The Art of
What Works
00 FM Duggan 6/11/03 3:59 PM Page i
This page intentionally left blank.
The Art of
What Works
How Success Really Happens
William Duggan
McGraw-Hill
New York Chicago San Francisco
Lisbon London Madrid Mexico City
Milan New Delhi San Juan Seoul
Singapore Sydney Toronto
00 FM Duggan 6/11/03 3:59 PM Page iii
Copyright © 2003 by William Duggan. All rights reserved. Manufactured in the United States of
America. Except as permitted under the United States Copyright Act of 1976, no part of this publication
may be reproduced or distributed in any form or by any means, or stored in a database or retrieval
system, without the prior written permission of the publisher.
0-07-143350-3
The material in this eBook also appears in the print version of this title: 0-07-141206-9
All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after
every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit
of the trademark owner, with no intention of infringement of the trademark. Where such designations
appear in this book, they have been printed with initial caps.
McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales pro-
motions, or for use in corporate training programs. For more information, please contact George
Hoare, Special Sales, at or (212) 904-4069.
TERMS OF USE
This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors
reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted

The Problem of Intuition 13
Goal Setting versus Coup d’Oeil 16
Four Keys to Success 22
Coup d’Oeil Today 26
Coup d’Oeil in Science 30
East Meets West 35
An Eye for Business 41
Chapter 3
The Art of Success 43
Adaptive versus Creative Response 43
Creative Imitation 48
Build on What Works 51
Johnson & Johnson 53
Marriott 53
American Express 54
Creative Structure 58
DuPont 60
00 FM Duggan 6/11/03 3:59 PM Page v
For more information about this title, click here.
Copyright 2003 by William Duggan. Click Here for Terms of Use.
General Motors 61
Standard Oil 64
Sears 66
The Art of Japanese Business 68
The GE Way 72
The Erratic Goddess 76
Creative Success 80
Part II The Advantage of Expert Intuition 83
Chapter 4 Plan-to versus Can-do 85
The Triumph of Planning 85

Creative Stimulation 157
Bootstrapping 161
Normal Science 165
What-Works Scan 167
Wei Wu Wei 171
Quality 173
Dialogue 176
Reengineering 178
Game Theory 181
Trotter Matrix 183
S-Curve 185
After-Action Review 187
Chapter 8
The Art of Synthesis 193
Whose Strategy Is It? 194
The McKinsey Way 196
Strategic Synthesis 206
Chapter 9
The Way of What Works 211
In Search of Success 215
Let Go 220
The Hero’s Journey 224
Creative Strategy 229
Appendix
Right versus Might 233
Schools of Social Strategy 234
In Search of What Works 236
GRAD 238
Globe-Trotter 242
Notes 351

someone else has done in the past, but in new combinations to
suit the present. The more you study the experience of others, and
the more you practice yourself, the more you can do. What works
in the future is some combination of what worked before in the
past. Great scientists, great artists, great business leaders—they
don’t “reach for the stars,” they grasp what works.
Four centuries later, we hear an echo of Leonardo’s secret in
the words of a modern Renaissance man:
The operative assumption today is that someone, somewhere, has
a better idea; and the operative compulsion is to find out who has
that better idea, learn it, and put it into action—-fast.
2
This quote comes from Jack Welch, who rivaled Leonardo in
the range of his achievements. Welch ran General Electric, the
world’s largest conglomerate, for 20 years of stunning success,
from 1981 to 2001. At a time when other companies sought greater
focus on one or two major businesses, Welch succeeded in a
dozen different sectors, from aircraft engines to mortgage insur-
ance to a major television network.
For Welch, a good idea was something that worked before
somewhere else. You search for what works, and that tells you
what you can do. Then you go ahead and do it. As Welch saw it,
his main job was to spread this method through General Electric’s
many different companies. Contrast that with the dot.com craze
of the same era, where pie-in-the-sky business plans brought the
stock market to its knees. Like Leonardo da Vinci, Welch was an
artist of what works.
This book tells how Leonardo and Jack Welch did it. And not
just them: We find dozens of others throughout the ages. Napo-
leon Bonaparte, Bill Gates of Microsoft, Ray Kroc of McDonald’s,

the globe:
A hero ventures forth from the world of common day into a
world of supernatural wonder: fabulous forces are there encoun-
tered and a decisive victory is won: the hero comes back from this
mysterious adventure with the power to bestow boons on his fel-
low man.
3
There are countless myths in the world, but only one hero’s
journey. So too with success: Amid great variety, you find the
Preface xi
00 FM Duggan 6/11/03 3:59 PM Page xi
same story again and again. Furthermore, we will find that our
strategists see what to do not in bits and pieces but all at once, in
a flash of insight that starts them off on a hero’s journey of the sort
that Campbell describes.
There are many, many artists of what works—or perhaps, as
Campbell might claim, there is only one, with a thousand faces
depending on the situation and times.
Maybe one of these faces is you.
xii PREFACE
00 FM Duggan 6/11/03 3:59 PM Page xii
The Art of
What Works
00 FM Duggan 6/11/03 3:59 PM Page xiii
This page intentionally left blank.
PART
I
The Art
of Expert
Intuition

we expect. And it’s been around for a very long time, since the
first full scholarly study of strategy more than a century and a
half ago.
That study is On War by Carl von Clausewitz, published in
1832.
2
Strategy began as a military science, and over the years
it spread to other fields, especially business. Although military
strategy goes back in time as long as war has existed, the schol-
arly study of strategy starts with von Clausewitz. The word strat-
egy entered the English language only in 1810, at the height of
Napoleon Bonaparte’s military success.
3
Napoleon won more bat-
tles than any other general in history, before or since. On War
explains how he did it.
Von Clausewitz uses a vivid term for imperfect information:
the “fog” of war.
The great uncertainty of all data in War is a peculiar difficulty,
because all action must, to a certain extent, be planned in a mere
twilight, which in addition not unfrequently—like the effect of
fog or moonshine—gives to things exaggerated dimensions and
an unnatural appearance.
According to von Clausewitz, four key elements of strategy
will help you make it through this fog of uncertainty.
First, you enter the fog with “presence of mind”—you expect
the unexpected. Don’t go in thinking that you already know what
to do. Be ready for surprise.
Second, you cut through the fog in a flash of insight. That flash
is a coup d’oeil,* which is French for “glance.” To von Clausewitz, a

unique.
Key scholars of expert intuition include Herbert Simon, who
won the 1978 Nobel Prize in economics, and the psychologist
Gary Klein, who studied firefighters, emergency room nurses,
and soldiers in battle. We also find expert intuition in the “science
of science,” the study of how scientists make their discoveries, as
told by the great historian of science, Thomas Kuhn.
Expert intuition shows up in philosophy, too, especially in
the Pragmatism of William James and other leading scholars
of his time. In The Metaphysical Club, Louis Menand tells how
Pragmatism became America’s core philosophy at the start of the
twentieth century, when the country teemed with competing reli-
gions, cultures, and traditions from around the world. In the face
of so many theories to choose from, Pragmatism tells you to pick
whichever one works the best for you in your current situation.
We find a similar strain in Eastern philosophy: Taoism in China
and Zen in Japan. Expert intuition runs through two ancient Tao
classics from the fifth century
B.C., the Tao Te Ching by Lao Tzu
and The Art of War by Sun Tzu. Centuries later, Tao merged with
Buddhism to become Zen. Japanese masters of crafts and martial
Introduction 5
01 Chap Duggan 6/11/03 3:36 PM Page 5
arts today study expert intuition through Zen classics like The
Book of Five Rings by Miyamoto Musashi, a great samurai of the
Middle Ages.
5
In war, in science, and in Eastern and Western philosophy,
expert intuition is the art of what works. You do what you can,
not what you want to, based on what worked in the past. And the

ignites the spark of the art of what works.
6 THE ART OF EXPERT INTUITION
01 Chap Duggan 6/11/03 3:36 PM Page 6
In business strategy, our study of the art of what works begins
with Joseph Schumpeter, an Austrian economist in the early twen-
tieth century. Schumpeter said that entrepreneurs create economic
growth—not the other way around. That is, entrepreneurs do
not just take advantage of what economic growth produces. They
see opportunities that no one else sees and turn them into eco-
nomic growth. In a key essay, “The Creative Response in Economic
History,” Schumpeter cites “personal intuition and force”—other-
wise known as coup d’oeil and resolution—as the key to success-
ful entrepreneurship.
7
In The Mind of the Strategist, by Kenichi Ohmae, coup d’oeil
and resolution show up again as “insight and a consequent drive
for achievement.”
8
In The Growth of Firms in Japan, Ryuei Shimizu
calls them a “sixth sense” and “spiritual courage.”
9
Ohmae and
Shimizu cite these elements as the key to Japan’s tremendous
business success in the decades after World War II. And in The
Origin and Evolution of New Businesses, Amar Bhidé shows that
successful entrepreneurs don’t dream up ideas on their own; they
take them from other businesses, like Napoleon drawing on the
actions of great generals before him.
10
Another study of business success, Built to Last, by James

plan activities that will enable you to reach it. If you keep to your
plan, you’ll reach your goal. But in The Rise and Fall of Strategic
Planning, Henry Mintzberg warns against rigid adherence to
plans.
13
Instead, he favors “emergent” strategy, where you adjust
your plans over time as new information emerges. Nowadays,
most strategic planners agree with Mintzberg. James Quinn, for
example, offers a similar view and calls it “logical incremental-
ism.”
14
The message: In the face of imperfect information, keep
your strategy flexible.
The second school of strategy, the learning organization, gives
a different response to dealing with the fog of war: One person
cannot possibly master enough information to develop a complex
strategy, but a team can, so everyone in the system needs to work
together. The best summary of this school remains The Fifth
Discipline, by Peter Senge.
15
And in Organizing Genius, Warren
Bennis supports the idea with several case histories.
16
The mes-
sage: In the face of imperfect information, work as a team.
The third school, competitive strategy, cuts through the fog of
business with economic analysis. The leader of this school, Michael
Porter, uses economic research and analysis to give a firm a better
understanding of its economic position in an industry, with special
emphasis on the positions of competitors throughout the entire

18
We can also add elements of expert intuition to tools from
other schools of strategy. For example, an exercise in strategic
planning or a team dialogue session in the learning organization
often begins with the question, “What is our vision?” That’s fine.
In the art of what works, however, we arrive at that vision by ask-
ing first, “What works?” The vision comes second, after you see
what path can lead to success. That avoids developing a vision
that you have no way to reach.
As another example, in competitive strategy, you analyze the
“five forces” that determine your competitive position: direct
competitors, suppliers, customers, potential entrants, and substi-
tutes. In the art of what works, these five forces also become “five
sources,” where you look for things that others are doing right
and that you might do as well. The result is creative imitation
based on what you find. Competitive analysis gives you the lay of
the land, but it does not tell you what path to take. Only a coup
d’oeil, based on what worked in the past, does that.
Using the principles of expert intuition, examples from busi-
ness history, and practical methods is how you learn the art of
Introduction 9
01 Chap Duggan 6/11/03 3:36 PM Page 9
what works. In the chapters that follow, we study these princi-
ples, examples, and methods in greater detail. At all times, we
look first for other observers who came before. This is the first
book to apply recent advances in expert intuition to the art of
strategy, but the basic idea is as old as mankind. It’s the ancient
secret of success.
This book itself follows the art of what works. We take what
others have found before us and make a new combination. The

01 Chap Duggan 6/11/03 3:36 PM Page 10