Playing To Win
Strategic Nihilism
Watch Out Because It’s Delusional & Destructive
A reader used the term strategic nihilism with me last week and it reminded me that I hadn’t talked about that concept for a long while. Then, almost on cue, a couple of examples of it arose in recent interactions. I decided it was the universe telling me that I should do a Playing to Win/Practitioner Insights on its dangers. It is called Strategic Nihilism: Watch Out Because It’s Delusional & Destructive. And as always, you can find all the previous PTW/PI here.
Meaning and Recent Examples
The reader was referring to people who treat strategy as if it is infeasible in their context. I have touched on one aspect of this before in My Business is Too Fast-Moving for Strategy, which is, as the title suggests, about people who argue that because their business is moving so very fast, they can’t ‘do strategy’ in their business — they believe that they do something other than strategy in making their choices.
There are broader cases when the people involved think strategy is infeasible/inappropriate in the general case, which has come up in two of my endeavors recently.
The first was in responding to a request for advice by a friend in an investment firm. He wanted advice on how to get the firm’s leadership, who had a complete aversion to strategy, to do strategy. To the leadership group, strategy choice boxed the firm in and it preferred complete flexibility. Some went so far as to say that strategy is a manifestation of irrational bias.
The second was when I was asked to review the draft of a book for purpose of potentially providing an endorsement (I didn’t). One of its exemplary case studies chronicles a new president of a bank who “terminated” the strategy department and chose to “operate without a strategic plan” and declared that he/the bank “has no strategy.”
The investment firm leadership and the bank president exemplify strategy nihilism.
History of Strategy Nihilism
The great Canadian strategy scholar Henry Mintzberg is a key figure in the history of strategy nihilism — though I am confident he didn’t intend to be. Henry is arguably the greatest Canadian strategy academic of all time. His 250,000 academic citations are five times the leading Canadian in the Rotman School strategy department, who is also a globally recognized superstar in the field. In addition, unlike most academic stars, Henry crossed over into the practitioner world with several popular books, including The Rise and Fall of Strategic Planning, Managers, not MBAs, and Strategy Safari, plus 16 Harvard Business Review (HBR) articles (only one other Canadian writer has more than 5 HBR articles — me at 34).
He is a fierce critic of MBA education and of analytically-driven strategic planning processes — two vectors of criticism that I share entirely. In one of his most influential HBR articles Crafting Strategy (1987), he introduced to the practitioner world the concept of emergent strategy (a concept which he had introduced to the academic world two years earlier). In his view, strategies aren’t as proactively formulated and chosen as researchers or practitioners think they are. Instead, they are crafted more iteratively as the company interacts with its changing environment.
Again, I resonate largely with his view. Strategy is a messier crafting process than strategic planning technocrats love to imagine it is — and indeed attempt to force it to be. However, even though I like Henry and his work a lot, I have always viewed him as being more nihilistic on this point than I am inclined to be. He is much more skeptical that strategy can be created deliberately in advance. That may be because Henry is first and foremost an academic and I am first and foremost a practitioner. I have been a leader in organizations in which we have created numerous successful deliberate strategies (e.g. Monitor Company, Rotman School and Tennis Canada) and have advised companies in the creation of scores more. So, I have extreme confidence that it can be done, though I happily acknowledge that learning and adjusting as one goes along is also important.
The downside to Henry’s work on emergent strategy is the way in which so very many executives interpret it. In my experience, the most common interpretation: since the environment is unknowable and fast-changing (yes, the VUCA obsession features large here), it is impossible for me to make strategy choices, and instead, I am going to let strategy be emergent. By that, they mean that they will make strategy choices at some unspecified future date at which time the environment will have become clearer. In the meantime, their conclusion is: I will just react as best I can.
Sadly, this complete strategy nihilism is a recipe for at best, mediocrity, and at worst, abject failure. And I am fully confident that it is not what Henry meant by emergent strategy.
It is Delusional
Even sadder, this view is utterly delusional. While the investment firm above was denying that it ‘did strategy,’ it was making profound strategy choices — including to not have a CEO — for which the opposite is not stupid on its face (which is my definition of a strategic choice). And for the new bank president who eliminated strategy, the book went on to detail choice after choice the president made for which the opposite wasn’t stupid, and was, in fact, the opposite was what everybody in the industry did. Yet to the writers, the acts of not having a strategic plan and terminating the strategy department were clear evidence of the brilliance of operating without a strategy.
As I have written before, it is impossible to not have a strategy because strategy is what you do, not what you say. For this insight, I credit my late beloved academic mentor, Chris Argyris, who identified the people and organizations typically have an espoused theory — i.e. the theory that they believe and proclaim that they are following — and a theory-in-use — i.e. the theory that guides their real actions, and that those theories are often radically different from one another. For example, the bank president espouses having no strategy while making very clear strategy choices. In Chris’ view, these people are not consciously hypocritical. They are often delusional. They believe they are following their espoused theory — and are typically quite angry when it is pointed out that they are not.
When it comes to strategy, the business world is chock-a-block full of delusional executives who espouse a nihilist variant of emergent strategy while making all sorts of strategy choices.
And it is Destructive
In life, delusions can sometimes be largely harmless, or even helpful. But strategy nihilism of the sort described here is highly destructive. The big problem is that it lets leaders get away with making strategy choices unilaterally without exposing them to critical review. And remember, strategy choice is in the domain in which Aristotle advised us to imagine possibilities and choose the one for which the most compelling argument can be made. For that to happen, there needs to be a robust discussion of those possible choices.
The bank president above undermines that process by declaring that there is no strategy and then making a slew of critical strategy choices. That behavior is obsessively controlling. The same holds for the investment firm. By declaring that there is no strategy, the executive team can make any strategic choice that it wants to make without justifying it — because it (supposedly) isn’t a strategic choice.
Literally all the CEOs with whom I have interacted that espouse the nihilist version of emergent strategy were control freaks. They loved to make all their decisions without needing to justify them by declaring the force majeure of VUCA and deploying the coping mechanism of (faux) emergent strategy. As you can well imagine, it doesn’t end well for them or their organizations. Eventually, some entity — a board, an activist shareholder — steps in and removes the delusional and destructive CEO.
Informal vs. Formal
To return to Henry for a moment, I agree with his characterization of the creation of strategy as more of a crafting process than a formal analytical process. As I have argued before, most formal strategic planning processes don’t produce viable strategies. Sometimes, the informal strategist doesn’t even call it strategy.
I learned this by growing up at the feet of an entrepreneur — my father who as a young man started an animal feed manufacturing business, when I was two years old. He could not have explicitly done ‘business strategy’ because he would have never been exposed to that term, having had only a high-school education at rural school. (Nor did I until I — for better or worse — attended Harvard Business School.)
But he would always explain to me his choices when I asked him questions about things that perplexed me as a kid, such as why every Monday he published a price list with the prices of every feed the company sold in every order size (with the discounts for larger order quantities explicitly laid out).
Ten(ish)-year-old Me: I don’t understand, Dad. If your salesperson gives the price list to the customers, it will quickly get into the hands of your competitors and they will be able to steal our customers by undercutting our prices — and you pledge that you will never sell at a price other than on the published list. Aren’t you making us vulnerable?
Dad: Well, Roger (which is how he started every single answer, which he always patiently and dutifully gave), you know that we compete based on superior feed formulation, technical support, and delivery reliability. If the salesperson hands the price list to the farmer at the beginning of the sales call and the farmer is completely confident that we will never sell below the price on the list, the call will all be about our superior feed formulation, technical support, and delivery reliability rather than haggling on price. And since no competitor has lower costs than us — in fact almost all have higher costs — if they discount from our list to steal a customer, it won’t be a profitable customer for them. Our job isn’t to win back that customer by discounting. It is to find the customers of that competitor who it overcharges to fund losing money on the customer they stole from us. Then we should steal those customers — at our list prices.
Now that is a tour de force of business strategy from a man who had never heard the term. It is the polar opposite of strategy nihilism. Perhaps, it is because of my experience with getting countless answers like that from my father as I grew up that I care so much more about the quality of the strategy logic than the formality or informality of the process that created it.
Practitioner Insights
You cannot not have a strategy because you cannot not make choices. Regardless of what you call it — just executing, keeping my powder dry, waiting for clarity — it is a choice. Don’t be delusional. Own your choices. Doing nothing until you have greater clarity is a choice. In the world of military strategy, this is more clearly understood to be an incredibly impactful choice than in business strategy because in military strategy, inaction can often guarantee your defeat.
You defeat the destructiveness of the delusion imbedded in strategy nihilism by making your choices explicit — first to yourself and then to your colleagues. You must have logic for every choice. Maybe do nothing has the strongest logic behind it — but it surely won’t if you don’t make it explicit to yourself. If you can articulate the logic to yourself, you can articulate it to colleagues who can poke and prod it in ways that may improve the logic.
Accept no excuse — VUCA or otherwise — for strategy nihilism. It is an anathema to leadership.
