| | Everything we know about
strategy is true ... but
dangerously incomplete.
The very behaviours and
characteristics that
maximise a company's
probability of achieving
notable success – such
as a compelling vision,
bold leadership and
decisive action – also
maximise its probability
of total failure. A new
book by best-selling
author Michael E.
Raynor, Deloitte
Consulting LLP and The
Distinguished Fellow,
Deloitte Research, The
Strategy Paradox,
presents a provocative
look at the perils of
strategy's conventional
wisdom – and what
business leaders can do
about it.
"Business leaders
feel compelled – in
fact, are exhorted to
make choices and set
firm strategies today
for their companies
based on assumptions
about a tomorrow that
they cannot predict. In
other words, guessing is
the secret to success,
but only when you guess | |
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| | right," said Raynor.
"The collision between
the need for commitment
to a future direction
despite uncertainty
leads to the disturbing,
and until now, ignored
kinship between
strategies that succeed
and those that fail:
this is the strategy
paradox."
The Strategy
Paradox offers a way
out, one that allows
companies to achieve the
returns they seek at a
level of risk they can
tolerate. The key is to
separate the management
of commitments from the
management of
uncertainty using an
organisational principle
Raynor calls "Requisite
Uncertainty". Based on
the commonsense notion
that senior leadership
should be focused on the
long term while
operating management
attends to shorter-term
priorities, "Requisite
Uncertainty" has some
rather counter-intuitive
implications:
- The board of | |
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| | directors should not be
involved in
strategy-making, but
instead on defining the
strategic risk profile
of the firm, taking into
consideration the risk
preferences of
carefully-defined
constituencies;
- The CEO should not
make strategic choices,
but rather should focus
on building "strategic
options" thereby
creating the ability to
pursue alternative
strategies that could be
useful depending on how
the future unfolds;
- Senior management
should not be concerned
with short-term results,
but should focus efforts
on hedging the outcomes
expected from a chosen
strategy;
- Line managers
should be focused
exclusively on
short-term results, with
no concern for long-term
strategic questions.
Raynor provides a | |
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| | practical toolkit for
implementing these
prescriptions, the
cornerstone of which is
"Strategic Flexibility",
a framework that
combines tried and true
management techniques in
ways that create a
fundamentally new
approach to managing
uncertainty. The four
phases of "Strategic
Flexibility" are:
- Anticipate:
building scenarios of
the future;
- Formulate: creating
optimal strategies for
each of those futures;
- Accumulate:
determining what
strategic options are
required;
- Operate: managing
portfolios of options.
Raynor supports his
thesis with what is
perhaps the largest
study of the
relationship between
strategy, performance,
and firm survival that | |
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| | has ever been done: the
equivalent of more than
150,000 survey responses
from companies
representing every
economic sector. He
demonstrates that the
types of strategies
systematically
associated with success
are also systematically
associated with failure.
He brings his assertions
to life with vivid case
studies featuring
companies such as Sony,
Microsoft and Johnson &
Johnson.
Raynor is the
coauthor, with Clayton
M. Christensen, of the
bestselling The
Innovator's Solution.
He has a doctorate from
the Harvard Business
School and is an adjunct
professor at the Richard
Ivey School of Business
in London, Canada. He
lives in Misissauga,
Canada.
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