Analogical Strategic Reasoning
(Gavetti Rivkin)

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Using analogies to make strategic choices. Explanation of Analogical Strategic Reasoning of Gavetti and Rivkin. ('05)

Contents

  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

What is Analogical Strategic Reasoning? Description

Analogical strategic reasoning is described by Giovanni Gavetti and Jan W. Rivkin in a fascinating article in HBR, April 2005. Although the authors have certainly not invented analogical reasoning, they deserve credit for explaining how it is used and can best be used within strategic decision-making. According to the authors, managers can benefit if they understand their own reasoning by analogy. Faced with an unfamiliar, novel, problem or opportunity, senior managers often think back to some similar situation they have seen or heard about, draw lessons from it, and then apply, transfer, those lessons to the current situation. Strategic reasoning by analogy can be very powerful if used correctly, but unfortunately also has major pitfalls. Compared to deduction and trial and error, Analogical Strategic Reasoning (according to Gavetti and Rivkin) has the advantage that strategic problems are neither so novel and complex that only trial and error can provide help, nor they are so familiar and modular that they permit deduction. Here's why Analogical Strategic Reasoning is used often by strategy makers:

  • The amount of information available in many strategic situations is similar to the information required to draw analogies.
  • The wealth of managerial experience matches the need for that experience in analogical reasoning.
  • The need for creative strategies can be fulfilled through analogy's ability to spark creativity.

Origin of Analogical Strategic Reasoning. History

Political scientists Ernest May and Richard Neustadt found that analogical reasoning often leads astray policy makers.


Usage of Analogical Strategic Reasoning. Applications

  1. Tool for choosing between possible solutions for strategic problems (but follow the 4 steps below)
  2. Acting as catalyst for generating creative options (out of the box thinking).
  3. Communicating complex messages quickly (people easily understand simple analogies).

Strengths of Analogical Strategic Reasoning. Benefits

  • Compared to deduction and trial and error, Analogical Strategic Reasoning (according to Gavetti and Rivkin) has the advantage that strategic problems are neither so novel and complex that only trial and error can provide help, nor they are so familiar and modular that they permit deduction.
  • The amount of information available in many strategic situations is similar to the information required to draw analogies.
  • The wealth of managerial experience matches the need for that experience in analogical reasoning.
  • The need for creative strategies can be fulfilled through analogy's ability to spark creativity.
     

Limitations of Analogical Strategic Reasoning. Disadvantages

  • Danger exist to draw an analogy on the basis of a too superficial similarity, not deep causal traits.
  • Distinguishing deep similarities from superficial resemblances is difficult. People tend to make little effort to draw such distinctions. This is caused by anchoring (once used, an analogy anchors itself and is hard to dislodge), and caused by confirmation bias (decision makers tend to seek out information confirming their beliefs and to ignore contradicting data).

4 Steps in Analogical Strategic Reasoning. Process

To avoid the limitations or pitfalls of analogical strategic reasoning, Gavetti and Rivkin recommend the following four steps:

  1. Recognize the analogy and identify its purpose. Is analogy being used and how is it being used?
  2. Understand the source. Why did the strategy work in the former setting?
  3. Assess similarity. Is the similarity more than superficial? Where are the differences?
  4. Translate, decide and adapt. Will the properly translated strategy work in the target industry?

Assumptions of Analogical Strategic Reasoning. Conditions

  • Strategic problems are neither so novel and complex that only trial and error can provide help, nor they are so familiar and modular that they permit deduction.
  • Previous experience can be useful in strategy.
  • It is possible to distinguish the good analogies (beforehand) from the superficial ones.
  • The authors only mention deduction and trial and error as alternatives for strategic reasoning by analogy. However many more approaches do exist. Find examples below.

Book: Non yet!


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Best Practices - Analogical Strategic Reasoning Premium

Expert Tips - Analogical Strategic Reasoning Premium
 

How to Avoid Being Misguided by Experience-based Biases

We often make decisions based on past experiences and judge the future. However, our past experience can sometimes misguide us since we refine and rei...
Usage (application): Analogical Strategic Reasoning, Decision-making, Cognitive Bias, Bandwagon Effect, Confirmation Bias, Anchoring
 
 
 

One More Assumption Behind Analogical Strategic Reasoning

Farjoun mentions another fundamental assumption in the analogical strategic reasoning model as described by Gavetti and Rivkin.
The authors impli...
Usage (application): Things to Realize when Reasoning Analogically
 
 
 

How to Design Experiments to Support Decision-making on Strategic Innovations

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Usage (application): Strategic Innovation, Strategic Decision-making, Strategic Experimenting, Experiments, Strategic Testing, Innovation Tes
 
 
 

Learning via the Case Method

The case method in business education has often been criticized, although it can be an appropriate and powerful approach for situations in whic...
Usage (application): Decision-making, Problem-solving
 
 
 

Meta-cognition (Meta-thinking) in Strategic Thinking

Most businesses are primarily concerned with the type of thinking that tries to make complex problems or interconnected and multidimensional issues ma...
Usage (application): Schools of Thought, Strategic Thinking, Scenario Thinking, Strategic Assumptions, Strategic Reasoning
 
 

Resources - Analogical Strategic Reasoning Premium

Personal Problem Solving: Process, Principles and Efficiency

A brief but excellent presentation about some key aspects of effective (personal) problem solving. The presentation includes the following sections: Usage (application): Problem Solving Process, Problem Solving Stages, Problem Solving Steps, Interpersonal Problem Solving
 

Analogical Training

Paper by SImone Moran, Yoella Bereby-Meyer and Max H. Bazerman describes how specific analogical training, wherein negotiators draw analogies between ...
Usage (application): Negotiation
 

Analogical Reasoning in Problem Solving

Comparison of well-defined and ill-defined problems. Following sections:
1. Heuristics for problem solving (including an example)
2. Represe...
Usage (application): Reasoning, Problem Solving
 

Top 5 Strategy Pitfalls

Strategy is complex and companies are making many mistakes while working on it. Stuart Cross identified 5 frequent strategy pitfalls to avoid:
Usage (application): Strategy Errors, Strategy Traps, Strategy Barriers, Strategic Planning, Strategy Process
 

Overview of Reasoning Types and Models

This comprehensive presentation clearly outlines the different models used in reasoning processes. The presentation includes the following sections: Usage (application): Reasoning
 

Analogical R. as Translation

Paper by Jonathan Yovel attempts to examine the underlying structure of analogical reasoning in decision making. The immediate (but not exclusive) con...
Usage (application): Decision-making
 
 

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Compare with Gavetti and Rivkin's Analogical Strategic Reasoning: Dialectic Inquiry  |  Root Cause Analysis  |  Cause and Effect Diagram  |  Pyramid Principle  |  Chaos Theory  |  Action Learning  |  Theory of Constraints  |  Brainstorming  |  Six Thinking Hats  |  Mind Mapping  |  System Dynamics  |  Scenario Planning  |  Game Theory  |  Real Options  |  Kepner-Tregoe Matrix  |  Plausibility Theory  |  Groupthink  |  Delphi Method  |  Force Field Analysis  |  Metaplan


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