If we take a fast-changing environment as a given, then why choose between them? The proposition is that both a deliberate and emergent strategy, delivered at speed, is superior to either on their own. Demanding stakeholders, highly competitive markets, and CEOs want both a statement of intent (deliberate strategy) and rapid execution and learning (emergent). This is a challenge. Most businesses prefer operating in one or another mode.
How does this work in practice?
Tech companies live and breathe this. They operate with constant switching between these strategy modes with each mode dynamically informing each other. Amazon steps easily into new retail categories while experimenting and relentlessly improving the operating model. The existing data also informs the emerging strategy.
What’s involved in working this way?
To achieve this, a clear statement of intent (or deliberate strategy) to frame the challenge and mobilise resources, coupled with relentless product build and learning (emergent) is required. The quality of the final output is driven by the quality of decision making on both dimensions. Constantly, probing and questioning. Are we solving a big enough problem (or opportunity) and are we solving fast enough?
Dyson is investing £2.5bn to build an electric car by 2020. The company has identified a significant market opportunity and is focused on building the battery capacity. However, they have no chassis framework in mind yet. A £2.5Bn investment and they don’t know what chassis they will use? Correct. “We don’t have an existing chassis. We’re starting from scratch”. This approach does make sense. Ultimately, the battery design will influence the chassis. The final car could look anything from a motorised skateboard to a hanglider (with a wheelbarrow and a traditional car in the middle of the spectrum). As an innovator, James Dyson is comfortable with this (or able to deal with something that would be very uncomfortable to other individuals). Given his track record, who would bet against him? “Dyson is a global heavyweight but it still operates in many ways like an agile startup in its technical pursuits, and particularly in the way they bet on new technology”*.
For many businesses, the challenge is operating in these two modes. Some are good at deliberate strategy process and execution (it’s also arguable how many are good at this) and some emerging strategy (think of ‘the seat of your pants’ entrepreneurs). How many can execute well on either dimension let alone confidently switching between the two modes of strategy? Perhaps an even rarer species than the famed tech unicorns!
How does tech solve the challenge?
They have several tools including the pivot, the product kill switch, and huge amounts of data. The pivot allows them to adapt quickly if either the problem to be solved is smaller than expected (small addressable market, unmet need, etc.) or just too difficult to solve (low adoption). The kill switch allows them to cut their losses and exit quickly with the market often rewarding this fast decision making. The appetite for data is relentless and fast outstrips the ability to structure it into nice neat solutions. If you want feedback on customers call them up or add a survey button on the site.
The most potent advantage is that these businesses were always this way. Ambitious problem-solving machines with no real boundaries on where their imaginations take them. This way of working is not exclusively for the founders and key executives but permeates right throughout the organisations.
How do non-tech businesses try and emulate this?
Usually, by selectively picking the bits they understand and trying to put a neat process around them. But it’s not that easy. For example, how frequently should you move between a statement of intent and a learning phase to be productive? One month, three months, a year, three years? Don’t try and look for such easy rules. If the early data comes back early and it indicates that it was a bad idea, you have to act on this. There are plenty more good ideas to invest your precious time and effort.
Should you also persevere? Absolutely, but unfortunately again, you don’t get a comfortable guideline. Surely, these tech companies have operating structures to make these kinds of decisions in a structured way and avoid chaos? Well of course, but they only provide a framework and the real effort is in the quality of the thinking and the process is very open to change. Even the process of innovation is constantly being innovated!
We are back again to Dyson when we think about innovation at a company or individual level. To truly embrace this way of working a business must be confident enough to make the bet on a direction, able to handle the uncertainty of experimenting, and able to switch between the two models. Switching between deliberate and emergent without guardrails.
*Forbes Sep 26, 2017. Dyson’s Electric Car Dreams Hinge on Battery Development
Written by Eamonn Galvin, an Associate with Pathfinder