The Strategy Paradox

Good Books: (via Emergic) Michael Raynor's The Strategy Paradox via an interview with the author of AlwaysOn.

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

Question: Why can’t 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 don’t think that’s 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: What’s the proper role in strategy formation for each level in a hierarchy?
Answer: I’ve 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 sense if not common practice that the more senior levels of a hierarchy should be focused on longer time horizons. What hasn’t 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 don’t manage strategic risk, they accept it.

I am in a start-up mode; perhaps, in the coming weeks, months + years ahead I will have more to share so that I am able to see the fruits of my vision, commitment + surprises (as I learn more) + strategies may also teach you something more: the highest probability of extreme success may also bring the highest probability of extreme failure.