Monday, May 07, 2007


The Strategy Paradox

Endless Innovation introduces a new book about innovation called The Strategy Paradox: Why committing to success leads to failure (and what to do about it). The thesis (as best I can tell from the reviews) is as follows:
  1. All of the various worlds that make up the global market place, such as the business world, the consumer world, the financial world, and the technology world, are changing quickly in ways we cannot predict.
  2. Big corporate strategies, while necessary for achieving corporate success, also assume a long term understanding of the global market place.
  3. These strategies, therefore, set organizations on paths that are inflexible to the inevitable changes in the global market environment.
  4. Thus the paradox, that in order to achieve corporate success, corporations--by intentional design--get out of sync with the market.
The solution to the paradox is to be flexible and adaptive. Darwin said it is not the strongest that survive, nor the most intelligent, but those species which are most adaptable.

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To counter this paradox, large hierarchical corporations can reach out to a broad base of stakeholders to help them forecast market trends. Some companies are using prediction markets to do this. Employees, suppliers, partners, customers, and other knowledgeable participants "buy and sell" virtual stock based on their assessments of possible outcomes. But Tapscott and Williams, authors of "Wikinomics: How Mass Collaboration Changes Everything," warn that these markets can be unreliable when they lack diversity or succumb to "group think." (p. 261)
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