Analogical Strategic Reasoning
(Gavetti Rivkin)

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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 (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!

Forum Forum discussions about Analogical Strategic Reasoning. 🔥 Experience is not Always an Asset on Decision-Making Most of us believe that we stay rational when deciding upon some news we received. However, Staats, KC and Gino (2018) argue that experience affects an individual's response to negative news, and thus... 17   15 comments Start a new topic about Analogical Strategic Reasoning Sign up for free

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Expert Tips Advanced insights about Analogical Strategic Reasoning. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips How to Avoid Being Misguided by Experience-based Biases Analogical Strategic Reasoning, Decision-making, Cognitive Bias, Bandwagon Effect, Confirmation Bias, Anchoring We often make decisions based on past experiences and judge the future. However, our past experience can sometimes misgu... One More Assumption Behind Analogical Strategic Reasoning Things to Realize when Reasoning Analogically Farjoun mentions another fundamental assumption in the analogical strategic reasoning model as described by Gavetti and ... Dangers of Categorical Thinking Decision-making, Strategy, Strategic Thinking Categorization, taking in voluminous amounts of messy data and then simplifying and structuring it so that you can make ... How to Design Experiments to Support Decision-making on Strategic Innovations Strategic Innovation, Strategic Decision-making, Strategic Experimenting, Experiments, Strategic Testing, Innovation Tes The probability of success of a major innovation is difficult to assess. Statistics and other datasets only provide info... Learning via the Case Method Decision-making, Problem-solving The case method in business education has often been criticized, although it can be an appropriate and powerful approach... Meta-cognition (Meta-thinking) in Strategic Thinking Schools of Thought, Strategic Thinking, Scenario Thinking, Strategic Assumptions, Strategic Reasoning Most businesses are primarily concerned with the type of thinking that tries to make complex problems or interconnected ...

Information Sources Various sources of information regarding Analogical Strategic Reasoning. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Personal Problem Solving: Process, Principles and Efficiency Problem Solving Process, Problem Solving Stages, Problem Solving Steps, Interpersonal Problem Solving A brief but excellent presentation about some key aspects of effective (personal) problem solving. The presentation incl... Analogical Training Negotiation Paper by SImone Moran, Yoella Bereby-Meyer and Max H. Bazerman describes how specific analogical training, wherein negot... Analogical Reasoning in Problem Solving Reasoning, Problem Solving Comparison of well-defined and ill-defined problems. Following sections: 1. Heuristics for problem solving (including a... Top 5 Strategy Pitfalls Strategy Errors, Strategy Traps, Strategy Barriers, Strategic Planning, Strategy Process Strategy is complex and companies are making many mistakes while working on it. Stuart Cross identified 5 frequent strat... Overview of Reasoning Types and Models Reasoning This comprehensive presentation clearly outlines the different models used in reasoning processes. The presentation incl... Analogical R. as Translation Decision-making Paper by Jonathan Yovel attempts to examine the underlying structure of analogical reasoning in decision making. The imm...

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