Michael E. Raynor - The Strategy Paradox: Why committing to success leads to failure

CONTENTS

To the futurewhatever it may be.

ACKNOWLEDGMENTS

I have read several hundred business books in the course of writing this one, and I have always paused to read the Acknowledgments page, generally out of idle curiosity. Some of the books I read are seminal, cornerstone works; others are entirely overlooked, however worthwhile their contributions to the field. But regardless of their status or stature, there is one common denominator: most everyone who undertakes the intensely selfish endeavor of writing a book attempts to leave some mark on the primary tangible output of their intellectual odyssey that recognizes those who made that self-indulgence possible. For some reason, it is often easier to offer these sentiments publicly than in person.

In at least this one respect then, this book is the same as every other, famous or forgotten: as a gesture of thanks I am giving over the first couple of pages to those who supported and helped me. It is not much. It is not original. But it is heartfelt and genuine, and it is the best I can do.

I begin with my firm, Deloitte, which has provided me the context and opportunity over the last six years to develop these ideas through invaluable interactions with both clients and colleagues. I have been perhaps uniquely fortunate to find myself part of an organization that has gone out of its way to allow me to create a special kind of professional fulfillment.

Wes Neff at the Leigh Bureau has been a believer since before the beginning of this effort, seeing the possibility of something substantial in someone who got lucky. Roger Scholl at Currency/Doubleday has been similarly supportive; his patience and enthusiasm for these ideas have been more important than he realizes.

Johnson & Johnson, Alliant Energy, and BCE Inc. all feature prominently in this book, but only because of Dave Holveck and Ken Dobler at J&J, Erroll Davis (then CEO) and Flora Flygt (then director of corporate research and market planning), both formerly at Alliant Energy, and Peter Nicholson, then Chief Strategy Officer at BCE. Being a consultant is the most rewarding when you have the chance to work for the most demanding clients who are tackling the most demanding challenges. They have all helped me and my colleagues learn what we never would have otherwise, and I shall be forever grateful for the opportunity to work with them.

Jim Wappler somehow found the time and energy to respond to my endless and always last-minute requests for some bizarre analysis of public company data or Compustat cross-tab. Jim can do things with Excel that are probably illegal in some states. He always offered his assistance enthusiastically and never failed to deliver more, and better, analysis than I asked for. Gaurav Singhal helped with similar data collection and analysis for the charts in Chapter 10. Susan Krauss in San Francisco and Khatija Mohammed in Toronto were unfailingly good natured and helpful in chasing down many half-remembered articles (can you find something by someoneI think the title begins with Lit came out in the 80sor maybe the 90s?).

In alphabetical order, Sandy Aird, Tom Barker, David Bushko, Mark Cotteleer, Richard Lee, Laura Martin, Phil Rosenzweig, and Bernard Tubiana all provided comments on various drafts of the manuscript, providing indispensable advice and serving as a sympathetic but critical audience as the ideas evolved.

Allen Morrison, in addition to filling that same role, provided the opportunity to develop these ideas with executive education program participants at IMD in Lausanne, Switzerland. The chance to hold these concepts up for scrutiny by several hundred senior managers from around the world was invaluable.

Stu Thornhill and Rod White at the Ivey Business School invited me to join in on some of their research into the relationship between strategy and performance. The resulting insights provide much of the conceptual and empirical foundations upon which this book stands, and Im grateful for the privilege of this continuing collaboration.

Tom Eisenmann of the Harvard Business School was on my thesis committee when I was a doctoral student there. I did not lean on him as much now as I did then, but Tom has nevertheless contributed enormously to this project as well, and, although he does not know it (well, I assume he does now), a big part of finding the motivation to press on with this manuscript through winters drear was his assurance that I wasnt wasting my time. I was willing to believe in these concepts to no small degree because Tom did.

A big part of what can make consulting personally as well as professionally gratifying are ones colleagues. Mumtaz Ahmed, Adriaan Davidse, and Howard Weinberg are, each in their own very different ways, gentlemen, scholars, and irreplaceable. I owe them all very different debts that must perforce go unpaid in kind. But gentlemen, my IOU is good, should you ever wish to call it.

Jim Goodfellow, another Deloitte colleague, contributed critically important insight very early on in the development of the ideas I have tried to give voice to in this book. His deep knowledge of boards forged the first link in the chain of reasoning connecting hierarchy, time, and uncertainty in ways that revealed to me what I believe to be a profound but long-overlooked truth. Without that inspiration this book would not exist in anything like its current form.

I single out Dwight Allen, also a colleague, for special mention. Dwight has played a role in the evolution and refinement of the concepts in this book that I can never completely acknowledge. He has made innumerable and invaluable contributions over the years in both theoretical development and client application. Over the last six months, Dwight has been indefatigable in reading through draft after draft, and his ability to see the text each time as if for the first time, to offer encouragement by identifying what is working and why, to highlight areas warranting improvement and to offer suggestions how, and to point out where I had inadvertently made things worse has been of inestimable worth. Everyone should be lucky enough to have a colleague like Dwight. I count myself among those few who have been.

I save for last those to whom I owe the most. My wife, Annabel, has kept our home running while I have been either chained to my desk upstairs or dealing with the inevitable indignities of air travel, all despite dealing with the inconveniences of a pregnancy that coincided with the really hard work of getting the manuscript through to production. (The new arrival is due in December.) Charlotte, our five-year-old daughter, sees none of my unusual professional existence as in any way unusual, for it is all she has known. And so, as only children can, she has helped me to keep it all in perspective while reminding me of what makes any of it worthwhile. I have no idea what her future holds, but she has already taught me that in life, unlike in business, it is the journey that matters most.

Mississauga, Ontario

October, 2006

CHAPTER ONE

WHAT STRATEGY PARADOX?

Most strategies are built on specific beliefs about the future. Unfortunately, the future is deeply unpredictable. Worse, the requirements of breakthrough success demand implementing strategy in ways that make it impossible to adapt should the future not turn out as expected. The result is the Strategy Paradox: strategies with the greatest possibility of success also have the greatest possibility of failure. Resolving this paradox requires a new way of thinking about strategy and uncertainty.