I initiated an action, for which I knew there would be an equal and opposite reaction. I sometimes do that, because I believe in waves, or oscillations, or rhythms. Call it what you want: I believe in them because they always beat stasis or straight lines. Nature doesn’t move in straight lines.
You didn’t disappoint. You very ably defended strategy. And you did it in an intelligent and nuanced manner -- unlike, say, Donald Trump. From a post in response by Rick Liebling: “I would … argue that the "seizing of opportunities" is not the antithesis of strategic thinking, but rather the result of it. A strong brand strategy helps a company understand what it should, and just as importantly, shouldn't do. This type of discipline is what allows a company to seize those very opportunities.”
And from Nick Schiavone: “I believe that Principles, Vision and Execution are more critical to ‘success & satisfaction’ than strategies, ideations and systems when it comes to launching, building and sustaining brands. The end result is really an ongoing, experiential relationship between a special ‘customer’ (i.e., a person of need or desire) and the product or service provided under the auspices of a special ‘preparer’ (i.e., a person of art & science). “
Here’s the thing. When I said much of a businesses performance comes down to luck, that sounded disparaging. But it’s far from it. Luck could also be defined as the circumstances of our environment: the factors that lie beyond our control. And they tend to be rhythmic in nature. Sometimes they’re good, sometimes they’re bad. Sometimes they’re huge swings in either direction -- what statistician Nassam Nicholas Taleb calls “Black Swans.” And if you look as strategy as Rick Liebling does, then strategy is simply being very good at detecting these rhythms and responding to them.
But that’s not how we typically look at strategy. In fact, our entire methodology of strategy tends to run in decidedly straight lines. Strategy should be decided on high and be disseminated down to the front line masses. In the case of brand strategy, it may be determined by an agent working on your behalf and delivered in the guise of branding guidelines and polished ads. It should be decisive and unerring. It should plow forward, despite circumstance.
Phil Rosenweig’s point in “The Halo Effect” was not that we should just surrender to the whims of fate, but that we shouldn’t kid ourselves about the importance of fate and our ability to control it. There is no single, straight-line, universally applicable recipe for dealing with fate.
The problem with strategy, as it is practiced in most organizations, is that it blinds us to fate. We tend to execute in spite of circumstance, rather than in response to it. Instead, strategy in the new marketplace should perhaps be renamed “sense-making.” It should embrace the rhythms and oscillations of fate instead of dampening them in the name of strategic thinking. Organizations should become one massive sensory and experimental organ, constantly monitoring the environment and responding in a rational and opportunistic way.
Finally, let’s not discount the impact of effective leadership and management practices. I said last week that leadership, when isolated from other variables, only accounted for 4% of an organization’s performance. Management practices accounted for another 10%. That sounds ridiculously low, but only because we tend to excessively canonize those things in our business mythologies.
Let’s approach this in a more rational way. Let’s imagine that two companies, A & B, both launched this year with $10 million in sales. Over the next 20 years, both companies were subject to the same rhythms -- positive and negative -- of the marketplace. But, because of superior leadership and management, Company A was able to more effectively capitalize on opportunity, giving it a 14% advantage over Company B. In 2035, what would be the impact of that 14% edge? It’s not insignificant. Company B would have grown in sales to $21 million, with growth of just over 100%. But Company A would have sales of almost $290 million. It would be almost 14 times the size of Company B!
It’s not that I don’t believe in strategy. It’s just that it’s time to rethink what we do in the name of strategy.