In a recent HBR article we argue that in an uncertain and rapidly changing world, companies must adopt strategies based on radical options, where they continuously develop new options that will be the basis of the future success – depending on what unpredictable world conditions they find themselves in. .But companies struggle to realize radical optionality because creating options is expensive: It requires expensive and risky exploration, increases complexity, and can lead to excessive redundancy. offense resource limitationsespecially the rising cost of capital, only complicates the challenge.
In addition to breaking a series of traditional strategy trade-offs, as described in our article, it also requires a new way of thinking, communicating, and prioritizing strategies. Basically, we must accept that strategy is no longer a single, unchanging road map, but a portfolio of possibilities that requires a new playbook. To succeed in this new world of radical optionality, managers and leaders must embrace:
Incompatibility and misalignment of ideas
Companies and individuals are working on multiple initiatives and tasks simultaneously. The assumption is often that although these activities may be very different, they are fundamentally aligned with a strategy and vision of the future.
However, organizations developing options for multiple possible future world states may need to simultaneously pursue non-complementary or even incompatible options. For example, NVIDIA sells its graphics cards to consumers, but it also built a cloud-based subscription service that can be used to access the graphics power remotely and stream games or other software on (non-NVIDIA powered) devices. In this case, solving a problem – for example, reducing streaming latency – may improve the attractiveness of NVIDIA’s cloud-based offering, but may reduce the traditional hardware business (by -cannibalize its direct sales).
Optimizing optionality requires recognizing the potential benefits of such incompatible options. This includes higher stability, due to the diverse future sources of income, as well as the ability to create a foothold in a credible future that relies heavily on centralized computing. In addition, NVIDIA’s move sets it up to benefit from a wider set of possible innovations in the future, as its cloud offerings will be enhanced not only by hardware breakthroughs, but also by -streaming software improvements, and other improvements.
Tomorrow’s winners must choose to embrace inconsistency equally by embracing different beliefs about the future, exploring different branches of the resulting “tree of possibilities,” and shifting attention and resources. between them as the future unfolds.
Many beliefs about the future have implications as well lining among the stakeholders of an organization. The image of “all aboard” is attractive: We are all sitting in the same boat, and rowing together helps us reach the finish line faster and more efficiently. But, in a world of radical uncertainty, we don’t always know where we’re headed — or, indeed, whether a particular boat is our best option for getting there.
As a result, achieving total alignment can no longer be the governing word. Against an uncertain future, companies must develop a diversity of visions (of reality) and visions (of the future), which, in their collision within the company, open new ideas through combinatorial innovation, improving the future organizational effectiveness.
Multiplicity and inconsistency of narratives
We always communicate strategies using stories as an attractive and useful simplification of a complex reality. However, when different, possibly incompatible options for the future are pursued, we can no longer rely on a singular, unchanging strategic narrative. Instead, organizations need to share and endorse multiple and changing stories to facilitate sustaining different options and transitioning between them.
For example, around the highly praised AI strategy in the past months, Microsoft has made statements that emphasize the role of its software as a coach, an assistant, or an automation engine. Some of these stories clearly show someone in the loop, while others do not. While these stories may not be true at the same time, in the same context, and for the same audience, Microsoft’s ability to continuously change its stories and offerings at a very rapid pace development scene enables it to remain relevant.
In such a multi-story world, organizations must abandon the goal of achieving absolute consistency and narrative stability – seen as a kind of sign of integrity – and instead embrace diversity and change.
Lou Gerstner provides a good example of non-constant communication that has been successfully deployed. Upon joining IBM as CEO in April 1993, he famously announced to investors and the press that “the last thing IBM needs right now is a vision” and that he would instead focus on smoothing and killing. But he actually pushed the work of a new vision: the environment that enables companies to use the internet for their businesses. He shared it publicly less than a year into his tenure and launched a $500 million advertising campaign around it soon after, helping IBM become an early leader in the space.
Thinking by talking
Just as narratives are tools of communication, they are also valuable tools for formulating and testing strategies: Spelling things out – even if only for yourself – helps build thoughts and -identify the flaws in your logic. As the poet and dramatist Heinrich von Kleist observed in 1805 essayit’s the same l’appétit vient en mangeant – appetite comes with food – l’idea vient en parlant — the idea comes with speaking.
When striving for a radical option, communicating strategic ideas with others also opens a path for its development. Rather than being an afterthought, speaking can be a way of thinking. We can test and develop strategies by speaking them out loud, recording responses, and collaborating with our listeners to test and shape ideas. In this context, telling multiple, potentially inconsistent stories can be beneficial because they create valuable reactions that can be observed and used. We can quote EM Forster’s famous quote from “How can I know what I think until I see what I say?” in “How can I know what I think until I see how others react what can I say?”
Thinking by talking can be put into practice within the company, to “test” and understand different beliefs. For example, executives can hold workshops where they put themselves in the shoes of industry mavericks — startups betting against incumbents’ business models — and discuss how their ideas can succeed. This and more imagination games we made to facilitate such workshops an effective way to test ideas and update your thinking.
In addition, thinking through speech can also be in an outward-facing way, measuring public reactions by floating a “test tube,” such as when a politician leaks plans to the press, companies show prototype products or even just announce the progress of an offer on a crowdfunding platform. A recent well-publicized example is Twitter CEO Elon Musk public discussion about Twitter Blue subscription prices to platform users.
The transition to a new culture
“A leader’s first responsibility is to define the truth,” writes Max De Pree, leadership guru and former CEO of Herman Miller. Company leaders, as “chief meaning makers,” set the tone and establish the context for what their organizations think or say. Thus, they must also lead changes in thinking and communication methods that open up radical options. This requires that they:
- Act as examples: They must be comfortable telling multiple stories and contradicting themselves when new narratives emerge and become relevant. This is not an encouragement to fabricate or distort facts and fundamental facts, but rather an acknowledgment that facts can support many possible accounts that do not necessarily agree with each other, that circumstances change and our knowledge develops.
- Create new rules: To use the power of speaks through thought, employees must be confident that “testing minds” that have not been fully formed and peer-reviewed do not require a career risk. Of course, guardrails should also be put in place for thinking aloud in public forums, where the ramifications are greater if an idea is poorly received or ultimately not delivered.
- Create a safe environment: To develop and leverage the collision of different perspectives, leaders must provide space playfulness and ensuring that employees feel safe to experiment with new ideas, processes, and practices.
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Success in a world of radical optionality requires a culture that embraces experimentation with new and often conflicting business and operating models. To achieve this, companies must recognize that strategy is a portfolio rather than a road map. Managers must rely on multiple and conflicting narratives, while creating strategies and crafting messages in real time. The challenge for leaders is to make the organization safe for employees to think and communicate in these new ways.