To be a great success in business, you need to have a compelling vision, create a well-thought-out strategy to achieve that vision, and then fully commit to that strategy with action and resources.
That’s also the recipe for being a great failure in business.
That’s what my guest argues in his book The Strategy Paradox: Why Committing to Success Leads to Failure. His name is Michael Raynor and we begin our discussion by describing the strategy paradox: the fact that the same sound strategy can lead to both success and failure. We discuss how the outcome then depends less on the strategy itself, than on the idea you decide to bet on, using the example of the way Sony employed the right strategy in backing Betamax in the VCR wars, but still lost out to VHS. Raynor then explains the limitations of forecasting and adaption, the approaches companies typically use to navigate the tension between needing to commit to something, and being uncertain they’ve committed to the right thing. He then unpacks two more effective ways of developing strategic flexibility: separating the management of commitment from the management of uncertainty, and acquiring a portfolio of assets that will increase your optionality. We end our conversation with whether the strategy paradox can be applied not only to making decisions in business, but to making decisions in our personal lives as well.
If reading this in an email, click the title of the post to listen to the show.
- What is the strategy paradox?
- Why we use VHS tapes instead of Betamax
- Can you tell the difference luck and strategy as paths to success?
- How do you manage uncertainty?
- The value of separating responsibilities in an organization
- How do you balance options vs. commitment?
- Why are markets so dominated by huge corporations?
- Using the strategy paradox with non-business decisions
Resources/People/Articles Mentioned in Podcast
- On Grand Strategy
- The Art of Strategy
- Competitive Strategy by Michael Porter
- Betamax vs. VHS
- The Three Rules by Michael Raynor
- The Fortune Sellers by William Sherden
- Superforecasting by Philip Tetlock
- 5 Tools for Thriving in Uncertainty
- Assault Your Assumptions Through Red-Teaming
- AoM series on Eisenhower’s leadership lessons
- Shelby Foote’s Civil War series
- Good News! Your Life Isn’t Limitless!
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Read the Transcript