6 December 2007

Strategy paradox

By Jim Pinto

Everyone knows the old saying “risk vs. reward.” But how many businesses really manage their risks to generate rewards?

Executives and managers know success depends on choices based on assumptions about the future which cannot be predicted. The “collision between commitment and uncertainty” creates The Strategy Paradox. This is the title of the new book by Michael Raynor, coauthor of bestselling Innovator’s Solution.

Ambitious, bold managers take big risks, for greater rewards. Conservative managers hope the future will bring more clues about which direction to take, and they wait—usually until it is too late. Most managers shy away from bold commitments, sacrificing the possibilities for greatness, for a chance of mere survival.

Michael Raynor explains how leaders can beat this tradeoff. Here are some of his suggestions:

• The chief executive should not be evaluated on the company’s performance, but rather on the strategic risk profile.
• The chief executive should not drive results, but manage uncertainty.
• Business unit leaders should not focus on execution, but on making strategic choices.
• Line managers should not worry about strategic risk, but devote themselves to delivering on commitments.

Raynor’s book includes case studies of success and failure at Sony, Microsoft, Johnson & Johnson, AT&T, and other major companies in many different businesses. It presents a framework for strategic action.

For business leaders at all levels, this is a good book to read.

Related links:

• Strategy Paradox – Book Review:
  http://www.leadershipnow.com/leadershop/9780385516228.html
• Buy Strategy Paradox on Amazon.com:
  http://www.amazon.com/exec/obidos/ASIN/0385516223/jimpintocom/103-0805027-7623017
• Wikipedia on The Strategy Paradox:
  http://en.wikipedia.org/wiki/The_Strategy_Paradox

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.