The Role of Strategy

There is a terrific quote in Creative Disruption by Simon Waldman about strategy. It is from Markus Reckling, the Managing Director of Corporate Development for Deutsche Post – here’s the quote plus Waldman’s interpretation:

“I used to think that strategy was about avoiding unforeseen events; now I it’s about making sure you can deal with them.” In other words, you cannot eliminate uncertainty – but if you want to be able to deal with it, it helps if you have the strongest possible core business to build from.

This is really important. A lot of the tools that we have to help build strategy don’t prepare us to deal with a dynamic environment – instead they primarily serve to reduce the perceived level of uncertainty that we face. This is a trap.

Here is John explaining a bit about why:

The danger with a lot of the tools that we use in strategy is that they seem very precise. This precision appears to reduce the uncertainty that we face. Since most of us are uncomfortable with uncertainty, this is a good thing. The problem with this is that it does not reduce the actual amount of uncertainty we face. Therein lies the danger – reducing perceived uncertainty can lead to a false sense of security, leading us to be even more vulnerable to major disruptions in our environment, or to radical innovations.

When you think about strategy, remember that it is supposed to help us compete. This means that we need to build tools that evolve, that are dynamic, and the equip us to deal with change, not to reduce uncertainty. We have discussed some approaches to doing this previously.

Here is a test for your strategy: when you think about it, does your strategy make you feel more comfortable about the future? If so, that’s a pretty good sign that you have an uncertainty-reducing strategy. If that’s the case, start working on building one that makes you uncomfortable. That’s the way to prepare for change.

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

Please note: I reserve the right to delete comments that are offensive or off-topic.

4 thoughts on “The Role of Strategy

  1. Hi Tim,
    A great post and agree with all your points. The only qualification I would make is that this is true especially for innovation strategy (as strategies can be for anything and under certain contexts, the models that John talks about can still offer value).

    Coming back to the crux of your post, I agree that percieved uncertainty reduction is not the best solution. A few days ago I had tweeted that one should use the “fire department” model to stay on top – and when I did that my thoughts were along the exact same lines as your reasoning.

    A fire department does not and cannot have a solution for every problem that they might face – as they yet do not know what they will be facing. So what they do is to have a very efficient team that can handle any unforseen event as well as even regular ordinary events. Corporations need to have a similar mentality – instead of trying to reduce the future into understandable chunks, it is better to prepare oneself to handle any uncertainties or changes as they are encountered.

    Also, instead of asking if their strategy makes them comfortable about the future, what I would like to know is if the solution they have envisioned through their strategies makes them comfortable. If yes, then like you said they are under an illusion of reduced uncertainties.


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