The Idea in Brief
Firms typically cluster around a few strategic positions, leaving others unoccupied.
The intense competition on those occupied mountaintops makes it hard for firms to gain attractive returns. Superior opportunities lie on the unoccupied mountaintops. Because they are “cognitively distant”—far from the status quo—they’re hard to recognize and act on, and therefore competition is weak.
Strategists are trained to analyze economic forces when they want to identify superior opportunities. But analytics usually won’t uncover the kinds of ideas that overturn the status quo.
Recent research on human cognition suggests that leaders would do better to use associative thinking to spot, act on, and legitimize distant opportunities. They should learn to make analogies with businesses in other industries, for example. Reinvention, it turns out, draws on intuition as much as it does on rationality.
This article explores ways to jump-start associational thinking—and to bring stakeholders along on the journey.
Michael Porter opened his classic “five forces” article with these sentences:
