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I only just got
back from a formal training session, where I’d gone to be instructed on
‘strategy,’ and its chances of success in the new, more turbulent work
environment. One confession, which I did not make at the various
sessions that made up the training experience, but which nonetheless is
important to understanding the perspectives here, is that on questions
of strategy, I am completely contrarian.

Thus, it mattered a
lot that the training was facilitated by firm believers in the utility
of thinking strategically as a distinctive business competence. And
that the larger numbers of the class were acolytes already of this
world view. Ignore for the moment, the plethora of buzzwords, and the
facility with which business books’ titles and the names of American
authors rolled of the tongues of participants, and the main argument
was simple.

There was consensus
on what strategy as a course of study is all about. So, it mattered
nought whether it is described in the traditional military sense as
“the process of, or skill in, planning and conducting a military
campaign” or along one of the derivations that business has come to
accept, including as “a long-term plan for future success or
development.”

The point is that
most discussants at the training facility assumed a simple “cause and
effect” relationship. To think strategically, it turns out, all that
needs to happen is for top management to get the “numbers right.” From
there, the firm is better positioned to put in place a measurement
system (preferably through the “balanced scorecard,”) commence
measurement of the resources deployed, and presto – it’s almost like
“magic!”

My concerns are no
less simple. Whereas for a military-type campaign, the decision
parameters are mostly given: troop numbers; equipment type, equipment
quantity; the spatio-temporal strength of supply lines; terrain
support; etc. We cannot say the same, any longer, of contemporary
business conditions. All you need do to understand what students of
chaos theory call the “non-linear feedback systems” challenge is try to
itemise the range of effects in our interconnected world to which a
single cause can lead.

Framed differently,
what does the believer in the benefits of traditional “strategic
planning” make of the following episodes, and their unintended
consequences? The July 4 2004 consolidation in the Nigerian financial
services industry, and how it re-shaped the industry in the country;
the September 11, 2001 coordinated suicide attacks by al-Qaeda upon the
United States, and their effect on the just-in-time production
revolution in developed economies; or the demise of the “central
planning regimes” after the collapse of the Berlin Wall in 1989.

Doubtless, the
possibility of infinite variations of cause should force us to take a
more critical look at the standard estimation techniques behind most
attempts at formulating strategy.

What follows from
these? Does the death of strategy eliminate the need to plan? Now, I
think not! In planning, the proper tension is between linearity and
non-linearity.

In a world in which
the multiplicity of links and interdependencies ensure that effects are
not proportional to their causes, or in which even businesses have come
to realise that a team working together might often achieve results by
far superior to the results from the combined effect of each working
individually, the balance of activity rapidly flits between choice and
chance.

In effect, what
remains for the manager is his/her operational control over the
near-term. Within this context, the main questions that planners must
address is what the costs would be to them, if the decisions they make
turn out wrong. Ideally, in the absence of serious downside risks,
planners can proceed down as many turns in the road as catch their
fancies. Unfortunately, since the cost of failure is often potentially
very large, planners do well to avoid certain policies even if the
probability of success is better than 50-50. In this case, the cost of
failure is a major constraint.

If we, then, narrow our plan effort in the knowledge that “the
spontaneous self-organisation of economic agents leads to unpredictable
and emergent outcomes”, then four plan parameters remain open to us:
keeping the decision-making process simple; avoiding conservative
orientations; keeping costs down; and a readiness to embrace new
products/technologies.