Owning the downside

The green, green grass

“An idea starts to be interesting when you get scared of taking it to its logical conclusion.”

Nassim Nicolas Taleb, The Bed of Procrustes

Beware the summer strategist. You can only measure an organisation’s commitment to a strategy or principle by the pain it is willing endure and the price it is willing to pay for its choice.

Focus, commitment and clarity are connected virtues. They organise and direct your energy. Ordinary sunshine merely warms you, when focused through a lens it starts fires.

Focus is lost by trying to ‘have it all’. In a world of scarce resources, every clear decision comes with a cost as well as a benefit, a downside as well as an upside. By committing to one course of action, you forego others. In becoming skilled at one thing, you limit your development in a different domain. By structuring around one design principle, you neglect others. Every virtue contains the seeds of a matching vice.

If you commit fully to expanding in East Asia you can’t also do the same in Latin America, although there may be many exciting opportunities on that continent. If you develop skills in agility, you may suffer in rigour, even though there will be times that call for it. If you organise around the customer you can’t organise around product excellence and you will watch competitors bring innovations to market before you. If you prize transparency, you will not be good at keeping secrets.

The true test of your rigour and clarity is the degree to which you are willing to accept, even celebrate, these gaps and weaknesses, and to hold to your choice even when you miss out on some opportunities. Strategy means sacrifice.

The challenge is of course that the grass seems greener elsewhere. You feel the pain of what you have and imagine the benefits of what you lack. As a customer-focused organisation you probably will not celebrate your loyalty and lower cost of sale as much as you brood on the product features of your competitor. If you said ‘no’ to Brasil, every other news article will mention a growth opportunity there.

You try it one way. Over time you forget the rationale that drove you to do it that way and become tired of the gaps and shortfalls. The pressure to reverse course grows. If you succumb to it, the cycle merely starts again, in a pendulum swing of waste.

So we see organisations fudging, compromising or churning their decisions. Fudge is when you strive for “innovation and stability”. Compromise is when you want a little bit of transparency but not too much. And churn is that swing back-and-forth between the extremes. Platitudes, blandness and procrastination are the hallmarks of such places.

When committing to a course of action, be clear on the downsides and spell them out. Tell people what you won’t be, have or do. Obviously take moderate steps to mitigate the risks but don’t kid anyone, least of all yourself, that it will be plain sailing. Make a record of your reasoning that you can return to when the doubts grow. Consider what your rivals and competitors have sacrificed for their own advantages. Know the difference between a failure in executing what you set out to do and a natural consequence of succeeding at that execution.

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