STRATEGIC THINKING (II)

Prof.Dr.Dr.Dr.H.C. Constantin Bratianu

Faculty of Business Administration
Academy of Economic Studies
Bucharest, Romania

LINEAR THINKING
representation
The
Input (X)

Process
constant (K)

Output (Y)

Y = kX
Where K is a process constant.
The output is proportional with the input.

LINEAR THINKING (I)

Outputs are proportional with inputs
Processes are described by linear equations
Linear thinking is the most frequently used approximation
in our daily life
In linear thinking one sequence of any activity starts only
when the previous sequence ends
Complex problems can be decomposed into simpler
problems. Each simple problem can be solved and got a
solution. By assembling all of these simple solutions we
get the solution of the initial complex problem.
In linear thinking we can sum up objects or events and get
the final result

LINEAR THINKING (II)

Measuring systems are based on linear thinking
E.g.
5 kg apples x 2 $/kg = $ 10
2 kg + 7 kg = 9 kg
Budgetary salaries are based on linear thinking
E.g.
40 hours x 5 $/hour = $ 200
Democracy is based on linear thinking
Language is based on linear thinking
In Europe, getting university Diplomas is based on
linear thinking

LINEAR APPROXIMATION
Graphical representation

NONLINEAR THINKING (I)

Life processes, natural processes, social processes are
not linear
For instance, biology demonstrates that people dont
have qualities whose values to be proportional with
their age. Just think of the situation in which the
tallness of a person would be such a quality
Outputs are related to inputs by nonlinear equations, of
different forms
E.g. Y = a + bx + cx + dx
Y = log x
Scientific discoveries, Engineering innovations,
A scientific discovery cannot be proportional with any
other entity

NONLINEAR THINKING (II)

Intellectual work, artistic performance and knowledge
processing are strongly nonlinear processes
For nonlinear processes summation is not valid
Complex problems cannot be decomposed into simpler
problems since problems will change their nature
For nonlinear processes integration is the most
important characteristic (e.g. Big Mac and a chicken
soup)
Friendship, love, happiness, excellence, performance,
quality etc. are strongly nonlinear

The butterfly effect

If a butterfly is producing a perturbation of the air in
New York, we may have a tsunami in Tokyo.

Peter Senge: If you cut an elephant, you dont

get 2 smaller elephants!

DETERMINISTIC THINKING (I)

Deterministic thinking is based on idea that events
are certain, and well defined. There is no uncertainty
about them.
Certainty give us a feeling of security and makes the
decision process very easy because everything is
clearly defined and there is no ambiguity or
incomplete information about events.
The model of deterministic thinking are the laws of
physics. For instance, the second law of Newton:
F = ma (F and a are vectors)

DETERMINISTIC THINKING (II)

The entropy law: In a closed system the entropy will
increase in any natural process.
The train tables or plane time tables are models
of deterministic thinking.
The time table of your classes is also such a
model
Traffic regulation and organizational internal
regulations are based on deterministic thinking
Legislation is only partially deterministic since it
leaves the possibility of interpretation

RANDOM/PROBABILISTIC THINKING (I)

Events in nature, society, and our life events are not
certain. Also, we rarely have events well defined and
with a complete information description.
Events are mostly uncertain, and our information
about them is incomplete and fuzzy. We have a
limited cognitive capacity to understand many
events in our work or life and we must make
decisions in these conditions.
Herbert Simon introduced the concept of limited
rationality to underline the incompleteness of our
knowledge state in making economic decisions.

RANDOM/PROBABILITIC THINKING (II)

Events can be characterized by their probability of
appearance:
Probability = (No. of favourable chances)/ (No. of total
chances of being produced)
Probability values: 0< p< 1.0
When p = 0, the event does not produced
p = 1.0, the event will produce for certain
That means that certainty is only a limited case of
uncertainty.
In decision making uncertainty brings in the risk.
Because of the risks we are adverse to uncertainty,
and the role of management is to reduce it.

RANDOM/PROBABILITIC THINKING (III)

Dealing with uncertainty is influenced by our culture
and education.
In Japan, uncertainty is part of life and people
developed a different approach with respect to it.
The Japanese language is fuzzy by its nature, and it
gets clarity from the context. For instance verbs do
not have future. They get the meaning of the future
from the context.
In any conversation one person leaves the message
fuzzy and invites the other person in contributing to
the clarification.

SOLVING PROBLEMS

In schools we solved hundreds of problems that:

- were defined by other people (e.g. professors)
- were well defined, with complete information
- had 1 or 2 solutions, for which we had formulas
- solving these problems is based on deterministic thinking

In management we deals with problems that:

- are defined by our top managers, or we have to identify and
define them
- these problems do not have complete information
- there are no generic formulas to solve them
- solving such problems is based on probabilistic thinking

INTELLIGENT THINKING
A complex model of thinking able to optimize and to
offer the best solutions to any problem
A model based on capacity of combining a lot of known
data and knowledge, in a very short time
All the data and knowledge needed are known. There
are no new elements

Intelligent thinking is strongly nonlinear and dynamic

Intelligent thinking is able to process tacit knowledge

CREATIVE THINKING
A complex model of thinking able to generate always a
new piece of knowledge
Knowledge creation, conversion, transmission and use
are based on this model of thinking

Creative thinking is highly nonlinear and random

Scientific discoveries and Engineering innovations are
based on creative thinking

In real life there is a strong connexion between

intelligent thinking and creative thinking

POSITIVE vs. NEGATIVE THINKING

Positive thinking is looking for positive facts and results

It is based on an optimistic approach
It stimulates creativity and innovation
It helps in dealing with uncertainty

Negative thinking is looking for negative facts and results

It is based on a pessimistic approach
It blocks creativity and innovation
It increases adversity for uncertainty and risks
It makes rather difficult any decision making in
conditions of fuzziness, ambiguity and uncertainty

STRATEGIC THINKING
Strategic thinking is the most advanced and the most
powerful model for Science, Engineering and Business
Strategic thinking is based mostly on the following:
- entropic thinking
- nonlinear thinking
- random thinking
- intelligent thinking
- creative thinking
- positive thinking

Strategic thinking is the most adequate way of thinking

for the future

STRATEGIC THINKING

Graphical representation
Time

Strategic
thinking model

NL

Complexity
R

Generation
of events

Simple thinking model