THE LIMITS OF STRATEGY. Eduardo Jasson.
Eduardo M. V. Jasson, MBA, PhD.
Insight and Strategy Development Specialist.
Published on February 13, 2017
WHAT IS STRATEGY
There are several ways of defining strategy as a management tool. One of these ways is to consider it as an organizing tool that allows planning toward the future. This is the classic view of Igor Ansoff on strategy. It can be a vision, that motivates people to think which steps or actions are required to be put in motion to make this vision a reality. This is the most common view of entrepreneurship. There are many more ways to define strategy. Henry Mintzberg used the analogy of an elephant to show that strategy’s definition and meaning depend essentially on the point of view adopted by the strategist and the organization to which he pertains. Before, Michael Porter defined strategy as an instrument to achieve the best fitting of an organization toward certain environmental conditions. It was the “survival of the fittest” what defines the best strategy.
Do I think all of them are wrong? Or do I think there is at least one that is correct? Well, not necessarily, to both questions. To understand the real meaning of strategy, as a management tool, it is necessary to develop the ability to see it with new eyes and with a dynamic perspective. A strategy is not a fixed and static instrument, but it is more an instrument that changes as the business conditions change. Again, Henry Mintzberg provides the concept of intended strategy and emergent strategy. The difference between them is nothing more than an act of adaptation to changing business conditions.
The world becomes much more complex and, up to certain point chaotic. Emergent events rise almost on the spot and change the basic conceptualization of businesses and how businesses are managed. The type of businesses also changes and emerges as novelties with social, cultural and even political objectives, although they generate revenues larger than well-established corporations. The point here is how to deal with this complex world without disappearing in the process of trying to adapt and cope with it.
THE DUALITY OF STRATEGY
The answer to this fundamental question resides in a simple conception of strategy. As light can be described with a dual nature, a strategy also can be conceptualized and given meaning with a dual characteristic. In effect, under a business environment that shows a low rate of change and a, more or less, stable condition, strategy must follow an organizing planning that is equivalent to planning for the future. This planning is reflected in a set of plans that is composed of initiative and programs that must be implemented to achieve certain predetermined objectives and goals. A strategy is mainly a static instrument that helps to assign limited resources, and to evaluate performance, while observing the variation between what happen and what was planned. Even though strategy is considered a static tool, it admits certain changes, because any organization is not alone and isolated, but within a space where competitors react to actions taken as part of a planned strategy.
On the other hand, under an environment which is complex and chaotic, with a high level of turbulence, nothing can be taken for granted. There are almost infinite alternatives for this environment to evolve and to be in the future. It can be said that the future environmental state is opened to the imagination. This is the important point because under a hyper-turbulent environmental condition, any alternative of a future state is possible. Strategy as a static tool loses sense and meaning.
Entrepreneurs and mavericks give us here an important lesson to re-conceptualize strategy. A strategy is not anymore the result of applying certain organizing principles, but it is more the result of a process of learning and experimentation, to discern what is possible and what is not, as the environment evolves toward an unknown new state. This experimentation happens through an iterative process of “trial and error” that allows to make sense of the evolutionary process of the environment and to identify the hidden rules deeply embedded in a complex and chaotic system. In other words, allows identifying the “new order” within the system, equivalent to a discovery phenomenon.
STRATEGY IS EXPERIENTIAL LEARNING
Then, under a dynamic perspective, a strategy can be defined as a tool of experimentation and learning or an experiential learning process that promotes the discovery of a strategy that almost perfectly matches the environmental characteristics and also promotes a continuous adaptation to the changing and turbulent environment. Strategy becomes an experiential learning tool for any organization.
Let me use a metaphor to give more clarity to the new conceptual meaning of strategy. If a team of people decides to do rafting in a turbulent river in the Colorado Canyon, they can go alone. The risk is if any of those people knows the tricks and particularity of the flow and current in the river. They don’t know the signals that the river can show and that can be associated with high-risk. But if the team is enough courageous to do it several times, they began to learn and to know the river. They are experimenting and learning, and in each time they are mastering a bit more the river and its characteristics and signals. This is the reason why many groups use guides that have had the opportunity to do this process before. The guide knows very well his strategy and the team can do the same as they learn.
THE LIMITS OF STRATEGIC APPROACHES WITH A PRAGMATIC VIEW
So, a strategy can be given meaning as a static management tool, an organizing instrument to achieve certain objectives and goals, but also could be given a meaning as a dynamic tool that allows the organization to experiment and learn, affirming the duality characteristic of the strategy conceptualization. Nevertheless, the key question is how to use effectively this duality of strategy. When should an organization focus on using it as an organizing tool and when as an experiential learning tool? Even more important is the fact that people require different competencies to be good organizers and good planners, and different competencies and skills to be able and take the risk to experiment with a learning perspective from past experiences. These are the two predominant issues that a chief strategy officer must concentrate on when designing the strategy development system in any organization.
Then, the limits of strategy depend, fundamentally, on the environmental characteristics and rate of change of these conditions in relation to the conceptualization and meaning given to the strategy as a tool for the organization. As an organizing tool, the limit of its convenience and efficacy depends on of the level of turbulence on the environment. If the level of turbulence increases substantially, the organizing approach lacks sense and an experiential learning approach rises with more power to define what the organization can do or be in the future.
Is your organization prepared and does it have the people’s competencies in place to take advantage of the duality conceptualization of strategy? Because if this is not the case, remember that turbulence in the industry and the markets come suddenly and can surprise organizations with unexpected consequences. Examples can be found for thousands in the history of modern corporations. Just to mention some of them, the dot.com crisis, the mortgage crunch and the financial crisis of 2008, the Blockbuster and Eastman Kodak cases, or the emergence of microcomputers are only a few of them.
