The Strategy Paradox: Why Committing to Success Leads to Failure (and What to Do about It)

by Michael E. Raynor

A compelling vision. Bold leadership. Decisive action. Unfortunately, these prerequisites of success are almost always the ingredients of failure, too. In fact, most managers seeking to maximize their... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 0385516223
• ISBN13: 9780385516228
• Release Date: February 2007
• Publisher: Crown Business
• Length: 320 Pages
• Weight: 1.33 lbs.
• Dimensions: 1.1" x 6.4" x 9.4"

Customer Reviews

Strategy Gets New Life

As a strategy consultant, I'm always on the look out for the next book to either recommend to my clients, or that they are likely to gravitate towards, to be prepared with my opinion when asked about the work. And since I have been a fan of Clay Christensen and disruption theory and was looking forward to see what Raynor would do on his own. Thanks goodness for a relaxing the long weekend so I could finally make the time for this. Also, I have never written a review before. Since I really liked the book and there seemed to be few comments yet doing it justice, I figured I would cut my teeth on this one. Generally, I have to agree with the HBR review -- he's a disruptive thinker in his own right: this is an approach to corporate strategy that is new, combining the merits of commitment-based strategy with the inescapable need for flexibility. I am looking forward to practically applying the core concepts on behalf of my clients. The Strategy Paradox: Hidden in Plain Sight Raynor begins by demonstrating what many of us have long suspected but weren't able to come out and say: when it comes to traditional strategic planning, the emperor has no clothes. Established frameworks -- from Ansoff to Porter to Hamel to, for that matter, Christensen, are premised on an ability to decide today what will be successful tomorrow. We're told again and again that the future will yield its secrets if only we're smart enough and our analysis is rigorous enough. But prediction is a dark art at best: the data are always ambiguous. Personally, I've never seen a single path forward as clearly the best choice. This means that unfortunately, the most successful strategies are necessarily based on big commitments: it is fine to want to be "agile" and commit only once the data are clear, but the company that guesses right in the face of ambiguity will always outperform the "wait and see" approach of the adapative enterprise. And so you have to commit big if you want to win big, but when you commit big you create the risk of losing big. That's the Strategy Paradox: the same strategic positions that hold out the promise of extreme success create the possibility of extreme failure. Raynor demonstrates this both anecdotally and with a truly extraordinary large-scale data set. Anecdotally, in Chapter 2 Raynor has a totally new take on Sony's Betamax and MiniDisc fiascos. The tendency is to look at strategic failures such as these and conclude that the perpetrators were just plain dumb. What Raynor shows is that the strategic choices made, at the time they were made, were perfectly reasonable. Better still, Raynor shows that the opposite choices -- the ones made by Matsuhshita (VHS) and Apple (iPod) respectively were also perfectly reasonable. And that's the point: the future is uncertain, but you have to commit if you want to win big. A "take-it-as-it-comes" approach might have avoided catastrophe, but at the cost of having any real hope of real suc

A significant intellectual contribution

A significant intellectual contribution and a welcome addition to the serious management literature. The author basically argues that most studies of "great organizations" are incomplete because they compare companies that are spectacularly successful against those that are simply "mediocre." Drawing management practices solely from "great" companies in studies like these, he says, is fundamentally flawed, because they omit the most revealing comparison set, namely, those companies that have failed. His surprising finding is that when you compare the spectacular successes with the spectacular failures, they actually look pretty much the same: they both tend to have very clear strategies and consistent, focused execution against those strategies. The difference being that the failures simply picked the wrong strategy. The "Strategy Paradox" is that the strategic bets you need to make to pursue "spectacular success" (high commitment of plant, capital, technology, etc.) simultaneously increase your odds for "spectacular failure." The rest of his book presents a mind-set and tool-set leaders can use to mitigate the risk inherent with high-return strategies, increasing their odds of success. The job of the CEO is central to his approach. Basically, the CEO plays a "different in kind" strategic role. Instead of making strategic "commitments" (this role falls to operating unit leaders) and "executing" against them (this role falls to functional leaders), the CEO should be in the business of creating strategic "options," so that as the future changes, operating units have alternatives. Because of the extreme uncertainty about how the future will turn out in the long term, the CEO's ability to create "real options" against various scenarios of how the future will turn out becomes critical to long-term organizational success. The CEO does this through intelligent investment (partial equity stakes in emerging technologies, etc.) and other mechanisms that create options that divisional leaders can "exercise" or "abandon" as the future unfolds. I recommend this book highly and consider it one of the few true "paradigm shifting" books out there--meaning, one that can permanently affect your leadership mindset for the better!

Perspective Plus Critical Insight on Strategy

This book deals with some of the most important issues in strategy direction, integration and execution by posing the true paradox of commitments made under conditions of business uncertainty. Through deep and insightful thought, and the terrific depth of the supporting research on strategy principles and practices referenced, the author nails three issues that separate reality from myth and noise in strategic leadership and management today. First, it tackles the issues of hard choices versus options in strategy direction, suggesting that companies can derail themselves with overcommitments. Second, it recognizes the uncertainties that surround decision making and resource allocation at the strategy integration level. Third, it opens discussion about strategic cause and effect, in essence, reframing the factors that influence the creation of strategic and economic value. This book is part of a great new genre in strategy material, one that escapes from the attractive but suspect story telling and fad surfing that has tended to pollute critical strategic thought and behavior over the last decade. For serious students and practitioners of strategy, and for those in board positions with strategic oversight roles, this is a five star book that demands study. For those just entering the strategic journeys of their respective organizations, this is important work that should become part of your analytic and planning agenda.

Strategy for Change

Dr. Raynor's book is required reading on dealing with change. Accepted wisdom is to adapt to change, and not to adapt is to be left behind to go out of business. As a consultant in understanding customers and performance management, I certainly see first hand the benefits of the former and the consequences of the latter. "The Strategy Paradox" describes the limits to adaptability, that it is only viable when the pace of organizational change matches the pace of environmental change. Responding to either fast or slow change can leave strategies mismatched, and that increasing adaptability will eventually destroy strategy. Dr. Raynor also provides new insight to the concepts of requisite uncertainty, and responsibilities for longer strategic horizons at higher levels in the organizations. Of course, he also brings great clarity to his main themes, the strategy paradox of risk and return, strategic options, and resolving the conflict between commitment and strategic uncertainty in real situations. This means that all of us dealing with strategy and culture change, which is almost everyone, need to read this book as soon as possible.

An important book on strategy; a "must " read

Assessment --------- As a Contributing Editor to Strategy and Leadership magazine, I read a lot of strategy books. This is an excellent book, well worth reading. It's a must addition to the library of anyone interested in strategy. It's particularly useful for executives dealing with uncertain markets. Strategy is a relatively new field. Many books and ideas in strategy are ill thought out and not useful. In contrast, Michael Raynor's new book is well written, insightful and useful. It is particularly useful for companies in industries that have high degrees of uncertainty. Perhaps most importantly, unlike many books on strategy, it will cause management teams to rethink how they develop and manage strategy. The Author ---------- Michael Raynor's last book, The Innovator's Solution is the best of the three books on disruptive strategy that have been authored by the lead author, Harvard Business School professor, Clayton Christiensen. The Subject ----------- Raynor's strategy paradox is that companies that execute strategies may, by virtue of their commitment to their strategy, experience strategic failure. The example of Sony with Betamax and disc players is used illustrate new insights into these familiar cases of product failure. This core idea is a fascinating extension to the core idea in The Innovator's Solution where Christiensen and Raynor argue the well managed companies will often overlook disruptive strategies being pursued by new companies with initially inferior products. The different business models required for the successful and emerging disruptive strategy may not be manageable by the same team. Raynor's book addresses the issue of how should companies avoid overconfidence in their ability to develop strategies and implement in an uncertain environment. In brief, his prescription is to (1) explicitly manage the commitments to a strategy and (2) simultaneously manage the uncertainty around the strategy. The consequences of his prescription are important because they affect how organizations should view the role of executive and operating management. His prescriptions for portfolio management are based indirectly upon options theory, and illustrated by examples from Sony, Vivendi, Johnson