Playing to Win
Strategy, Disruption & You
During this long and painful run of COVID waves, plus the tragic mess in Ukraine, I have gotten a never-ending stream of assertions that doing strategy makes no sense in the face of such disruptions. I have addressed these questions before in this series with My Business is Too Fast-Moving for Strategy and Strategy in the Face of Discontinuity, but the questions and suggestions keep on coming. So, I am going for ‘third time’s a charm’ with my 23rd Year II Playing to Win/Practitioner Insights piece, Strategy, Disruption & You: Overcoming the Technocratic Urge. You can find the 75 previous PTW/PI here.
I have noted spikes of this strategy despair phenomenon at three points over the past two decades. The first was in 2001–2002 after the bursting of the dot.com bubble. The second was in 2009–2010 after the subprime mortgage meltdown produced the Global Financial Crisis (GFC). And the third is now, in the wake of the COVID pandemic plus the ongoing invasion of Ukraine. It became obvious to me that the third wave was in full swing when, in November 2021, I was asked by a very prominent management thinker how I felt about the decline of the importance of strategy. The reasoning implied was that the COVID pandemic (this was pre-Ukraine invasion) was such a big disruption that it makes it futile to attempt to do strategy. That is, if disruption of this magnitude lurks as a possibility, you shouldn’t attempt to make a coherent set of strategy choices because a disruption might make your choices all wrong.
I was flabbergasted, but I immediately recalled hearing the same reasoning immediately after the dot.com and GFC bubbles: when big unanticipated disruption throws the business world into turmoil, thinking ahead feels like it no longer has any utility.
Of course, that logic is a bit porous. Its implication is that it is better not to attempt to make a coherent set of choices due to the specter of disruption. But as I have pointed out before, it is not possible to not choose, because not choosing is itself a choice. It is the choice to continue doing whatever you are currently doing — as if that will be better for you when the disruption hits. Notionally, it would be better for you to continue holding lots of vendor financing debt in smaller tech company customers as the dot.com bubble bursts or vast portfolios of sub-prime mortgages as the GFC approaches or stakes in restaurants, cruise ship lines and casinos in 2020.
Obviously, the core notion that with disruption lurking, the best idea is to not think much because having a chimp throw a dart is as good as you can do is a bit silly on its face because choice is utterly inevitable. It begs the question: from where did this idea come? My view is that it is part and parcel of the technocratic view of strategy.
The Technocrat’s View
I believe that the despondency about strategy in the wake of major disruptions comes from the technocratic view of strategy, which equates strategy with planning, as I have discussed before in this series. In this conception, strategy is all about laying out a detailed plan. What is the optimal set of activities? How much and what kind of investment will we make in each? What is the sequence of and timing for each investment? For example: We are going to enter the Chinese market. First, we will build a factory. Then we will get distribution. Then we will sell to customers in this segment, etc. Alternatively: We are going to build a website, get traffic, start with a free model, then move to a freemium model, etc.
It holds that strategy is a set of initiatives that you commit to doing, with cost x, in time y, with results z. The technocrat holds that if this is the plan: it should happen as the plan lays out. The plan is largely treated as a description of future reality. It is doable and when it is carried out, it should generate the planned reality.
Because of this relative certainty about the plan, the technocrat is devastated by disruption — emotionally shattered. The disruption wrecks the plan leaving the technocrat to ask: Why bother planning? All that effort is just wasted. Don’t do it.
The Strategist’s View
The strategist’s view is that nothing about the future is certain. Nobody can predict it with accuracy. But a strategist believes that doesn’t mean you throw your hands up. You have to make investments — even if the investment is in doing nothing, which is an investment of available opportunities not taken. You use the most important question in strategy — what would have to be true (WWHTBT) — to pick the most plausible course of action. This can include working to shape the future in a direction that is helpful to your strategy.
But strategists understand that sometimes that uncertain future utterly overwhelms their strategy. That strategy could have entailed building the biggest and best featured cruise ship in the world, designed to launch in (say) April 2020. The choice to start building the ship was made during a period of robust demand and the ship was designed to provide a guest experience superior to all competition, at an attractive cost position due to scale economies of the large ship. Then boom: the cruise industry gets demolished by COVID — shut down completely for an undetermined length of time. Nothing can make this strategy challenge go away.
But the strategist is well-equipped to ask the WWHTBT question: What of the things that needed to hold true no longer hold, and which still do? And based on that analysis, how can we adjust our strategy to account for the new information? Have customers fundamentally changed? Has the competitiveness of the ship changed for better or for worse? If neither customers nor competitiveness of the ship have changed meaningfully, then the task is to figure out how to get through the financial trough in shape to compete on the other end when the underlying business comes back. Alternatively, if a number of the fundamental WWHTBTs have changed, then what is the best set of new strategic decisions now?
Technocrats spend precious time being shattered and losing confidence. Plus, the way they think about strategy makes it hard to know in what way to adjust. Their plan just got blown up. What do they do then? For the technocrat, there isn’t an obvious next step, which is a big reason why it feels so shattering to them. It is easier to tell themselves that planning just doesn’t work in this volatile, uncertain, complex, and ambiguous (i.e., VUCA) world than it is to get back into the proverbial saddle. In fact, I find that technocrats really like to talk a lot about VUCA. It really freaks them out — but also provides lots of excuses.
Strategists typically aren’t shattered. They are just bummed. They laid out the WWHTBT and hoped that the key things would be proven true. But they knew there was no guarantee of anything. But because they have the logical infrastructure of the WWHTBT behind their strategy choice, they have a better idea what exactly has gone wrong and what the potential fixes might be. That all makes it easier to just get on with it and update their choices.
You can’t escape random disruptions. And it makes little sense to punish the world for disrupting your well-laid plans by ‘not doing strategy.’ You can’t not do strategy because your strategy is what you do not what you say.And, if you try to punish it for being VUCA, the world will win and you will lose.
Instead, always invest in having a coherent logic for your choices. That is strategy. Recognize that the best strategy can do for you is to shorten your odds of success. It can’t protect you from the dot.com bust, the GFC, COVID, or the invasion of Ukraine.
But strategy can help you be thoughtful about what to do next by utilizing your WWHTBT logic rather than sitting there shattered and wondering what on earth to do. When the technocrats tell you that you are wasting your time on strategy, just ignore them. They can’t help you or hurt you. They don’t matter. Choice is the only thing that matters.