(2020-05-26) Chin Good Synthesis Is The Start Of Good Sensemaking

Cedric Chin: Good Synthesis is the Start of Good Sensemaking. Let us pretend that you are a laminate manufacturer.

Let’s say that you fell into the laminate manufacturing business near the beginning of the boom, and you rode the growth of the laminate market to become market leader. For awhile, all was good. Then, one day, you notice that a small competitor has crushed all the other tiny competitors, and has begun to gain on you.

It’s another two years before you realise that something really bad is going on

this year is the first one where it’s clear that your revenues are affected by their activities. The overall growth of the market for decorative laminates has stalled

Your team goes off to gather intel

The information that comes back is completely bizarre.

First, BL produces products that are of equivalent quality to your company’s products.

Second, their products are more expensive compared to yours.

Third — and this makes you scratch your head even more — none of the customers who had switched over the past two years were willing to return!

but BL delivers their laminates within 10 days of our order

“Why are they asking for special formulations?” you say, and your subordinate shrugs: “My contact at that resin supplier said BL wanted resins with a particular cure time.”

none of the observed facts we have matches the analytical frameworks that are present in our heads.

In adversarial competition, your actions are limited by your sensemaking ability

With this, you can sort of see why John Boyd makes analysis and synthesis the center of his theory

It seems that what we need to do is to gather enough information to synthesise a new explanation instead. And this is where our problems begin.

analysis and synthesis is also required when you are faced with an environment that has changed in ways that you do not understand.

Analysis is relatively easy: you take some framework and you apply it to your situation.

Analysis is easy, but synthesis is difficult.

Synthesis is difficult because it demands original thought

Boyd argues that if you are successful at synthesis, your next step is to test it

I think a couple of possible hypotheses fall out of the story:

Delivery time really does matter to these customers, and we should find out why it matters so much.

Perhaps BL really isn’t doing anything special

Perhaps there’s some other angle that we haven’t yet seen

Your best bet is to investigate hypothesis 1 and then reorient rapidly if it turns out to be a dead end.

There are a couple of things that you can do to test your hypothesis. The first is that you may look to see if the customers who have left you fit a certain profile.

The second thing you can do is to ask customers why they find the 10 day delivery so compelling.

The third thing you can do is to run a test — to see if it’s possible to match BL’s ten day delivery in a certain subsegment of your market.

it takes a few calls before one of them explains it to you: “Look, if I order from you, you usually deliver 10 days, 20 days, who knows? It’s not consistent. I can’t have my customers waiting on me! So if I buy from you, I have to maintain an inventory to prevent overlong waits from happening

You learn that there are, roughly speaking, three personas in the laminate market, and two of them are the reason for distributors switching rapidly to BL:

The Residential Cabinetmaker. This customer usually operates out of a small shop, serves a local area, and is undercapitalized

The commercial specification customer is an architect or an interior designer

The OEM direct purchase factory. These factories are the scaled up version of the residential cabinet-maker.

Is this story real? No, of course it isn’t. But is it based on a real story? Yes: in the 60s, Ralph Wilson Plastics stumbled — by accident! — onto a competitive advantage against Formica, the market leader

RWP began investing in manufacturing processes that optimised speed above all else. The example of the custom resin formulations is instructive: normally, different resins would have different cure times. RWP standardised all its resins to have the same cure times, in order to reduce the complexity and increase the tempo of their manufacturing processes.

How do we know the general form of this strategy? The answer is that a few consultants from the Boston Consulting Group noticed several commonalities in some of the companies they were advising during the 80s. In 1989, George Stalk Jr of BCG published Competing Against Time, from which this story is taken. The general theory of using speed as a competitive advantage was synthesised from observations of the competitive dynamics around Ralph Wilson Plastics, Toyota, Hitachi, Sony, Atlas Door and a couple of other companies besides.

Boyd only gives us two prescriptions when going through the analysis-synthesis loop:
Your synthesised model must be internally consistent (coherence).
Your synthesised model should match observations of reality.
Violate any of the two, and you should destroy your mental model and drop back down to analysis.

The results of synthesis is a sensemaking pattern, or framework.

Boyd’s ideas suggests something neat: the next time you read an author that attempts to synthesise a general pattern from a set of observations, evaluate according to internal consistency, and then generate possible counter-examples. For each counter-example you find, mark the author down for synthesis.