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strategy and business
 / Winter 2010 / Issue 61(originally published by Booz & Company)


How Aha! Really Happens

As an academic, Page knew that academic journals and publishers keep track of how many times other people cite their articles during a year. They rank authors according to the number of citations. Page thought of ranking websites the same way: Many citations would give a site a high rank. He told Brin, who adapted a data mining algorithm to do it. And they both cloned AltaVista on the Stanford computer system to try out their new method. At this point, they thought they had a great topic for a dissertation in e-commerce. But they used up so much Stanford computer space and time that the university made them open their new software to everyone on campus. The users rapidly came back to tell them that this was a great search engine. So Page and Brin stopped working on their dissertation and started a search business.

Already, the founders of Google had had the presence of mind to combine existing elements and change their goal, according to where the combination led them. But that was not enough. Their new search engine still had no way to make money. They did not want to sell advertising, because banner ads and pop-ups would keep the user lingering too long at the search engine site. The beauty of Google was to get you to the target site as fast as possible.

Then one day, while browsing the Internet again, Page noticed a site called Overture. The site sold advertising and displayed the ads as search results in a nice clean list on the right side of the page. Page experienced presence of mind and another flash of insight. He saw that instead of detracting from search, advertising could add a new dimension to it. He and Brin wrote a version of Overture and folded it into Google. That solved the money problem. From there, Google took over the Internet.

The Google story is but one of countless examples of how strategic intuition — an idea for action — appears in practice. Once you understand intelligent memory and the four steps of Clausewitz, you see it time and time again. But how can companies transform this knowledge into innovation methods they can use from day to day? Once again, we don’t have to reinvent the wheel. Instead, we find an example from history that we can adapt as needed.

Harnessing Intelligent Memory

That example comes from General Electric Company. In the late 1990s, CEO Jack Welch and Chief Learning Officer Steve Kerr adopted the concept of making new combinations from existing elements as the basic problem-solving method for the whole company. They used a simple matrix that took the process of intelligent memory — what the brain does in flashes of insight — and turned it into a step-by-step team method.

A similar process step should come between strategic analysis and strategic planning at all levels of your company. In strategic analysis you study your situation, and in strategic planning you lay out how to implement the best course of action in your situation. But between these two steps is the most important, typically overlooked process of developing an idea for the best course of action. Analysis does not produce that, and planning before you have the idea is dangerous and counterproductive. Flashes of insight give you the idea for your strategy, and the GE matrix lets you harness the flashes of the whole team.

Here’s how it works. At the top of the matrix, write down your current understanding of the situation (always as a provisional draft, because your understanding might change). Then comes analysis: List in rows what actions you think you might need to take to succeed in the situation (these too are in draft form, because they also might change). Then ask the most important question you can ever ask to solve any problem of any kind: Has anyone else in the world ever made progress on any piece of this puzzle? List sources to search for an answer to this question, across the top, as columns (in draft again). The team then starts a treasure hunt. They search the sources for elements that might apply to the list of actions, trying to find a good combination.

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