Emergic: Rajesh Jain's Blog

Emergic: Rajesh Jain's Blog header image 2

TECH TALK: Good Books: The Strategy Paradox

March 13th, 2007 · No Comments

I came across Michael Raynors The Strategy Paradox via an interview with the author of AlwaysOn. I was familiar with Raynor because of his previous book, The Innovators Solution that he had co-authored with Clay Christensen. The two things that caught my attention were the books byline Why Committing to Success Leads to Failure (and What To Do About It) and the following statement by Raynor: the same strategies that have the highest probability of extreme success also have the highest probability of extreme failure. In other words, everything we know about the linkage between strategy and success is true, but dangerously incomplete. Vision, commitment, focus…these are all in fact the defining elements of successful strategies, but they are also systematically connected with some of the greatest strategic disasters.

Here are a few more excerpts from the AlwaysOn interview by Guy Kawasaki:

Question: Why cant companies predict the future better?

Answer: Companies might be able to predict the future better than they can now, but for me the question is whether they will ever be able to predict the relevant future accurately enough for the purposes of strategic planning, and so avoid, or at least mitigate, the strategy paradox. I dont think thats going to happen anytime soon for some deep, structural reasons.

For example, randomness. Prediction requires the identification of a pattern that repeats, because a pattern is what allows you to use what has happened to infer what will happen next. Randomness is the enemy of pattern-based prediction because randomness means that there is no pattern, no way to use the past to predict the future.

Question: Whats the proper role in strategy formation for each level in a hierarchy?

Answer: Ive found that it helps to think about strategy in two halves: the commitments that all successful strategies entail, and the uncertainties attendant to those commitments. Commitments and uncertainties are only half the answer. The rest of the solution lies in calibrating the focus of each level of the hierarchy to the uncertainties it faces. It is common senseif not common practicethat the more senior levels of a hierarchy should be focused on longer time horizons. What hasnt been as widely recognized is that with longer time horizons come greater levels of uncertainty, and strategic uncertainty in particular. This fact has some profound implications for how each level in an organization should act.

Question: How does your answer change with respect to a start-up?

Answer: Start-ups tend to be enormously resource constrained. Typically they are not able to devote money and time to the problems of strategic uncertainty. As a result, start-ups tend to be bet the farm propositions: high risk, with the potential of high reward. Such firms dont manage strategic risk, they accept it.

Given my interest in the future and envisioning and creating tomorrows world, there is no way I could not get and read the book.

Tomorrow: The Strategy Paradox (continued)


TECH TALK Good Books+T

Tags: Tech Talk