Analogical Strategic Reasoning of Gavetti and Rivkin.

Analogical Strategic Reasoning of Gavetti and Rivkin.
What is Analogical Strategic Reasoning?

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 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:

ü  The amount of information available in many strategic situations is similar to the information required to draw analogies.

ü  The wealth of managerial experience matches the need for that experience in analogical reasoning.

ü  The need for creative strategies can be fulfilled through analogy’s ability to spark creativity.

Applications

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

Strengths of Analogical Strategic Reasoning.

ü  The amount of information available in many strategic situations is similar to the information required to draw analogies.

ü  The wealth of managerial experience matches the need for that experience in analogical reasoning.

ü  The need for creative strategies can be fulfilled through analogy’s ability to spark creativity.

Conditions

  • Previous  experience can be useful in strategy.
  • It   is possible to distinguish the good analogies (beforehand) from the      superficial ones.
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