The Strategy Paradox: Why committing to success leads to failure (and what to do about it)
by Michael E. Raynor
The basic concept of this book is that companies that commit to a grand business strategy may lock themselves into failure if the business environment changes from their initial assumptions or was never similar to their initial assumptions. In some cases, the author argues, other companies without strategy may stumble into success where a well-though-out plan may lead a 'properly' run company astray.
The target reader is anyone who is interested in the strategic management of business, with emphasis on large corporations with multiple business arms or holding/umbrella companies with a varied corporate portfolio.
The Book Content:
1. What Strategy Paradox?
2. The Best-Laid Plans
- Sony case study on BetaMax and MiniDisc
- Sony's problem: focussed too much on strategic success
- Solution: should have focused on strategic uncertainty
3. Who Dares Wins ... or Loses
- The extremes of the business domain are the place of highest risk and of highest return
- Most firms choose less risk and average return to make it to next year
4. The Limits of Adaptability
- Being completely adaptable is not enough
5. The Limits of Forecasting
- Impossible to predicte long-term with accuracy
6. It's About Time
- Hierachical levels in a company should have different planning and decision making responsibilities based on time-lines
7. Making Choices versus Creating Options
- Avoid making commitments when uncertainty exists
- Instead create options
- This option creation needs to be centrally held in a company
8. Strategic Flexibility
- Johnson & Johnson case study on management of strategic uncertainty and strategic options
9. What If ... ?
- Using scenarios to grow strategic options
- Scenaio tools and techniques
10. Preparing for the Unpredictable
- Creating, preserving, exercising, abandoning business options
- Putting value on business options
- Choosing business options based on the management's risk/return profile
11. Reinventing Strategy
- Summary - need to embrace uncertainty
Appendix A: How Diversification can Create Value
Appendix B: Scenarios at Alliant Energy
Appendix C: Real Option Valuation
My Opinion: Basically, the book is longer than I feel the topic merits. It looks like the author tried to stretch it out with footnotes and expounding on case studies, but the topic could have been covered in probably 6 chapters. (When I wrote papers in University, one of my Profs told me that the more citations I used the better the reader's opinion of my research would be. He also mentioned I should cite some of his work as well :)) but the footnotes are asides that will either be unread or will break the flow of the idea.) I feel that some of the author's case studies are not particulary strong in supporting the premise of the book. On the whole, I agree that blindly locking into a strategy is bad, while the idea of creating options at the board and CEO level rather than making decisions was a revelation to me. I came over from the point-of-view of portly cigar-smokers in a locked room making grand strategy to energetic domain-savy investigators creating possible futures.
The author does not give a good encapsulated view of the way the world is and why the book will help. Basically the author mixes some good and bad, risk, randomness and reward stories and tries to apply his theory which is just a statement of the obvious. Had more statistics been presented with quantified technical values for weighing success we could have seen the benefits of a before and after.
I would approach the topic this way:
Problem Definition (with a couple of case studies)
Approaches to Solving the Problem (scenarios, forecasting, adaptability)
Case Studies where the Techniques were used or not used (J&J, Sony, Vivendi, BCE, etc.)
Ideas: A book for building good tools for keeping options open for the small business entrepreneur would be an excellent read.
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