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Making far-reaching decisions
adopting innovative products and technologies, petrol stations
evolving into self-service stations, with car-washes and mini-
markets, in the steel industry when mini-mills emerged, tires in
the automotive industry changing from bias to radial technology,
and so on. The Red Queen is everywhere, and there are few places
where you can afford to stand still. And if you want to get into
such a race, look for an industry where everybody is running in
the same direction; they’re bound to get stuck in a corner some
time soon.
Binoculars in the mist
The world of business is changing continuously. But the thing
that is very difcult to predict is what will change and when;
there is just a heck of a lot of uncertainty. And that makes making
strategy a bit of a challenge . . . Because how can you make proper
plans with a ten-year horizon when you haven’t got a clue what
will happen in your business next year? It is a bit of a tussle . . .
Therefore, my good colleague at the London Business School,
Professor Don Sull – master of the analogy – often shows his
classroom a picture of a sailor looking through his binoculars,
saying, “This is our traditional view of how we regard making
strategy”: someone who is able to look into the future, and make
a detailed plan of how to proceed towards a chosen destination.
However, the reality of strategy-making is quite different; it is
more – according to Don – like you’re driving a car in heavy
fog, peering through the window, trying to navigate around
unexpected things that suddenly appear in your way.
I like and agree with his analogy.
In pretty much all businesses,
although you may know where
you’re headed, the route is
fraught with uncertainties and
unexpected events. Technological
developments, market demand,
competitor actions, entrants,
‘‘
In businesses, although
you may know where you’re
headed, the route is fraught
with uncertainties and
unexpected events.
’’
Business Exposed162
changing consumer preferences, Icelandic volcanos erupting,
the macro economy, etc.: nobody can discern with any certainty
what lies ahead of us.
I’d like to extend Don’s analogy of driving in heavy fog. Because
we’re likely not alone on this road. We have competitors. And
what do most of us do when we’re sharing the road with other
users in heavy fog? We concentrate on the lights of the car ahead
of us, because it gives us some guidance, and we can rely a bit on
the faith of the fella in front of us.
But, although it may make us feel more secure, is that really
such a good idea? It’s only human I guess, but it sometimes also
seduces us to drive faster than we otherwise would have done,
just to keep up with the advancing lights. And, if the fog is
heavy enough, it seduces us to drive closer to the guy than we
may deem wise if we’d thought about it. Of course, a multiple
collision in the mist is quite common; we’re following the car
in front of us, but that doesn’t mean that we can brake in time
if he goes off a cliff, smashes into a tree, or
another car on the road.
That’s often how it goes in business as
well. Competition is a race, but it’s also a
race in the mist. Often, everybody ends up
following the quickest competitor, bidding
for 3G licenses, entering China, merging with IT companies, etc.
But sometimes, everybody ends up with a big bump on the head.
However, of course, if you slow down, you might lose the race.
So, what do you do, confronted with fast-moving competition?
Well, do what you do when you’re driving in the mist. First of all,
keep a healthy distance between you and the car in front of you.
If he crashes, you still want to have time to stop. Second, if that
car is driving faster than you’re comfortable with, slow down. He
may get there faster than you, but he may also not get there at
all. And sometimes that’s just not worth the risk.
Finally, don’t use binoculars. They will blind you. Rigidly
executing a detailed long-term strategy won’t allow you to see
‘‘
Competition is a
race, but it’s also a
race in the mist.
’’
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