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TECH TALK: Good Books: The Strategy Paradox (Part 3)

March 15th, 2007 · No Comments

Here are some excerpts from the first chapter of The Strategy Paradox by Michael Raynor:

Most strategies are built on specific beliefs about the future.Unfortunately, the future is deeply unpredictable. Worse, the requirements of breakthrough success demand implementing strategy in ways that make it impossible to adapt should the future not turn out as expected. The result is the Strategy Paradox: strategies with the greatest possibility of success also have the greatest possibility of failure. Resolving this paradox requires a new way of thinking about strategy and uncertainty.

The strategy paradox, then, arises from the collision of commitment and uncertainty. The most successful strategies are those based on commitments made today that are best aligned with tomorrows circumstances. But no one knows what those circumstances will be, because the future is unpredictable. Should one have guessed wrong and committed to the wrong capabilities, it will be impossible to adaptafter all, a commitment that can be changed was not much of a commitment. As a result, success is very often a result of having made what turned out to be the right commitments (good luck), while failed strategies, which can be similar in many ways to successful ones, are based on what turned out to be the wrong commitments (bad luck). In other words, the strategy paradox is a consequence of the need to commit to a strategy despite the deep uncertainty surrounding which strategy to commit to. Call this strategic uncertainty.

The tool for creating strategic flexibility, called Strategic Flexibility, has four phases:

Anticipate: build scenarios of the future
Formulate: create optimal strategies for each of those futures
Accumulate: determine what strategic options are required
Operate: manage the portfolio of options

This book is not the first to observe that the future is unpredictable and that strategy making must take uncertainty into account. What is new is that here uncertainty is not an afterthought, not something one considers after commitments have been made. Instead, uncertainty is placed at the core of decision-makjng at the highest levels of the organization, and a broad range of strategic and organizational thinking has been marshaled to address the paradox created by uncertainty.

Tomorrow: The Strategy Paradox (continued)

TECH TALK Good Books+T

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