Strategy is about creating the future, not predicting it. You develop strategy by starting with a bold vision of the business in the future and working backwards, not by an understanding of the present business and working forward. The latter merely entices you to compromise your vision. It is only the former that can take you where you want to go.
The CEO of a Japanese SME has one of the boldest visions for his future business of any client I have worked with. It is the kind of industry-transforming strategy that has been happening all across Japan, and this CEO is poised to make it happen in his domain. It changes the industry’s business model. It puts his company in a dominant position with customers in a way that a large competitor would find hard to match. It makes a decades-old system obsolete, in which distributors dominate and own end customer relationships. His vision is the kind that shakes up an industry, changes power structures, and benefits end customers in ways they had never thought possible. This is what strategy is all about—or at least should be.
Despite all this boldness and audacity when talking about his vision, the same CEO became meek and tentative as he considered what his business and industry are like now. His strategy will likely anger a lot of people in the industry whose businesses’ real value-added has been questionable for at least a decade, and make nervous the employees who don’t have the stomach for such audacity.
The pace at which he envisioned execution was so slow that he would be well into retirement before his vision even started to take shape—if at all—and he is still a relatively young guy with school-age children. So I asked him: “Why so cautious?”
He rattled off a litany of reasons why what he wanted can’t possibly be done—whether employees who would reject the direction he wants to take, distributors upon which the business depends suddenly cut ties out of spite, the lack of infrastructure needed to support customers in the new model, and the improvement in capability the salesforce would need to achieve, just to name a few.
All of these are legitimate risks. Yet, not one of them invalidates his strategy or cannot be managed. While he thought he was merely managing reasonable expectations and mitigating risk, he was actually doing the opposite. Such tentative moves would likely only tip his hand so others who are willing to move faster can either counter his endeavors or even hijack them as their own.
Business caution and business prudence are not the same. In caution, you mitigate risk by compromising strategic objectives. Aim lower and you are more likely to succeed, or so the reasoning goes—only caution exposes you to being blindsided by someone more aggressive.
Prudence, however, is tenacious. In prudence, you mitigate risk by developing contingencies should your assumptions turn out to be wrong, and you never, ever compromise strategic objectives.
This distinction matters because building strategy from the present engenders caution. It is easier to move the goal post when it looks difficult to get there. Working backwards from the future engenders prudence because all paths lead back to where you want to go.
I convinced this CEO to suspend his concerns about the present for now, and indulge me. We worked backward from his vision of the future. In less than twenty minutes, a vision he had described earlier as “pie-in-the-sky” was now reasonably achievable in his mind, and I agreed with him. We could now move forward.Strategy should be audacious and bold, and if you think audacity and boldness are unnecessary for success in your industry, you are setting up your business to be supplanted by someone who does. Click To Tweet
So if you are in the midst of developing strategy for your business, be bold, audacious, and uncompromising of your objectives. Work backwards from the future. Use prudence, not caution, to help ensure your success.
And by all means, be unreasonable! If you are the leader, you are the only one who truly can, and the most successful strategies always are.