The Strategy Paradox
The Strategy Paradox is an interesting book written by Michael Raynor on why certain strategies adopted by certain companies are successful and why some are not. Interesting simply because it directly reflects what I am facing in my industry. However the replies he gives reminds me about that joke about a consultant that was lost in the country side and stumbles into a farmer who has his lost sheep…
In an interview with Guy Kawasaki, Michael Raynor shares his insights on what he coins “The Strategy Paradox”:
That is, the same strategies that have the highest probability of extreme success also have the highest probability of extreme failure. In other words, everything we know about the linkage between strategy and success is true, but dangerously incomplete. Vision, commitment, focus…these are all in fact the defining elements of successful strategies, but they are also systematically connected with some of the greatest strategic disasters.
In this interview he started out strong with Michael giving great examples of why the Sony Betamax was a failure and how Microsoft beat Apple to become the undisputed leader in the PC industry. In particular he describes Apple’s continued high-risk strategy today, which is very similar to my recent post:
Apple continued along the path that it had blazed with the Apple II and the Macintosh: very cool, very high-performing products built around a proprietary architecture of hardware-software integration. This was a perfectly reasonable bet to continue, but it happened to be the wrong one in the personal computer market of the late 1980’s. Like a broken clock, a strategy that never changes gets it right sometimes, though statistically it is wrong more often than not. The iPod is Apple’s latest hit, and it’s more of the same: a cool device built around a proprietary architecture. Apple’s clock hasn’t changed; it still reads twelve o’clock. It’s just that it happens to be noon again.
Excellent point, I could not have stated it any better.
However mid way through I started to get a little annoyed as his started getting very “wishy washy” with his answers.
For example, Apple’s strategy sometimes works great, and sometimes fails miserably. It’s not that Apple sometimes “forgets” what makes for greatness. It’s that what makes for greatness also exposes you to catastrophe. The same goes for Sony.
To produce success, vision, commitment, and focus must be linked to an accurate view of what lies ahead, and nobody can adequately predict the future. If you can guess right on a regular basis, my hat’s off to you…and can I buy your stock? But no one has any legitimate claim to an ability to make predictions relevant to true strategic planning.
It’s interesting as after reading the last 4 questions, Guy’s questioning, perhaps I am reading it wrong, seem to have a slight hint of frustration within it as he seems to not get the answers he was looking for. That was also exactly how I felt towards the end of the interview as well. It did leave me wanting for more, as I had experienced with Guy’s past interviews with authors.
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.
Perhaps Michael did not want to give away too much, but it did not help that he provided vague answers or stating the obvious. This was quite obviously reflected, in particular, when he described the different hierarchical responsibilities to strategy and innovation from the board of directors to the lowly manager. I also find it an odd comment as from my experience, corporate hierarchy and structure is paradoxical with innovation and strategy.
I will reserve anymore of my comments until I get around to reading the book. It is unfortunate that after this interview, the only reason I would pick it up is to see if there is an answer to this paradox and not just about him re-stating the obvious or talking in circles. Unfortunately it would not be on the top of my priority list, and the 34% discount it running on Amazon does not help at all.
You can read the entire interview here.