One of the defining characteristics of our time is the inescapable reality of increased uncertainty and ambiguity. This has ramifications in all aspects of our lives, but I will focus just on the conduct of business instead of veering off into poetry or political analysis.
J.P. Castlin observes that companies are likely to encounter ‘strategic drift’ as earlier business planning becomes less relevant due to changes in the competitive environment:
It stands to reason that the farther we get from the current present, the less likely the new present is to resemble its predecessor. Certainly, the pace of change is rarely constant, but change itself is. As long as we keep doing the same thing, in the same way, strategic drift (the gradual deterioration of relative competitiveness) is all but guaranteed; the speed at which our plan becomes a hindrance to success may vary, but sooner or later, it will.
At the same time, the longer we stick with a plan, the more we are likely to invest in it. […] The more money we lose, the less capable we become of making peace with our losses. Gradually, and then suddenly, we no longer own our strategy - the strategy owns us.
That wisecrack — we no longer own our own strategy, the strategy owns us — holds a deep truth.
And if we were to zoom in on the company that has fallen into that trap, some mechanism is missing that might have picked up on the signals, changed course, made adjustments, and adapted. Indeed, Castlin argues for what he calls adaptive strategy, as an alternative to traditional, linear approaches:
There is no lack of companies that stuck with their original strategic plans despite market changes and consequently went under. The question is how to know when to change.
Unfortunately, there is no calendar date that one might pencil in, nor a single key metric to track.
The best way to deal with change is through adaptive strategy, which partly is about continuous adaptation through small and coherent moves (thereby limiting the need to make big moves and pivots) and partly about developing the ability to change more and faster should one still have to. It is not about mastering uncertainty, for it cannot be mastered, but making the best of it.
Castlin’s adaptive strategy is a newer version of Henry Mintzberg’s emergent strategy. In his work, Mintzberg has advanced the concept that top-down, linear, strategic planning — which he calls ‘deliberate strategy’ — is inadequate in the face of an accelerated world.
He criticized the deliberate model of strategy formulation and execution — where the CEO and a cadre of managerial planners apply ‘creative design’ — and the rest of the organization is structured and directed to execute that design. Note that such a strategy is fully formed before execution.
In The Design School: Reconsidering the Basic Premises of Strategic Management, he states,
Behind the premise of the formulation-implementation dichotomy lies a set of very ambitious assumptions: that environments can always be known, currently and for a period well into the future, in one central place, at least by a capable strategist there. To state this more formally, by distinguishing formulation from implementation, the design school draws itself into two questionable assumptions in particular: first, that the formulator can be fully, or at least sufficiently, informed to formulate viable strategies, and second that the environment is sufficiently stable, or at least predictable, to ensure that the strategies formulated will remain viable after implementation. Under some conditions at least, one or the other of these assumptions proves false.
As Rishad Tobaccowala puts it, ‘the future does not fit in the containers of the past’, and a deliberate strategy — even the most carefully constructed one — is just another container that fails to constrain the future.
If we leave the design school model behind, the alternative is what he calls ‘emergent strategy’. Instead of relying on what was known to the CEO and his cadre at the time of formulating a deliberate strategy, Mintzberg focuses on ongoing learning as a counter to Castlin’s strategic drift:
The fundamental difference between deliberate and emergent strategy is that whereas the former focuses on direction and control-getting desired things done, the latter opens up this notion of ‘strategic learning’. Defining strategy as intended and conceiving it as deliberate, as has traditionally been done, effectively precludes the notion of strategic learning. Once the intentions have been set, attention is riveted on realizing them, not on adapting them. Messages from the environment tend to get blocked out.
Signals are blocked because the linear, deliberate strategy calls on the organization to focus on making the strategy work, not paying attention to where and when it doesn’t. Rather than adapting to what is actually happening, people across the organization focus on the map, not the territory.
So, what is missing from deliberate strategy is the critical role of learning. Again, Mintzberg:
Adding the concept of emergent strategy, based on the definition of strategy as realized, opens the process of strategy making up to the notion of learning. Emergent strategy itself implies learning what works: taking one action at a time in search for that viable pattern of consistency.
Many old-school leaders may resist the idea that strategic thinking should not be the sole province of the C-suite or the strategic planning department. Everyone, and specifically those at the edge of the business — in closest contact with the marketplace — should be learning what works and what doesn’t, thinking adaptively about how to do better, and trying a new tack in the ever-changing marketplace. Yes, not everyone should be able to bet the company on some pivot into a new market, or a radical rethink of a product. But everyone should be able to take bounded efforts to tweak products, processes, and services, and to make recommendations for larger changes, as well.
This managerial resistance to emergent strategy is one way a deliberate strategy can turn on its formulators, and come to own them. They should be more afraid of the future sneaking up on them than the looming specter of uncertainty.
As Castlin pointed out, uncertainty cannot be mastered but instead must be accepted as the background noise of the mad, mad world we live and work in.
And Mintzberg offers this final insight to fearful leaders, to help their shift to emergent leadership:
It is important to remember that emergent strategy means, not chaos, but, in essence, unintended order.
Order that comes from loosening the reins, and pushing strategic learning across the organization, not from a map of the future that can never be perfectly designed.
