Playing To Win
Strategy Choice, Risk and the Road not Taken
How to Leverage WWHTBT to make Bolder Choices
A terrific protégé suggested a topic in the wake of a recent online discussion in which we both participated. I met her originally when I served as her alumni interviewer for the Harvard College admissions process and was so impressed that four years later, I encouraged her to join Monitor Company after graduating. She has gone on to an impressive career there and beyond. Her reflection was that her biggest successes came from taking the greatest career risks. But she observed that most people, most of the time don’t — either when making career or business decisions. Based on her provocation, I have dedicated my 3rd Year III Playing to Win/Practitioner Insights (PTW/PI) piece to Strategy Choice, Risk and the Road not Taken: How to Leverage WWHTBT to make Bolder Choices. You can find the previous 113 PTW/PI here.
Do I buy her Assertion?
I fully concur with her assertion. I too have watched plenty of people across a wide range of circumstances shy away from choices that deviate substantially from the status quo. It happens in career choices and strategy choices alike. In fact, they often see strategy choices as career choices too. As AG Lafley told me once, one of the most important strategy choices he made on his way up the corporate ladder at P&G would have been ‘a fire-able offense’ if it hadn’t turned out well.
Time after time, I have watched someone frame a choice, identify an interesting possibility that deviates from the status quo, seriously contemplate it — but eventually choose not to do it.
The Absence of a Control Group
I believe that a reason for this phenomenon is the absence of the moral equivalent of a control group, which is always used for prospective clinical studies in the medical field. The treatment group receives the medical intervention being evaluated; the control group doesn’t. And the results are compared to see whether the medical intervention created a significantly better outcome for the treatment group than the control group experiences.
For most career and business choices, there is no control group equivalent. That is, you never will know what would have happened with the choice not taken. Sure, there are cases where you do — when you trade a stock, you can track what would have happened had you held it. But that is the proverbial exception that proves the rule.
For most career and business decisions, there is no control group because you can’t be in two places at once. If you take that new job, you won’t have the ability to compare what does happen on your new job to what would have happened had you kept your existing job.
The same holds for strategy choices. You will never be able to assess exactly would have happened had the choice in question not been made. You only know what happens based on making the choice. And alternatively, if you don’t make it and instead stick with the status quo, you will never know what would have happened had you made it.
When a bad thing happens on a path explicitly chosen over the status quo, humans have a strong predilection is to assume that no bad thing would have happened on the original path. For example, let’s imagine you drive to work using an alternative to your usual route and you get into a fender-bender. The immediate reaction tends to be: if only I would have used my usual route, I wouldn’t have gotten into the fender-bender. But you will never know whether you would have mowed down a dog crossing the street had you taken your usual route because it didn’t happen due to the choice to not drive on that route.
Had you stuck with your normal route and mowed down the dog, you wouldn’t have blamed yourself for having made a bad choice to take that route. You would have seen it as either bad luck or inattentive driving. But the fender-bender would have been the result of a bad choice.
I believe that the lack of a control group with which to compare causes us to be skittish about purposely and consciously deviating from the status quo. Following the status quo results in the lowest probability of feelings of regret. Again, sometimes the weakness of the status quo is made evident. Imagine if you were Apple employee #8, Ken Espinosa, and instead of becoming a part-time programmer at Apple in 1976 while attending high school, you gave the opportunity to your best friend. You could track that friend (perhaps) going on to be Apple’s longest serving employee and becoming a very rich person — probably richer and more successful than you. As with this case, in the small minority of cases, the outcomes on the alternative road are clear but most times they are shrouded in deep fog.
What Would Have to be True (WWHTBT)?
I have long advocated using WWHTBT to evaluate strategy choices because we never know what is true about the future. Since we have no data about the future to ascertain what will be true about a new strategy choice, the next best thing to do is to evaluate the logic of that choice by asking WWHTBT about the industry, customers, our organization, and competitors for a choice to be a great one. When you are considering a bold strategic choice, it is important to ask WWHTBT to be able to better understand the risks of that new strategy. The biggest risks are the features that would have to be true that you feel are least likely to be true. Then you can work on those features to determine whether, in the future, you believe you will be able to make true those things that both don’t appear to be true currently and wouldn’t be true in the future without some significant intervention.
One can readily see this as a methodology for assessing the bold new choice and enumerating its risks. But less obviously, it is also an important methodology for better understanding the risks of the status quo: i.e., WWHTBT for the status quo to continue to function as it does today.
Often the implicit assumption about the status quo is that it isn’t risky — because it is what we are doing today. This is, of course, a silly notion. But it often creeps tacitly into the thinking — and when it does, it causes the bold new choice to appear dramatically riskier than the status quo. Asking WWHTBT for both the bold new and status quo choices in the same way, with the same rigor, puts the two on the same footing in terms of foreseeable risks. In that sense, it gives an equivalent peek down both future roads. Can your WWHTBT evaluation be perfectly accurate? Of course not; the future is unknown. But the key is to create balance between the bold choice and the status quo to give the bold choice a fair chance to prevail.
Putting it in Action
As with all of my advice, I only give it if I use it myself, and I have used this approach for my entire career.
For example, when I took over as Dean of the Rotman School in Toronto, the desired view of most of the faculty was to continue the status quo — only do it better. Rotman had a Canadian reputation for being a strong finance school and was located mere blocks from the heart of Canada’s capital market — Bay Street. However, the School fragile finances due to the then weak Canadian dollar (65 cents to the US$ in 1998 when I took over), low tuition level, and small MBA enrolment (130 per class). Plus, it had minimal international reputation. So, status quo-only-better meant continuing as a finance school with improving economics.
When I did the WWHTBT for that status quo approach to work going forward, a key feature was that Rotman would be able to maintain its excellent reputation for finance into the foreseeable future. But that was a dubious WWHTBT feature for the status quo strategy. Our finance reputation was based on the pioneering work of Myron Gordon, a legend in the field of finance but already a 78-year-old retired Rotman Professor Emeritus, plus a group of senior finance professors already in their 50s. We were already struggling to hire any young finance professors and that labor market was getting even tougher competitively.
That WWHTBT analysis of the status quo helped me push for a strategy to double MBA enrolment, quadruple tuition level, quintuple both executive education and endowment earnings, in order to transform the finances of the School, and with the greater economic base, build the school’s reputation for Integrative Thinking and Business Design. While it was viewed by the outside world as extremely bold and risky, for me, it didn’t seem risky compared to attempting to make the status quo work.
I used a similar approach as part of the team that created and deployed the spectacularly successful turnaround of Tennis Canada, described here, that resulted recently in the country’s first ever Davis Cup championship. The strategy was bold, but the boldness was warranted by the sobering WWHTBT of the status quo.
I used the same technique while serving in a leadership role at Monitor Company, while on the board of the Skoll Foundation, and while serving as a Trustee of the Hospital for Sick Children. It always helped bold strategy choices feel less bold by having two roads compared equally, not differentially.
Practitioner Insights
When making important choices, whether on your own career or on strategy, always perform a WWHTBT exercise on the status quo as well as any alternative. The WWHTBT of the status quo will always helpfully reveal that the status quo is far from risk-free. Rather it will always be risk laden. Of course, the boldest strategic alternative to the status quo will embody plenty of risk too. But performing the exercise on both will help you calibrate the net additional risk that you are taking on, not the gross risk of the alternative. And net risk, not gross risk is what should determine your choice.
