This is a summary of Chapter 2 of Simon Wardley’s free book on strategy and mapping in business.
Simon Wardley, at this point a youthful CEO motivated by his own imposter syndrome, has engaged deeply with military history in order to find the missing pieces of how to evaluate business strategy.
Creating maps for business seemed like the answer, but unlike the board in a game of chess, a business isn’t static but a living thing made of networks of people, activities, and capital. What kind of map can cope with all that?
To find out, Simon started experimenting with different visualizations. He would map the areas of business considered “core” as a sort of test.
The problem is that what is “core” for a business changes over time. Nokia, for instance, was once a rubber manufacturer, then a consumer electronics company, and later a telecommunications giant. The latter focus would have been unimaginable to Nokia’s leadership when they founded the company in 1865.
So why do things change? As it turns out, we don’t get much of a choice in the matter because of competition. The desire to differentiate creates novelty, and the desire to keep up with others eventually makes that novelty commonplace.
For example, the first nuts and bolts depended on an artisanal, custom process of crafting one bolt and one nut that matched each other perfectly. It was a novel and painstaking process, but the structural improvements the system provided were extremely valuable. The use of nuts and bolts continued to spread, and the pressure to adopt the practice in order to keep up eventually resulted in the invention of the screw cutting lathe. This standardized way to mass produce uniform, interchangeable nuts and bolts destroyed the artisanal industry but paved the way for more complex machinery and mass production systems.
This kind of phenomenon is a cycle that repeats in all things affected by competition, and we’re always standing on the shoulders of the giants who came before us.
An interesting illustration of the idea is Thomas Thwaites’ toaster. He attempted to build a household toaster from scratch, mining and smelting his own copper, iron, and nickel, and even molding his own plastic. The whole thing took 9 months and cost him more than $1700. The thing even worked for a solid 5 seconds before melting itself apart. But the only reason he even got that far was because he could make use of all sorts of complex capabilities like microwaves, leafblowers, and textbooks on metallurgy.
. . .
Simon takes us through his first map — a 2005 snapshot of the online photo service he ran.
He also shares how it meets all the criteria previously discussed for a map.
It’s clearly visual, and context specific — a map of his online photo service in 2005, and not, say, a map of the automobile industry in 2016 or a pharmaceutical company in 2010.
Component position is expressed vertically within a value chain — a chain of needs cascading from the anchor, which is the user and the user’s needs. As a user, you care mostly about your needs, which are higher in the value chain and more visible. But as the provider, you care about everything in the value chain.
Component movement is expressed horizontally, as progressions from left to right through the stages of evolution:
- Components in Genesis are unique, rare, uncertain, constantly changing, and newly discovered.
- As they progress into Custom Built, they are still uncommon but we’re learning about them. They’re individually-made, with no two alike… frequently changing and requiring artisanal skill.
- Progressing further into Product, components become increasingly common, better defined, and better understood. They’re manufactured with repeatable processes… Change is slower. Though there’s a focus on differentiation, you’d expect to see many of the same product and generally increasing stability and sameness.
- Once components move into Commodity, it’s all about scale and volume operations, which require a focus on standardization and efficiency. Change here is glacial.
The map can also represent more advanced concepts, like the flow of risk, information, and money between components… and even the climatic patterns in play, such as how you expect components to evolve and the inertia you anticipate encountering when that happens.
Similar to how a military map might have different kinds of forces, like infantry, tanks, and artillery… this map can have different kinds of components — Activities, Practices, Data, and Knowledge. We have different names for the evolutionary stages for each of them, but Simon uses the Activities labels as a shorthand.
Simon continues on to describe the basic steps of making a map. He recommends gathering a group of people familiar with the business into a room with lots of post-it notes and a huge whiteboard.
Step 1 is defining the scope and the user need. Are we a tea shop? An auto company? A nation state? Who do we serve inside that scope, and what do they need?
Every single component can be expanded into its own map, and every map is itself a single component in someone else’s map, so you can expand or reduce the scope as needed.
Talk to your users and understand their needs. A user journey may help here. While your business is a user with its own needs, it’s important to focus on the people you serve first. Their needs correspond to the high level capabilities you must provide.
Step 2 is the value chain. With your high level capabilities defined, examine each one and determine what subcomponents (any Activities, Practices, Data, or Knowledge) it will use. Then do the same for each of those subcomponents. Keep going until you reach the limits of the scope you defined earlier. For instance, there’s no sense in breaking down power any further if it’s just being consumed from a utility provider.
When you have a reasonable set of components, draw a line down the center, place your high level capabilities near the top, and place subcomponents underneath with lines drawn between them to show how they’re related… as in this component needs that component.
Step 3 is the map. Add a horizontal line for evolution at the bottom and mark sections for Genesis, Custom Built, Product, and Commodity stages as shown.
Then move the components of the value chain to their relevant stage. It’s easiest to examine a components’ characteristics and ask...
- How ubiquitous and well defined is the component?
- Do all my competitors use it?
- Is the component available as a product or a utility service?
- Is it something new?
Simon shares a cheat sheet you can use to help decide. Maps are a communication and learning tool, enabling discussion about the landscape. Arguments here are expected and desirable, but if you get particularly stuck, that may be a sign that a component should be represented as multiple subcomponents. Be careful to describe the component as it should be treated, rather than how you currently treat it.
Once you have placed the components in their relevant stage to the best of your ability, you have a map!
Share it with others and invite challenge to make the map better and spread its ownership.
Consider unmet needs and missing components. Make sure you’re not building your own toasters from scratch, and don’t confuse how you treat something versus how you market it.
You can map a whole line of business in a few hours, though it can also take longer on your first attempts as you get used to the process.
In the next chapter, Simon loops through the strategy cycle to share some of the basic lessons he learned by mapping his company back in 2005.
To read the rest of Simon’s book, or to get started with Wardley Mapping for yourself, visit LearnWardleyMapping.com.
I'd like to say a special thanks to the LearnWardleyMapping Patreon members, especially our Professional members, Hacker Ben, Tor Christian Klaussen, and Mario Platt, and our Enterprise Member, Photobox. Thanks for making this possible!