Defining Paradoxical Strategic Terms
Copyright Jack Mixner. 714 449 1040. www.mixnerstrategy.com
Strategy Paradox: strategies with the greatest possibility of success also have the greatest possibility of failure (Raynor, page 1).
Fast Change Isn't a Solution
Satisfying customers in ways competitors cannot copy requires significant commitment to a particular strategy (Raynor, page 4). If things change in the environment, the company may be so committed change is impossible. For instance, in the seventies it took GM ten years to re-design its cars to have better gas mileage (Raynor, page 6).
Incremental Change Isn't a Solution
Incremental change isn't a solution either because the company may fail to make "fundamental transformations (Raynor page 6)." The auto companies continue to rely on the internal combustion engine by making incremental changes for improvement. Ultimately, they may abandon the engine. When it is, other companies with other engines may leap ahead and dominate the market.
Predicting the Future is Impossible
Predicting the future is just as impossible as making changes (Raynor, page 8). Because of weaknesses in its home market, Toyota focused on creating lighter, higher quality cars with engines that achieved greater gas mileage, much to the derision of American manufacturers. It ended up, however, that its choice, or, rather, the reality of its situation, dictated a strategy that ended up being the correct one. This was luck, not strategy.
Solution: Different Level - Different Task
Requisite Uncertainty gives various levels of the management hierarchy different tasks for managing strategic uncertainty.
Senior management focuses on longer time horizons - on strategic uncertainty - by generating multiple scenarios with strategies for each. Investments, sometimes small and seemingly insignificant, are made in all the possible scenarios until things become clearer. All the different scenarios, and their resultant strategies for adoption, allow the company to cover all the bases when the ultimate situation becomes clearer. Now, fast change is more likely possible.
Lower down in management, shorter time horizon planning focuses on delivering on commitments already in place (Raynor, page 9).
In a perfect world, senior management is not about managing for results in the short term. They focus not on repairing existing strategies but on selecting the strategies to take on (Raynor, page 9). They generate strategic options - the strategies that could be useful in the future (Raynor, page 10).
Strategic Flexibility comes at the divisional level when operating divisions make decisions to optimize their current strategies, not about which strategies to choose. Senior management worries about creating a series of options and choosing which ones the divisions should address. The divisions, freed of choice, compete fiercely on the chosen strategies (Raynor, page 10).
References
Raynor, Michael E. The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It). Currency/Doubleday. 2007.