the last time you brushed your teeth? Flossed? When was the last time you had 2 bills and only enough money to pay for one of them?

At it most basic form – a government is a delegation of responsibility to a small portion of a larger group of people trusted to maintain stability and the common good. If you consider that everyone is making a few hundred mistakes per day, and add that up for any number of people in a group; honestly I’m surprised that we do as well as we do.

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Who would win between Grand Admiral Thrawn with 6 Imperial Star Destroyers vs Grand Moff Tarkin with the first Death Star?

This is a guilty pleasure.  Yes, I have read far too many books, and a star wars fan, and spend too much time on Quora.

Honestly, this is just an illustrative exercise in assessment and investigation scenarios and options.  At first Glance, it would seem that anything vs the Death Star is no contest.

But a little bit of Sun Tzu, run the numbers, look at lines of sight, assess the leadership and how they do what they do.

It’s mostly Sun Tzu Chapter 1.

Enjoy.  The first draft was on Quora a while back:

Who would win between Grand Admiral Thrawn with 6 Imperial Star Destroyers vs Grand Moff Tarkin with the first Death Star?

First, this is Spot on – Matthew Jiang’s answer to Who would win between Grand Admiral Thrawn with 6 Imperial Star Destroyers vs Grand Moff Tarkin with the first Death Star?

TLDR: The Empire’s best military strategist (Thrawn) can beat the Empire’s best military Governor (Tarkin). But he will have to use every dirty trick and unconventional tactic and tool at his disposal, because a stand-up fight against the Death Star is suicide.

You could go into a pretty rigorous debate between legends and the Disney canon.

But the net assessment is pretty simple:

Grand Moff Tarkin:

The Emperor’s Governor of Governor’s. The highest ranking Political leader under the Emperor.

Reasonable tactician and strategist as shown in the movies and clone war TV series.

But Tarkin was put into his position of power because he was ruthlessly loyal to Palpatine, believed in the Empire, and was able to control Anakin / Vader. Tarkin is reliable, loyal, has no love for the Jedi, and gets results.

But Even in the Clone Wars series, it was established that Tarkin was not as good at tactics or strategy as Anakin. Tarkin was however very good at politics, deceit, and manipulation – which is why he was a senior leader in Palpatine’s Empire

Grand Admiral Thrawn:

In Star Wars Legends is remarkably smart, resourceful, and creative – takes on and beats Jedi. But is older and more experienced than he is in Disney Rebels.

In Disney Rebels show (recent Disney Canon), Thrawn is younger and less experienced, but still is characterized as a military genius, superior soldier, and hand to hand combatant, and is called in as a “ringer” helping Tarkin, to accomplish feats that Tarkin and his admirals are unable to do themselves. The Emperor sent Thrawn to end the rebellion that Tarkin couldn’t handle without help.

While Tarkin was the Emperor’s Grand Moff, The Emperor Made Thrawn his Grand Admiral – the Admiral of Admirals.

Thrawn is like a Hermann Balck – he doesn’t lose battles, and easily defeats larger forces than his own.

Death Star:

Planet Smashing Super Laser

15,000 Turbolasers, 768 Tractor Beams, 2500 Laser Cannons, 2500 Ion Cannons…

Plus hundreds of Fighters, hundreds of small support ships, and 1–2 million people at any given time. But only 26,000 Storm Troopers.

Death Star can only fire like one full power shot a day, maybe a few lower power shots.

For the sake of argument, let’s say the Death Star can fire 6 shots in a matter of minutes capable of destroying all 6 of Thrawn’s Star Destroyers. Makes it more interesting.

Star Destroyers:

You could argue ISD 1 vs ISD 2’s; Disney Cannon vs Legends.

But Basically, the Star Destroyers have a hundred plus weapons, 72 fighters each, just shy of 50,000 people including 9,000 plus Stormtroopers.

Technically 6 X 9,000 = 54,000 – Thrawn has twice the number of Storm Troopers with his 6 Star Destroyers.

By Comparison, the Star Destroyers are small, fast, and nimble.

The Battle –

The Top Political Leader in the Death Star against the Top Admiral with 6-star Destroyers?

1 – If the Death Star only gets one shot and then has to recharge, and Thrawn can find Erso’s weakness – Matthew Jiang’s answer to Who would win between Grand Admiral Thrawn with 6 Imperial Star Destroyers vs Grand Moff Tarkin with the first Death Star?

2 – Let’s go hard for Thrawn:

Assume:

  • Death Star is able to fire 6 shots quickly to destroy Star Destroyers in range, and will not miss (Honestly the Star Destroyers should get a dodge).
  • Thrawn does not find Erso’s weakness.

What is a Grand Admiral to do to stop the Mad Moff with a Death Star?

Don’t get in Range (Duh). The Star Destroyers have faster Hyperdrives, so you simply may avoid the Death Star indefinitely.

  • Sneak some nuclear warheads on to the Death Star and cripple it’s power supplies. Then it’s an easy fight if the Death Star can’t power its shields or weapons.
  • Have human spies sabotage the power supply, then take it by force.
  • Have droid spies sabotage the power supply, then take it by force.
  • Have Slicers (Hackers) sabotage the power supply, life support, weapons, etc, and take it by force.
  • Have Saboteurs hyperspace jump the Death Star into a planet, moon, or star.
  • Have Assassins kill Grand Moff Tarkin.

But that’s boring… What? HOW? The Death Star has over a MILLION people on it at any given time. A million people consume plenty of food, clothing, etc. There has to be constant cargo traffic to sustain a city of a million people living in the Death Star, and that gives Thrawn an opening to use asymmetrical warfare.

Conventional Assault –

The Death Star is HUGE. Given its size and shape, it’s pretty reasonable to assume that only 1/2 of its weapons could be brought to bear at any given angle. And the closer you get, the curve of the sphere works against the defenders.

Given the height of towers, the curvature of the surface, once you are on the surface, assuming the weapons are essentially evenly distributed across the Death Star… When you are on the surface at any given time probably only a few hundred of those towers can actually see and engage you.

(Math – with 80 km Radius – the Surface area is about 80,000 square km – 20,000 weapons, roughly one weapon per 4 sq km, or roughly a weapon every kilometer. Depending on what you guess for tower height, for something the size of a Star Destroyer VERY close to the surface, roughly every tower for 25 km will have a line of sight to engage. A 25 km circle on the surface of the death star will have around 400 towers in it, firepower roughly comparable to 2 star destroyers.

So on the surface, at “point blank range” a force of Star Destroyers is roughly equal in firepower and has advantages in mobility and shields in that position.

Granted that’s still a problem. But if I jump a couple Star Destroyers to within a mile of the surface, and quickly land – now I have an exploitable advantage, and I’m below the main shields and can easily engage the towers while using Star Destroyers like big tanks hovering across the surface of the Death Star.

Thrawn is known for highly precise hyperspace jumps and micro-jumps.

So Thrawn would basically use scouts and spies to aim a Hyperspace jump behind the death star where the big gun is worthless, land his ships on the Surface of the Death Star, and essentially start an invasion deploying ground troops and mechanized units targeting power systems and life support where a minimum of Death Star Weapons may be brought to bear, and Thrawn can take advantage of having twice the infantry, and much more mobile heavy cannons.

Unconventional / Mixed Strategies – After Reading too many Star Wars Legends books

Given the size and maneuverability of the Death Star, I’d wait for it to be in a predictable spot, and use mile-long Star Destroyers to pull in the largest asteroids or bombs I could come up with – delivering them with precise close-range hyperspace jumps that the Death Star cannot dodge. How do you miss a target 160 kilometers wide?

Honestly given the resources of 6 Star Destroyers, I would seriously raid some systems and gather additional resources for a few weeks to set up a battle I can win. One Star Destroyer can control a planet. With 6? I can hold multiple Star Systems at Gunpoint and take whatever I want.

Get ahold of as many explosives, ships, loaded fuel tankers, asteroids, and nuclear weapons that I can find.

And hire as many pirates and mercenaries as I can find. Maybe even make a deal with the Rebel Alliance if it suits my needs. Or simply empty the nearest imperial prisons and arm the criminals as irregulars against the Death Star.

While gathering planet killing asteroids, have spies, saboteurs, hackers, droids, and assassins independently infiltrate the Death Star to use software hacks and physical sabotage to disable, disrupt, and / or destroy the Death Star’s command and control systems, life support, power supply, engines, propulsion, food supply, water supply. They can use poison, biological weapons, chemical weapons, anything they can sneak on board. Spread any available plague.

Imagine those little mouse sounding black car droids spreading plague in all the cafeterias….

And see if some assassins get lucky and manage to kill Tarkin.

Based on schedule, signals, scouts, recon – we can determine when the Death Star is having problems from sabotage and is a sitting duck:

  • Only Jump to the Backside where the Super Weapon can’t get you.
  • Ram it with as many fuel tankers and cargo ships filled with explosives that you can find – hopefully hitting the Death Star basically while still in hyperspace.
  • Ram it with as many Asteroids and Comets that you can tow through hyperspace. Or improvise hyperspace engines onto asteroids and hyperspace jump them into the Death Star.
  • Basically bombard the back side of the Death Star as hard as you can with as much as you can find – the point being to soften up its defenses.

Then when you run out of things to Ram the death star with –

  • Give immediate special forces support to sabotage efforts to bring down the remaining power for shields and weapons. (Just like Ezra and Sabine did to Thrawn’s Interdictor in SW Rebels)..
    • Also, have teams deploying additional biological and chemical weapons into the air and water systems of the Death Star.
  • As soon as you get enough of an opening of confusion, surface damage, diminished weapons and shielding-
    • Precise jump super close to the Death Star with half your Star Destroyers (3), keeping 3 in reserve. Also, bring in any other additional ships available, and have them directly support the assault.
      • Have the irregular force of Pirates, Mercs, and Rebels assault / invade the Death Star under cover of Star Destroyers.
      • Also in Thrawn style see if there are any number of dangerous predators that you can find, quickly enhanced with some cybernetics, and release on a few hundred thousand unsuspecting and unarmed Death Star workers away from the main fighting. Even a few packs of hungry wolves dropped by droid shuttles roaming the halls could do well to add to the chaos.
    • Land Assault force in best available position in the Death Star, where the surface defenses are the weakest after the bombardment.
    • Set up Fighter cover for the invasion force
  • Have one Star Destroyer modified as a massive Space Tug, or a Ship or giant bundle of Engines modified to essentially bolt onto the Death Star, and push it using the hyperspace engines into the nearest planet/moon.
  • If you can get tractor beams large enough that you can mount them on a nearby planet or moon or comet or large asteroid, and use the tractor beam to pull the Death Star and the big Rock into each other.

The goal here being to basically make the Death Star a no man’s land that everyone on board wants to leave. Use a Golden Bridge Strategy – Attack one side with punishing force, sabotage every life sustaining system, and make the rats desert the sinking ship by giving them a safe place to escape. Let them use all those shuttles, support craft, and escape pods to leave. More confusion and rational choice disrupting chain of command.

If your buddy got Ebola yesterday, you are under emergency lighting because the power is out, you felt a bunch of earthquakes, all the Stormtroopers are being shuttled to the far side of the DS station, and there are reports of predatory animals and droids attacking people. Would you just hang tight and follow orders? Or would you grab your friends, find the nearest shuttle, and get out of there?

Well, you’d probably hang tight until you find out the Death Star lost engine power and is now on a collision course with the Planet it was orbiting for resupply, and the bulkheads are on lockdown because primary life support is out, and you have been ordered to use an oxygen mask. And oh yeah, the functioning air systems are filling up with smoke and nerve gas. Then you may be willing to risk disobeying orders and abandoning ship.

And while all that confusion and battle is taking place, either overload the main reactor to make the damn thing explode, crash it into the nearest rock bigger than it, or hit it with enough asteroids and comets that it breaks apart, or set off enough nukes inside it to make it a radioactive slag.

All while keeping 3 Star Destroyers in reserve, as a quick reaction force, because odds are Tarkin can pull some tricks and call in some favors, and he’ll have help within hours.

Hopefully, by the time Tarkin’s reinforcements arrive, they will see a powerless, burning, disease-filled hulk swarming with ships; crashing into the nearest planet while Rebel, Pirate, and Tarkin loyalist infantry try to figure out how to get off the cursed thing before it kills them.

Thrawn may have to sacrifice a few Star Destroyers to get the job done and push the Death Star to its death (Moving slowly unless they have some Star Trek or Star Gate Engineers to rig the hyperdrives to do something Sci-Fi to speed it up). Worth the price.

Do it right, Thrawn could have the Death Star and the Rebel Alliance destroy each other while he makes the killing blow to each.

“No, you see the exhaust port is too difficult for fighters to hit. We’ll soften up the Death Star with some sabotage and kamikaze attacks, then you need to land an army on the surface, fight your way to Erso’s reactor weakness, and plant demolition charges manually.  Send your best troops, I’ll provide you with maps and schematics, and 50,000 Storm Troopers. We’ll cover you with the fleet.”

To quote Patton – “Fixed fortifications are a testament to the stupidity of man”

Hope you had as much fun as I did.

-T

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Can you be strategist and tactician at the same time?

TLDR : YES

Strategy – Longer Term – Bigger picture

Tactics – Shorter Term, immediate, smaller picture

But it’s a yin-yang sort of thing.

Can you win today while considering how that impacts tomorrow?

Can you consider pig picture, long-term consequences and positioning while getting through immediate problems and challenges?

That is really called operation art in military circles. Good combat officers have to do that. Balance the urgent with the important.

Good Example – Invasion of Iraq in 2002.

That Strategic Objective was taking Baghdad in 72 hours. Why? Because that’s how long you can fight without sleep. That was the time limit before they had to take a break.

The Army showed strategic brilliance. Every time an Army unit was attacked, they called in air support to handle it and kept moving to Bagdad.

Many Marine units showed Tactical brilliance – Every time they were attacked, they destroyed the enemy. But they got bogged down and many were late to Bagdad.

So one can mess up the other. It’s a matter of priorities.

Balancing strategic priorities vs tactical urgency is always difficult. But it’s just a skill like any other.

Hope that Helps

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Why Mars? Elon Musk’s Strategy

Why Mars?  What is Elon Musk’s Strategy?

observatory

Hey guys.  I actually went over this a few times with colleagues over the  summer, and started writing this right before Elon Musk started his Mars PR campaign in September.  Just missed the chance to appear prophetic.

As it is this is still a fun topic.

So Ted,  Why Mars?

A Problem 

First we need to go back about 20 years.  Hang with me a sec – I’ll keep it to the point.  In the 20th century – there was basically 2 ways to get anything over a few hundred pounds into space.  Very big rockets or the space shuttle.  Rockets were a little less expensive than the space shuttle, and didn’t need astronauts, but didn’t carry as much weight.  

To get an idea of what rockets were like before Mr. Musk got into the business, there were only really 3 heavy lift options by 2000. The Atlas rocket was first built in 1957 by Martin (to carry nuclear bombs), The Delta rocket first as the Thor ICBM in 1957 by Douglas (also to carry nuclear bombs), and the Space Shuttle in 1981 by Rockwell.  It was all government money, cost didn’t matter.  The rockets were big, expensive, single use disposable products.  By the late 1990’s Martin Marietta was owned by Lockheed Martin, and Boeing owned McDonnell Douglas and Rockwell.  Notice all the
names – what was 7 aerospace companies became 2.  Rockets imgreswere not the best business to be in.  By 2006 Boeing and Lockheed combined the Atlas and Delta Programs into a single company called United Launch Alliance.  

And the whole time it cost you a few hundred million dollars for what amounted to a souped up 1950’s rocket sometimes using Russian made engines, to put something into space in the United States.  There are some other rockets out there, but we are keeping this simple, and focusing on what NASA uses.

An Opportunity

So in 2001, Elon Musk, Tech entrepreneur with degrees and physics and economics was getting a payday from the companies he had built in the 90’s, namely PayPal, and was pretty well connected.

If you are a well respected entrepreneur with access to investors, over a hundred million dollars of your own money, and happen to be educated as a physicist, you get to chase your dreams and dream big.

Elon Musk speaks in terms of existential risk.  That is, what is threatening the existence of the human race, and what can you do about it?  Also keep in mind this was not long after all those disaster movies where asteroids hits the earth.

So the big dream – colonize other planets, get people living somewhere other than earth so we have options.  In 2001 all Musk was talking about was putting a robot greenhouse on Mars to see if we could grow stuff in Martian soil and also generate interest in space exploration.  He talked around, looked at options, got laughed out of Russia, twice.

Elon Musk ran into the problem we started with – the big rockets were all based on 1950’s cold war technology, were very expensive (a few hundred million $ per rocket), single use, disposable, hard to get access to even if you had the money, and required an army of people to build and launch.

Frustrated, he did what any physicist, economist, technology entrepreneur does.  He ran the numbers, did some calcs, and the more he looked at it, the more he figured he could drop the price by a factor of ten, and make good money launching rockets for $60 million a launch. 

So now we are going to steal from project management theory – run a backwards pass (start at the end and work your way to the beginning) of the basic logic that created the strategy that Elon Musk has been running with for 15 years now:

Backwards pass – Mars Strategy:

  • Problem – Colonize Space
  • Solution – Try Mars first, it’s cooler than going to the moon (been there, done that, not to mention the pop culture fascination with Mars).
  • Problem – Getting to Mars just once is way too expensive – just the required heavy lift rocket is a few hundred million dollars. And you’ll need lots of rockets.
  • Solution (2016) – Innovate heavy lift rockets that cost ten times less.  This is A005_C008_1221PL
    accomplished through cutting edge software, automation, modular design, new technology, new materials and manufacturing techniques and reusing as much of the rockets as possible. (
    Watch first ever rocket landing video 2:05 mark ).  SpaceX will put a payload into space for $57 million.  ULA’s price point is $200 Million after a cost savings campaign.
  • Problem – You need to be good at the rocket business before you can compete with United Launch Alliance, NASA, and anybody else.
  • Solution (2010)- Build a competitive rocket business first.
  • Problem – You need to learn to crawl before you walk, let alone run.
  • Solution (2006) – Start small with an prototype entry level rocket (Falcon 1), using $100M of your own money.  Prove the basics before you scale up.  And innovate as much as you can knowing what you need for that heavy lift rocket down the road.
  • Problem – It takes allot of money to get into the rocket business.
  • Solution (2002) – Find a wealthy and convincing tech entrepreneur to sell a dream.  

Elon Musk’s schwerpunkt always has been to get to Mars.  The rest of the strategy was about making that happen.  While SpaceX has been breaking records and doing things for the first time ever; NASA who is basically controlled by congress retired the old Shuttle Program, and had no rockets to call their own; and United Launch Alliance motivated by profit is downsizing, restructuring, and trying to figure out how to keep up.

Because SpaceX started in 2002, was fully funded in 2006, only launched 5 basic Falcon 1 home_block_careersrockets from 2006 to 2009, and spent the last 7 years simply building and innovating a low cost reusable rocket business with commercial and government contracts, including NASA and Air Force contracts….  Everyone seems to forget the 15 years ago Elon musk went into the rocket business because he wanted to colonize Mars.

That is until he reminded us in a big way last month – probably because he’s to the point where he needs to start generating interest and fundraising to take it to the next logical progression of his multi decade campaign to put people on Mars.  If you take a look at his speaking tour the last couple of weeks, that looks to be exactly what he is doing.

Now anybody familiar with multibillion dollar engineering projects already knows it will take longer, be harder, and more expensive than what Elon Musk is advertising.  As is evidenced by the explosion they had recently.

Every Astrophysicist will tell you that nobody has figured out good solutions to Mars colony challenges… Problems like deadly radiation, electrostatic dust sticking to everything, long duration equipment, long term health effects of half earth gravity…  There’s lots of science and engineering yet to be done.

But the Wall Street Analysts will tell you that SpaceX is making a healthy profit, beating its competitors (United Launch Alliance, NASA, the Russians, really everyone), and it’s only a matter of time until SpaceX solves the technical problems, makes it affordable, and raises the money to do it.

And if you want the strategic science lesson – it’s that a startup trying to put people on Mars is better at building and launching rockets than government run NASA and profit driven ULA. It’s why business schools teach that mission and vision statement stuff – because chasing dreams tends to yield better results, better structure, better culture than chasing votes or money.

falcon_9_launch_and_landing_streak

An images thanks to SpaceX and ULA Websites
Posted in Business Strategy, Space, Strategy, Uncategorized | 3 Comments

Is the US uninvadable?

So kids, this is something I killed a morning  with on Quora back in April – an excuse to write about a scenario I’ve obviously been thinking about for a long time.  After a few months it’s at 161,500 views, so I figure it’s worth sharing on my blog that gets a handful of hits everyday.  Enjoy!

Is the US uninvadable?

Ted Galpin, Astrophysicist cheerleader turned professional strategist

No.  If you think like a ruthless military strategist, and don’t mind civilian casualties it’s VERY doable.  Read the history of Sun Tzu and how he made his name.  Here’s how I would do it.  You have to go unconventional.

From a conventional standpoint – the basics have been covered by other answers well enough. Even without a military, The United states has a pretty well armed civilian population, and a HUGE amount of territory, hundreds of millions of people.  We can raise a militia of 50 million well armed men very easily.

Invade, occupy, conquer the US?  Unlikely in the conventional sense.

But you could raid, sack, and burn down the US and take allot if you had the resources of a major nation (Russia, China, India, Pakistan, England, France, maybe Israel or Iran).

Step 1 – Q Ships, Light ballistic Missiles, Nuclear Electromagnetic Pulse.

Q-ship technically is a WWI thing – really just an innocent looking freighter or civilian ship with enough concealed weapons to surprise and destroy pirates and submarine attacks on a transport convoy.

So first you get some really innocent looking freighters – there are thousands of them today.  You put some old school SCUDs, or other relatively simple Ballistic missile systems in the hold pointed up.

You arm them with the best atomic warheads you can get a hold of.

You get as close to the US shores as you like – and you fire those missle up into high altitude above the US – probably multiple times from multiple ships, ideally east coast, west coast, gulf of mexico, and great lakes.

Nuclear electromagnetic pulse

The idea is to make lots of those red circles over as many cities as you can.  And a couple of orange and yellow ones for good measure – say 10 or 20 missile shot up into high altitude of 20 miles above major population centers.  Plus a few higher and wider if not as strong, just for good measure.

You could do the same from Disguised satellites as well, but it would be much harder.

Result of Step 1:Nuclear electromagnetic pulse (EMP)

Without entering US territory, with a handful of freighters launching nuclear warheads, detonated high in the atmosphere, you can saturate the US with electromagnetic pluses.

So What?  Well, given the state of the US infrastructure, as I understand it from my career engineering it:

  • All consumer electronics will be dead.  All transistors get fried by an EMP.
    • Your car won’t start – electronic ignitions have been standard for decades.
    • No Cell phones
    • No Internet
    • No TV
    • No Refrigeration – food will start to spoil in days
    • No Microwaves or electric stoves. Really hard to cook food, unless you have a grill on your porch.
  • All US infrastructure will be damaged and/or inoperable.
    • Limited Commerce / Money.  Most of us use credit and debit cards.  With out internet, you are stuck with the cash in your pocket.
    • No Electricity – the power plant control, transmission, and distribution systems are not shielded, and it would take weeks or months to get the electricity back on; after undamaged parts are imported from outside the EMP area.
    • No / Limited Water – because the water supply is pumped.  If the pumps have no power, your faucet won’t work.
    • No / Limited Natural Gas – Same pump issue as the water.
    • Limited Fuel – all the electric pumps are dead, so you have to know what you are doing to simply get gas from a gas station, if they let you use tools on their pumps.  Even if you have the cash, and a 40 year old car, would they let you siphon from the main tank?
    • Food supply
      • No cold storage – fresh food goes bad in days
      • No vehicles – can’t transport food supplies
      • Industrial farms and agriculture need  electricity and water.  What happens to the feed lots, industrial dairy, chicken factories, irrigated fields?

So imagine waking up one morning, and everything is silent.  No Cars.  No Heat.  No Air Conditioning.  No Phone.  Your Cell phone is dead.  No radio or TV.  Nothing turns on.  Even your watch stopped, and your LED Flashlight won’t work.  The food in your freezer is starting to warm up, you can’t take a shower.

And you have no idea why because all communications are out.

And the only vehicles that work are kick start motorcycles and some cars and trucks, the older the better.  All test that have been done  in the last ten years show that some vehicles die, some don’t, some malfunction.  The less electronics in the car, the better the odds it will survive.

Now multiply those problems by 300 million people across the United states.

At best, you have a humanitarian nightmare, because nobody knows what is going on, and our technology and tools have been reduced to mostly the dark ages.  The only things that still works reliably are guns and fire.  And I will bet that looting and crime will be a huge problem.  You can’t call for help.

Consider that after a few days, 300 million people will be confused, desperate, dehydrated, starving and cold in the dark on foot with no way to know what is going on or if help is coming.

And the military will have the same problems.  The Navy ships will be ok – but a few hundred ships need to get here first, and can only do so much, near the coasts.  The cold war era weapons were pretty well shielded from EMP – so most military trucks, Humvees, some of the helicopters, some of the jets, will still work.

But the electricity and water problem is true for the military – as most bases use city electricity and water (They have published studies).  Most of the military battle networks, digital communications, GPS, lasers, smart weapons, Night vision, digital cameras, won’t work.  The Army will basically be stuck with 1980’s technology.  They say some of the digital stuff is shielded enough, so the Army may still have some laptops and digital radios.  But the infrastructure to support 21st century battle space awareness and communications – will be limited.   They will still have some magic, but very limited compared to what they are used to.  Don’t expect to see many drones.

So basically – after Step 1 – which is find a deniable method of EMP attack on the continental US.  Basically you have a massive humanitarian disaster with the US plunged into the dark ages, and the military will have their hands full simply trying to take care of it’s own, and provide as much humanitarian support as they can, while crime, looting, or scavenging becomes necessary for most of us to simply eat.  Not to mention the healthcare, disease, and sanitation problems.

So the entire US population is facing a humanitarian nightmare, and the military has additional logistics, supply, and communications problems on top of that.

Step 2 –  If you are organized and prepared, step 2 is is literally Sun Tzu 101.

You can play hard or soft.  But the recommended course of action would be to take advantage of the chaos and take whatever you want.  You can sack and burn down cities, steal whatever you like, and simply avoid confrontation and staged battles with an otherwise distracted military.

If I was running the invasion, I’d basically send out commando raids to start burning down every major city, as quietly as possible (make it look like criminals), so the Army isn’t looking for me.  You want to burn every soft civilian target available, live off american supplies, and quietly just make things as hard as possible on the civilians and military without letting them know you are there.

And then you are talking dark ages warfare.  Spread disease, use chemical weapons, burn down the cities, burn the crops, destroy or poison the food and water supply (simple as E.coli in some cases).  Steal everything you can.  Even a few thousand troops operating off of Q Ships with follow up support from Military ships, maybe air drop troops just to cause problems.

In a month you could have every major US city in flames, with a the civilian population starving to death, thirsty, and cold in the dark; and a military overwhelmed by too many problems, and probably not enough food even for the military.

Step 3 – Wait.

If you really do it right, you don’t let them know who did it.  Even better, populate your commando teams with third world mercenaries and terrorists…  You have decent odds at starting the dark ages, and covering the hillsides with third world terrorist arsonists and saboteurs…  Spread bio weapons and disease.

And never ever have a single citizen of you country ever set foot on US soil.  Total deniability – make it look like super terrorists instead of a state action.

Step 4 – Do what works best for you.

  • If the US collapses under it’s own weight – you could probably pull of a credible conventional invasion on “humanitarian peacekeeping” grounds, with UN support; at least after a few months and tens of millions have starved to death.
  • If the US survives, the economy, industry, and military will be in shambles, and you can basically step up as a world power to fill the vacuum left by a crumbling US dependent on humanitarian aid.

Now odds are you’d eventually get caught, and suffer reprisal from the US Navy, which has the ability to bomb most nations into the stone age even without homeland support.

But any target is vulnerable, if you know where to look, and understand science.

Nothing is uninvadable.  You just develop a strategy that exploits the weaknesses of your opponent while avoiding or redirecting it’s strengths.

So the way you conquer a nation with an unbeatable military is to attack it’s civilians, soft targets, and infrastructure using weapons that the military cannot counter, then wait for them to starve to death behind their super weapons.  You can do it with 1960’s technology, never use a gun, robot, or any science fiction.

If anybody sees any flaws or mistakes in my assessment, please let me know.

Thanks, this was a fun exercise.

Posted in Uncategorized | 4 Comments

Can Bruce Bueno de Mesquita predict the future?

So here’s one I first took on in Quora, and it’s a fun topic –

Can Bruce Bueno de Mesquita predict the future?

NYU Professor BBdM claims to predict international policy events with >90% accuracy in his book “The predictioneers game”. It seems grotesque, now we have a paper where he descibes his method. Can you falsify his statement?  http://irworkshop.sites.yale.edu…BBdM Ted Talk
Ted Galpin, Astrophysicist cheerleader turned professional strategist

I’ve been following Bruce Bueno de Mesquita on and off for roughly a decade.

In theory – Yes, sometimes, with limits he can predict the future (And his marketing is probably exaggerating, but he’s not really doing anything that other mathematicians are not doing, he just sells it really well).

He’s been doing this stuff since the 80’s. But I guess it took a TED talk and a Book for people to really take notice.

Here’s some context:

  • He famously was one of the earlier academics to successfully apply game theory to political science; and everybody laughed at him until he proved to be right (He predicted an “unlikely” candidate would win an Iranian election in the 1980’s; and 2 years later proved to be right, reportedly surprising the political science community). That when the Poly Sci Quantitative vs Qualitative culture wars began.
  • He consequently started selling his services to the government.
  • His models are supposed to be rational choice driven game theory models that are heavily data dependent.
  • The famous CIA quote is that a good CIA analyst can tell you a what political party should win the next election with about 80 percent accuracy.  Bruce Bueno deMesquita – BBdM could then interview the CIA analyst, populate the variables, do the math, and give you a NAME that was right 90% of the time. Technically BBdM adds precision to existing accuracy.

Good analysis give you accuracy. BBdM adds precision by using good math on top of good behavioral science. If the underlying data points you in the wrong direction, the math probably won’t change that.

  • We know from fundamentals of math that every model he builds would be custom based on available data; using a underlying algorithm that he’s been tweaking and using since the 1980’s.
  • We know from mathematical modeling 101 that the ability to predict the future is limited by available data and known patterns. That has plagued engineers and scientists for centuries.
  • The fundamental assumption in BBdM’s models is they are built on a version of rational choice theory.
  • Rational Choice theory is often applied incorrectly. It states that people usually do what is in their best interests.
    • Rational Choice theory actually means people usually do what they believe is in their best interests (from their own point of view). Important pragmatic semantic.
      • For example – you know people will order Pizza because they like Pizza, but really they should order a salad because it is much healthier.
      • Rational choice is relative to understanding the subject. Hence why it has been misused and easily critiqued in the past.
  • BBdM’s best work tops out at 90% for a few reasons:
    • 1 – Incomplete information leads to incomplete mathematical precision and accuracy. I.E. You are vulnerable to Black Swans (what you don’t know).
    • 2 – It requires you to accurately read people’s minds – this is where the knowledge of an analyst comes in. If your analysts don’t understand the psychology of the individuals, then they may guess wrong on the rational choice, and the math can’t fix that.
    • 3 – It really should be lower than 90%, I’m guessing they only pick battles they know they can win to cheat the metric – a common business practice.
  • Because the model’s are based on rational choice, BBdM can only predict decision making of people or groups of people. And only if you can identify the influencing players of the game, model the interactions of the players, the decisions they will make, and the resultant net result when you add up all the decisions based on rational choice. Basically a giant decision tree matrix.
  • Technically speaking, a good strategist with good data using the right math and the right science should be able to consistently predict the future. This is what good management consultants try to emulate.
  • If you have any doubt, I know from my business, every Billion Dollar piece of technology (think jets, mines, power plants, bridges, refineries, Sub stations, sky scrapers) is predicatively modeled on paper and in computers to make sure it is possible, will work, and to estimate cost and economics long before they spend the billions of dollars to build it (often in the form of an engineering feasibility study).
  • Any situation where you have enough science and measurement,  the appropriate math can be used to effectively predict the future. That’s what operations research has been doing for years. That’s what Gantt logic and Agile Velocity try to do with projects.

For example – In WWII German submarines where hard to sink because they went underwater when they saw planes, so it was hard to kill them with aircraft. Operations research analysts ran lots of what we now call data analytics (by hand in the 1940’s), and figured out that if you put bright lights on a bomber, it looks more like the bright blue sky, and an anti submarine bomber could get close enough to kill a submarine before it was spotted and the submarine did a crash dive. The math predicted right that time.

So given all that.

Can BBdM – Bruce Beuno de Mesquita Predict the future? Sometimes, if you ask the right kind of questions, and he can find the right input data for the math to work. He specializes in political science and the decision making of large groups. If pressed he may even be able to model and predict a stand alone complex – but that’s kind of obscure and I don’t think anyone is looking for those yet (outside of social moment and viral based marketing techniques).

But Hannah Fry could predict how riots happen in Python a few years ago (not when, but how). Operations research has made progress in future prediction for many, many decades. And Game theory is pretty old – that’s a big part of how Rand sold Mutually Assured Destruction theory and led them to purportedly recommend economic brinkmanship to end the cold war – knowing the expensive weapons being built were unlikely to be used in WWIII. And that worked, the cold war escalated to the point of bankrupting the Soviet Union with military spending. Technically we tricked them into building a military too large to economically sustain.

To answer your question – yes, you can use math to predict the future. That is sometimes, if you know the science, the math, and have the right data and analysis. That’s why engineers are correct 98% of the time, and guys like BBdM are right only 90% of the time, and only if they are careful and only pick questions they know they can answer.

Given more time – we are likely to see the rise of something analogous to the psychohistorians of Asimov’s Foundation. Actually if you read that link – We are not that far off from that today.

As of 2016? A good Strategist working with a Good mathematician, a Good Data Scientist, a Good Operations Researcher, and a Good Behavioral Scientist should be able to predict accurately, and even maybe precisely the things we understand and know how to measure, but not the things we don’t understand, or can’t measure. And each question would take them months to answer (analyze and model), and even then it is doubtful anyone can ever beat BBdM’s claimed 90% because everybody makes mistakes and has limits.

In reality hitting 90% accuracy is crazy hard, unless you get to select your problems. In my experience “complete” models are about 80% precise (you get within 20% of what you expected) and are accurate (pointed in the right place) about 80% of the time. But getting adequate information to make a complete model is rare.

I’m guessing that BBdM gets his success by having access to the best experts and data the US Government can provide. Most good teams should be able to replicate BBdM’s results given access to that level of resources. Not easy by any means, but theoretically doable. I’ve seen comparable results in different modeling techniques in business – if you constrain the scope of the model enough, you can enhance your accuracy.

The honest take away you can get from BBdM is if you understand what someone thinks or believes in their own best self interest from their own point of view, 9 out of 10 times you should be able to predict what they will do next. Any Game theorists out there able to confirm or deny that with empirical data?

The only claim BBdM has really made is he can mathematically model that rational choice up to scale of decisions made by large populations like how nations vote in electrons. Seeing as he’s been on a sole source contract to the US Government doing that for like 20 years or more – I’m guessing he’s been doing it, and his success rate is good enough to keep him on retainer.

Interesting and very skeptical article that goes into some details here: Bueno de Mesquita’s prediction of Iran’s future – it reminds me of 5 mathematicians having 25 opinions on one topic.

Hope that was enlightening and answered the question.

-Ted S Galpin

Posted in Geopolitics, Math, Strategic Science | 3 Comments

A New Strategic Science?

A new strategic science.

That could have so many meanings.  So what do I mean?

First obviously I haven’t been publishing much on the Blog the last couple of years.  Due to a combination of things – raising a small child, some family health issues, diving in head first to help build a tech startup (which of course failed after 3 years due to a dominated strategy – a company political battle I lost.  Kids, never bet the farm on an industry bubble, especially the price of oil), and any number of distractions.

A few years older, many years smarter, and I noticed that I wrote a ton on Quora for some reason in the past couple years.  The passion never died, it just went else where.

Relative to the  new strategic science Blog – This really is my passion – so I’m getting back in to sharing.  I have goals I may or may not live up to.  But no more fear, and a new strategic science blog, we are gonna have fun with this.  It’s time.8eddd537-b668-4fcf-8f00-f012ea9d5322-original

Relative to the new strategic science discipline – been through some massive experiences, and many very cool books have gone through my mind.  Connecting lots of dots between history, practice, and industry. There is enough knowledge and empirical data out there to build a scientific discipline out of strategy.

And when you drive the art of strategy down
the knowledge funnel; and turn it into a science, a craft, where you can engineer success as much as you can engineer anything else…

That’s what I’ve been doing with my life, my career, my studies for 20 years now.

Time to share and put it into a form where others can really use it, be entertained by it, and benefit from strategy.

So I’ll be writing more, and hitting strategy on a wider variety of subjects, and having more fun with it.  Sharing the ideas and work I do elsewhere, like Quora, LinkedIn, Facebook  Because it’s what I love, and I know it can help you.

Thanks for reading,

– Ted S Galpin

Posted in Strategic Science, Uncategorized | Leave a comment

Strategy vs. Tactics (not what you expect)

suntzu strategy and tactics

So, I got some highly unanticipated free time, so here’s a quick run through some important fundamentals.  I don’t care what you do, mastery of the fundamentals is the key to being successful, be it sports, work, or strategy.

First the obligatory definitions, I could argue these, but for today we’ll go by what’s currently popping up on Wikipedia:

Strategy:  a high level plan to achieve one or more goals under conditions of uncertainty. (one could debate that strategy not just a synonym for plan, we’ll save that for another time).

tactic is a conceptual action implemented as one or more specific tasks (fair enough).

So formally speaking the text book definitions from military science and business books goes like this, a strategy is a plan that is executed via a variety of tactics.  The military goes on to say that grand tactics are large scale tactics, and grand strategy is the political strategy that provides overall direction to military strategy (i.e. terrorists bad, China OK, Canada Harmless).

Gee, that’s actually kinda boring.  So how does this help you?  Where is the salient advantage in these pedantic semantics?

First, the common sense is strategy and tactics are interchangeable words for a solution to the problem.  Strategy and tactics have a yin yang relationship in defining each other – bigger long term picture relative to immediate small scale.

Stay with me.

Tactical means winning battle today. Strategy means winning the war. But the battle had a strategy, broken up into tactics utilized by each team. But each team leader had a strategy, that was adapted in execution by a strategic utilization of appropriate tactics for the resistance and challenges faced. Yin / Yang.  Once you leave the textbook, the only difference between strategy and tactics is your perspective.  Boxers and quarterbacks have strategies for minutes worth of action. Political strategies have tactics that take months to execute.

The difference between strategy and tactics in everyday language is simply to show the short term vs long term perspectives to the task at hand.  That would make grand strategy where strategies interact, and grand tactics where different tactics interact.

So what? How does this help you? (finally there)

First, conversationally it is good to simply know the effective semantic difference between strategy and tactics.  Hopefully your now there.

Secondly, in order to be truly successful, you need to have good strategy and good tactics.  You need to understand the role of each.

Many business have good strategies, but bad tactics and can’t make the strategy happen. In Afghanistan, the US military enjoys tactical brilliance and dominance; they almost never lose a battle; but strategically Afghanistan is a decade old strategic quagmire.  Winning every battle yet to win the war.  Just like we all know well established small businesses that were tactically brilliant, did great work – but were strategically incapable of adapting to change and simply went out of business when the economy crashed.

Conversely, there is a long tradition of brilliant strategies they nobody managed to make happen.  The quote that comes to mind is “the best laid plans of mice and men.”

The simple truth is strategy and tactics are the same skill, same concept applied at different levels. That simple idea is important because you now know that a perfect strategy cannot succeed without good tactics; and brilliant tactics probably won’t deliver strategic results on their own.  When your strategies fail for lack of execution, you know there is a disconnect between the strategic and the tactical.

So when you are making your decisions, planning, preparing, and executing your vision for the future, remember that you will have to simultaneously view your struggles from both the strategic and tactical points of view in order to succeed.

And honestly, you probably need to consider the grand tactical and grand strategic views as well to make your long term life get to where you want to go.

So what does that mean?

Strategically you have one year, two year, five year, and probably ten year or longer perspective, goals, and challenges.

Tactically you have a perspective, goals and challenges for this morning, today, this week, this month.

Grand tactically you have to manage the interactions between your work tactical situation, your home and personal tactical situation. You may have multiple projects. Health or fitness goals, school, family, or relationship commitments and challenges that affect your daily tactics of that important business problem your are tactically solving now. Also there are grand tactical problems you can’t control – traffic, weather, sickness, accidents. But you have to manage the grand tactical everyday of how do I deal with a getting sick, a fender bender, find a breakfast and still keep my boss happy this morning?  At minimum you can think of grand tactical as tactical work life balance.

In terms of grand strategy, well; you need to balance work, career, business and personal strategic goals and resources, and how those strategies interact. Grand strategically you also have to consider the big picture – politics, law, the economy – things you can’t control that may have a big effect.  There is a good time and a bad time to make investments or purchase real estate – if you’re lucky you find the intersection of grand strategic opportunity with personal strategy – i.e. buy a new home after the housing bubble bursts, not before – if you have the choice.  Anybody who bought a house in 2008 either didn’t have a choice, or failed their due diligence of the housing bubble that was well understood in financial journals a year before the market crashed.

Grand strategically how do I use limited time and money to get what I want in the long term – career, family, home, car, hobby? In business grand strategy how to I balance supply chain costs with new healthcare regulation costs and changes to corporate tax code while attracting quality talent?  Those are grand strategy considerations that form the broader picture of sometimes conflicting strategic goals we have – like put in overtime for that promotion but spend more time with family.

And obviously here where we circle around.  You need tactical competence on the day to day stuff, grand tactical skill to balance conflicting priorities and limited resources, all while remembering your strategic schwerpunkt ….  Not to mention the grand strategy reality of conflicting strategies and the grand strategic environment you are in.

Now, you can ignore these truths and keep muddling through the way you like.  Or you can try to organize your mind and efforts in terms of the tactical, grand tactical, strategic, and grand strategic – and see if that perspective helps you improve how you manage priorities and get things done, considering short term opportunities within the context of long term goals and strategic constraints out of your control.

Yes, thinking like a strategist can and probably will give you a headache.  I recommend you start by writing things down. As I’ve learned, if you don’t write it down, it never happened.

That’s enough for today.  Thanks for reading, hope it helps.  Let me know.

– Ted Galpin SPP

Posted in Strategy, Uncategorized | 11 Comments

TED, FRY, Complexity, Systems and Strategy

First in a series on prediction.  I hope.

Today is a simple if abstract discussion.  The math of strategy.  Now the majority of my peers at ASP specifically avoid the quantitative, and most strategists I’ve encountered are  MBA’s, historians, or soldiers that are not that keen on math, and don’t have much use for it beyond the simple arithmetic of “our big number beats their little number.” (which isn’t even always true).

Hannah Fry TED Talk

TED, FRY, Complexity, Systems and Strategy

By now, many of us are familiar with TED Talks (Technology, Entertainment, Design).  Personally I was chagrined when I found out Ted.com was taken.  But at least it’s being put to good use.

The TED talks are about “Ideas worth Sharing.”  They started out very cool, and have gotten more commercialized over time, but more often than not, are fascinating; if typically very focused on technology (due to their silicon valley roots).  There are also independently organized TEDX talks that really embody the “diamond in the rough” meme that started TED.  It’s a great place to see well communicated ideas.

The other day on my lunch hour I happened upon a TEDx Talk from Britain that well, hit my sensibilities as a physicist, mathematician, and strategist squarely.

FRY?

Dr Hannah Fry, according to her website, is a “Dr. of Fluid Dynamics, researcher of Complexity Theory and all round bad-ass.”  If you take a look at her PhD Thesis, it’s 200 pages of graduate level mathematics that pretty well qualify her self description (As do her blogs posts on Python scripting).

OK, enough background.  SO what?

Point is, Dr Fry did a really well developed TEDx Talk earlier this year that demonstrates in layman’s terms the power of modern mathematics.  Specifically they created a mathematical model given available information and science that accurately recreates what happened in the 2011 London Riots, and appears to predict the behaviour of riots.

Complexity

OK, I’m biased.  I’m an astrophysicist that does quantitative analysis of business intelligence and project planning and execution for a living.  My pile of books to read at home includes math texts on catastrophe theory, game theory, and complexity theory.  But I confess that it was John Mauldin that first showed me the value of applying complexity theory to strategic thinking.

Here’s how Math works.  Your classical physics and math is great for directly predicting simple things.  This is the majority of everyday engineering and construction.  We can accurately mathematically predict how well engineered machines and processes will work before we build them (e.g. machines, electronics, factories).  We can use math to measure and control the consumption of measurable quantities, be is Gas in our cars, grams of protein for athletes, sales revenue, market share or money in our bank accounts.  But you are limited by what you can measure, and it has to be “simple” mathematically speaking.

2 Problems.
1 – There are many things you can’t measure.
2 – Some  problems require you to measure too many things.

Now in the 20th century, science got around some of those problems by using statistics (i.e. simple pattern recognition).  We can mathematically model and predict how huge systems work if their behavior is simple when treating them as a whole.  This works for things like galaxies, stars, gases, explosions, fluids, water, etc.  I don’t need to track every molecule of water in a pipe, just the sum of its parts and everything works out.

The problem is the middle ground.  A complex system is something that has too many variables to measure and solve simply; and not consistent enough to treat as a single simple whole (i.e. a business, a war, the economy).

Now in the 21st century (with the help of computers), complexity theory is starting to get good.  Researchers like Dr Fry are starting to create mathematical models that accurately reproduce and potentially predict the behavior of real life complex systems, using rationality and complex math.   This is possible by basing the model by adapting existing models that work in analogous scientific systems.

For example assume:

How viruses spread = How information spreads
Shopping travel habits = Rioting Travel habits
Predator Prey movement = Rioter / Police movement

Adapt those three models into a single predictive model, and they actually do model and predict how fast, how long, and where riots will spread; based on input conditions and changing variables.  The model is roughly as accurate as the input data, and does a good job of recreating riots that have happened.  But even here, the precision and accuracy of the model is based on how many measurements you can put in.  Historical data plus known science becomes a constraint on future prediction.  That’s mathematical modeling 101, at least it was when I was in college.

Notice business kids,  they use the known science of shopper behavior to accurately predict how rioters behave.  Personally I had forgotten there was a science to shopper behavior.  Point – there is tons of data and science out there, if you take the time to find it (there nothing new under the sun, odds are somebody else already knows the solution to your problem).

Systems

So at this point, ya’ll are saying, cool Ted.  So some math geeks can do some math that models a riot.  So what?

Ok kids.  Any organization; a family, an army, an NGO, government or business is a system of interrelated parts that exchange information and resources to accomplish a variety of activities to accomplish organizational goals while also doing activities it needs to do to survive.  E.G.  A Family may go on vacation – focusing on logistics, travel and entertainment, but still have to deal with tactical needs of food, shelter, sleep, and family politics plus the long term requirements like bills, insurance, and a home.

A business may be focused on selling it’s product, with the normal cycle of R&D, Marketing, supply chain, manufacturing it’s product – but also has to have HR, Legal, Accounting, Facilities, IT, Taxes, and possibly PR and Lobbying to support the simple goal of building and selling a product.

Point is – all the functions of the business form a system of relationships that exchange information and resources in a constant and definable way.  Time sheets feed accounting so they can do payroll, but need charge numbers on the time sheets to feed financial cost controls and bucket costs for filing taxes.  These are mathematically speaking, complex systems like what Dr. Fry works with.

Hopefully, the system thing is making sense.  System, ecosystem – simply a collection of processes that flow resources and information through the organization to accomplish what needs to happen.  Working in an Engineering firm, I see plenty of technical process flow diagrams for things like refineries and power plants – and the methods are the same as when we are doing business processes.  There is a reason why there is a whole “systems thinking” movement in management consulting.  It’s accurate to the real world, and works when done well.  I was amazed when I started studying business strategy, all these cyclical strategy frameworks were almost identical to a standard engineering control theory.

Funny to me at least, I bring up that point at an ASP meeting fully of strategy consultants that developed these business strategy frame works, and they are honestly ignorant of their parallel development of the existing engineering science that is many decades old.

Well, kids, there is a math to your organization’s system.  And an easier paradigm than complexity theory.  Google the term “topology”.  It’s a branch of mathematics developed to study shapes; but what topology really does is map the relationships of different groups with different functions.  Which means two relevant things.  1 – there is a math for quantitatively modeling the relationships; i.e. the flows of information, resources, and processes within your organization.  And that math is also the math of databases; so if you can find someone willing to learn the theory of a homeomorphism (one to one vs. one to many relationships),  you can have a model or framework for understanding exactly how to map the system of processes of your organization; and even use it to streamline the series of databases that IT already maintains to try and manage that existing system via IT based business intelligence (ERP).   This allows you to data mine your big data intelligently if you understand the topology, the relationships between how different sets of data interact.

Then to miss Fry’s point.  If you can find some graduate students in complexity theory, you can model the behavior of your organization’s processes  and accurately and precisely predict how they will react under different scenarios.  You can take what good managers do instinctively, and improve on it.

Now, let’s be honest.  The vast majority of us have not studied graduate level mathematics like complexity or topology.  But you don’t really need to do formal math to be effective.  Math is just the science of patterns and relationships.  It’s built on rules and numbers.  But the rules work without the numbers (accurately if not precisely).

If you can understand the difference between a one to one and a one to many relationship, and notice that a pattern of a one week delay in supply chain results in a two week delay and cost in manufacturing –  You can sketch out some simply process flow diagrams to model the systems of your organization, and see the patterns of what goes right, what goes wrong, and will have a legitimate engineered approach to troubleshooting and understanding what goes right and what goes wrong.  It works for plants filled with a billion dollars of machinery, it can work for your organization filled with people doing various interdependent functions working towards team production.

Learn the concepts, and it can paradigm shift your ability to understand and solve problems.  If you can define and recognize the consistent patterns of your organization, you can predict how changes will affect those patterns.

Strategy

So what?

We covered, well, a lot in a small space.  I obviously have too much applied math to get of my chest.

Dr Fry can’t tell you when a riot will happen.  But she can tell you how a riot will happen. That allows for some very precise scenario planning.  Be ready for an event or change before it happens.  And honestly, scenario planning has been around for decades.  Even going through the act of inaccurate scenario planning prepares the participants for change – orients them to better understanding the patterns of an organization and how they react to change.

If you understand the patterns, you have a chance at anticipating, managing and changing them.

Example

Here’s the math free example of applying the math of understanding patterns of behaviour and relationships.  Charles Duhigg wrote a very useful book called the Power of Habit.  He thinks in terms of habits and the behavioural triggers that cause them.  Which is simple math: Trigger = Habitual Behaviour; only gets more complex as you see how a system of habits as a process in a population.

So what?  Well, how’s this for problem solving.  Some years back, Mr. Duhigg spent some time in Iraq during the war.  In the city he was in, the Army had a problem that every evening people would gather in the town square, protest, and there were some riots.

Over a few several days, Army leadership observed the habits – people didn’t show up to riot.  The town square was also a market.  People arrived to shop, ate dinner, and then were already gathered in the evening.  Trouble simply ensued after dinner.

Solution? The Army Major tasked to solve the problem simply banned kebab stands from the town square.

So at the end of the day, people in the town square got hungry, went to find food, and left the square.  Ended violent protests and riots with zero force, no violence, no death.

Charles Duhigg rightly calls that the power of Habit.  Someone like Dr. Fry would likely call that an elegant solution by simply understanding the equation, and changing a variable to zero.  I simply call it good strategy.

Dry Fry may be able to predict the pattern of a riot.  In one instance, Charles Duhigg witness an Army officer able to identify the pattern and disrupt it, and prevented the riots from happening.  In other words, he successfully predicted the conditions needed for a riot.  They can do that because in there own way, they do the math to understand why things happen the way they do.

The lessons here are simple:

  • You can’t predict the future (unless you are very well informed and good at game theory, then you can a little – but we’ll leave that for next week.)
  • But if you can identify predictable patterns of behaviour for a system of relationships ( e.g. an organization), you can predict how that behaviour will happen; e.g. Dry Fry and her complexity models that show how riots happen.
  • The better the math (pattern recognition), the more precise the model.  But even simple models can yield accurate and useable predictive results for patterns of behavior.
  • You can use a system map or process diagram to identify the relationships and patterns of your organization.  That will give you a framework for predicting the patterns of your organization.
  • If you can predict how your organization will respond to change, you can prepare for and manage that change.  Whether a change in the market, or any deliberate strategic change to the organization driven by leadership.  If you know how the organization works as a system of processes, you can deliberately engineer the desired results.

And the big points

  • You know change is coming. You know the world is not standing still.  This is a tool that can help you be ready for change, and respond and change your organization and it’s system of processes in a faster and more appropriate way.  Simply put, an appreciation of math combined with some leg work, and you can adapt faster and better than your competition.
  • Yes kids, this is another approach to process improvement.
  • Even better – If you can do that internally with your organization, you can probably also map the system of processes for your value chain, supply chain, market, competition, etc.  And get the same sort of feel for predicting and appreciating changes external to your company. Allowing you to adapt your external view and relationships just like the internal above.
  • Even better, if you take the time to understand how things work in the world, you may be able to manipulate (influence) the process to get results more in your favor.  I.E. it may be possible to alter a riot in progress, or a market shift to change the outcome predicted by the model, and achieve a more desirable outcome.

You can’t predict when events will happen, but you can be ready with a good response for when they do.  Yeah, it’s basically the boy scout motto.  But there is legitimate math that can help you manage the problems that are too big to measure, and too unpredictable to treat simply.

By rigorous study of the math of the patterns, we can learn them, and that allows us to predict, adapt to, and potentially disrupt, prevent or improve those patterns.

If you understand the patterns of conflict, you have the potential to predict, adapt and manipulate it to a more desirable result.

And in my mind, that is what strategy is all about.

If you made it this far, thanks for reading my pedantic rant on math.

-Ted Galpin SPP

 

 

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