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The Strategy Paradox: Why Committing to Success Leads to Failure

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A compelling vision. Bold leadership. Decisive action. Unfortunately, these prerequisites of success are almost always the ingredients of failure, too. In fact, most managers seeking to maximize their chances for glory are often unwittingly setting themselves up for ruin. The sad truth is that most companies have left their futures almost entirely to chance, and don’t even realize it. The reason? Managers feel they must make choices with far-reaching consequences today, but must base those choices on assumptions about a future they cannot predict. It is this collision between commitment and uncertainty that creates THE STRATEGY PARADOX.

This paradox sets up a ubiquitous but little-understood tradeoff. Because managers feel they must base their strategies on assumptions about an unknown future, the more ambitious of them hope their guesses will be right – or that they can somehow adapt to the turbulence that will arise. In fact, only a small number of lucky daredevils prosper, while many more unfortunate, but no less capable managers find themselves at the helms of sinking ships. Realizing this, even if only intuitively, most managers shy away from the bold commitments that success seems to demand, choosing instead timid, unremarkable strategies, sacrificing any chance at greatness for a better chance at mere survival.

Michael E. Raynor, coauthor of the bestselling The Innovator's Solution, explains how leaders can break this tradeoff and achieve results historically reserved for the fortunate few even as they reduce the risks they must accept in the pursuit of success. In the cutthroat world of competitive strategy, this is as close as you can come to getting something for nothing.

Drawing on leading-edge scholarship and extensive original research, Raynor’s revolutionary principle of Requisite Uncertainty yields a clutch of critical, counter-intuitive findings. Among

-- The Board should not evaluate the CEO based on the company’s performance, but instead on the firm’s strategic risk profile
-- The CEO 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

With detailed case studies of success and failure at Sony, Microsoft, Vivendi Universal, Johnson & Johnson, AT&T and other major companies in industries from financial services to energy, Raynor presents a concrete framework for strategic action that allows companies to seize today’s opportunities while simultaneously preparing for tomorrow’s promise.

320 pages, Hardcover

First published January 1, 2007

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Michael E. Raynor

11 books29 followers

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5 stars
81 (28%)
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112 (39%)
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Displaying 1 - 26 of 26 reviews
Profile Image for Ryan Holiday.
Author 99 books13.9k followers
July 6, 2012
Raynor's book is not the easiest read, but then again, that says more about the reader than it does about the book. The concept is rather revolutionary--and thus, difficult to digest immediately--in that it suggests almost everything we know about strategy and success is wrong. All the books, studies and anecdotes are comparing successful companies and mediocre companies instead of what they claim to do: compare success and failure. If they actually did compare the two, Raynor claims, you'd find a lot of similarities. That all too often, the keys to success are the recipes for failure. And that the people who we hold up as fearless leaders are really just one change in fate away from being the people we mock as losers. He's saying that this is inevitable, after all, how can a study include the business that started and failed and no one ever heard of? Thus, we only see wild success or middle of the road, bet hedgers.

Von Clauswitz talked of this too, saying that as we examine history, before we judge military defeats we must consider what our opinion would be had they succeeded. In other words, if the insurgent resistance in Iraq hadn't been so strong or if the WMD had materialized, would Bush's unilateral, undertrooped strategy be as derided as it is right now? Or if weather hadn't beaten back the Persians at Thermopylae, would we still think them arrogant and brash?

Accordingly, Rayor's book is a very unique look at some of the most illustrious examples of business failure. We see that some of Sony's biggest gaffs, had the market gone the way they'd hoped, would have been their biggest successes. This is true because of the theories two assumptions:

1) A successful strategy requires full commitment
2) Full commitment, in light of unpredictable futures, can mean catastrophic failure

And thus, the more you strategize, the more likely you are to be both massively successful and massively unsuccessful. The only middle ground--and often the most commonly taken--is mediocrity, where the company is neither successful or driven out of business.

Raynor poses a conclusion we often find ourselves also coming to:

"The only way [Company X] could have managed the situation any better is to have predicted the future...and that of course, is impossible. The future never gets here."

He sees strategies as equity or stock. You're purchasing the stock, and if you guessed right, you make money and if you guess wrong, you lose. The real way to succeed then, is to buy options on stocks. Essentially, to set up multiple, concurrent strategy options, from which you can then "agree to buy" the winners. These options then make your chosen strategy mobile in the face on an unpredictable future. This gives you strategic flexibility.

Overall, this was a very interesting book. The review deriding it above are to be expected--if we could all understand this, it wouldn't exactly be a paradox or problem would it? Pick it up and even if you don't understand every word, merely being cognizant of the dilemma would help you.
226 reviews1 follower
January 27, 2019
Deloitte book highlighting the value of real options and reinforcing the extent to which outcomes are not indicative of results/quality of decision-making, a pet peeve of mine. It's unclear to me that the added layers of complexity and management of optionality and various scenarios/time-horizons are practicable for many other than the very largest of organizations, but it represents much-needed pushback on "just predict it" theories common among my MBA students.
54 reviews
April 20, 2023
Bardzo ciekawa tematyka, poparta analizami i zobrazowana na przykładach. Dla mnie była to jednak męcząca lektura, momentami zbyt naukowa. Dodatkowo minus za literówki i toporne tłumaczenie w polskim wydaniu
Profile Image for Fabian.
405 reviews43 followers
May 25, 2017
My main insight was that the same strategy that can lead to massive success can also lead to failure. That is the Paradox.
Profile Image for Heli.
11 reviews1 follower
January 18, 2019
Very interesting, quite unconventional approach to strategy. Perhaps the best strategy book I’ve read even though the ideas are quite complex.
Profile Image for Turgut.
295 reviews
April 27, 2019
One of the best books on the topic. Better than business school top strategy books. Rarely useful and applicable book.
Profile Image for TheMadReader.
146 reviews
May 9, 2022
Not an easy read but if you can complete this book and actually comprehend it, you’re already ahead of the curve.

Learn more here than from any college course.
Profile Image for Bart Breen.
209 reviews18 followers
March 11, 2012
Up front, those reading this review should know that I work for the same consulting firm of the author and have assisted in facilitating group training using this book. I have not been directed by anyone within my firm to write this review nor am I under any constraint to only give this book a positive review. I am providing this review at my own initiative as a regular reviewer on Amazon on my own time.

Michael Raynor's work in the Strategy Paradox might seem in some ways to be an exercise in shooting oneself in a foot. As a recognized consultant and academic leader in the field of Strategic Planning, it's not necessarily a smart business move to go to such great lengths to explain why so much of what passes for conventional wisdom within the business community, amounts to the equivalent of whistling past the graveyard at night in order to give yourself some sense of control over those things which really, of which we have very little actual control.

The reality is that those who survive in business, are the ones who then provide the insights to others as to how to succeed. Nobody wants to take advice from a loser, right? Those businesses that then have succeeded along with their corporate leadership become the gold standard which everyone else seeks to learn from and emulate in order to bring about their own success. So much of what leads to success however, in the end reduces to some form of positioning for success based upon anticipation of market conditions, consumer demand, technological and process-driven innovation and let's be honest, sometimes just plain old "dumb luck," that what passes for strategy is just emulating past decisions and methods of arriving at strategies that repeat what has been done before but then are at the mercy of those uncontrollable elements of chance.

Raynor demonstrates through a very thorough and documented approach that often what businesses do to achieve success is based upon the models of past stellar successes with very little recognition of how risk that is leveraged to provide above average returns on effort and investment, by definition runs the risk of corresponding failure.

If this is the case, then what is the value of strategic planning and why bother doing it?

Raynor addresses these issues and in the end provides some solid input as to how strategic planning can be done when separated from the populist "conventional wisdom" that becomes commonly accepted but doesn't actually deliver when it's applied in volatile environments.

Included in the detailed discussions of varying elements of strategic planning are such popular approaches as "adaptability", forecasting through the extrapolation of the past and other currently in vogue methods, the impact of timing (including organizational structuring and its ability to adjust to changes externally and internally), options based strategy versus firm decisions and commitments in advance, strategic flexibility, scenario construction, unpredictability "robust" strategic planning, and then finally a conclusion with a remarkable summation (certainly in the context of strong ego reinforcement typically found in corporate power structures) that has to be read to be believed. Raynor, however, in my opinion is spot on.

In many ways, this is a book of questions more-so than a book of answers. Answers are present however and in the end, someone reading this book should come away with a greater appreciation for reality, personal limitations and some counter-intuitive lessons that in the end, could just lead to some more effective approaches to age-old, and constantly redefining problems.

5 stars.

bart breen
323 reviews13 followers
October 4, 2008
Failure and success are two sides of the same coin. Any great plan must necessarily make assumptions about the future that cannot be known. It must make commitments. Thus, if these do or do not come to pass can define success.

The opposite of success is not failure; it is mediocrity.

Raynor's solution to this problem is the purchasing of options. You invest in the ability to follow many different paths through the future. An important point here is that this is not the opportunity to invest in growth but in strategic options.

The top of a company should not be focuses on making strategic decisions but with managing strategic uncertainty.

The chapter summaries in this book are really good.


"The very traits we have come to identify as determinants of high achievement are also the ingredients of total collapse. And so it turns out that, behaviorally at least, the opposite of success is not failure, but mediocrity."

"The most successful strategies are those based on commitments made today that are best aligned with tomorrow's circumstances. But no one knows what those circumstances will be, because the future is unpredictable."

"Adaptability is viable only when the pace of organizational change matches the pace of environmental change. When the environment changes either faster or slower than the organization, adaptability is no longer sufficient."

"Fast change leaves an organization's capabilities optimized for an environment that suddenly no longer exists...Slow change prompts an organization to adapt to incremental changes in the environment around it, and because of these incremental adaptations, the company often fails to see the need for a more fundamental transformation."
This entire review has been hidden because of spoilers.
Profile Image for Ryan.
7 reviews19 followers
September 3, 2019
Excellent book detailing the best profit-maximizing model, given epistemological constraints that affect all humans. According to Raynor, the most successful companies pursue extreme positions in the market (extreme product differentiation or extreme cost-cutters), these behaviors also applies to firms that take substantial losses. Examples of such firms are Apple and Sony, which have won big when they have won and vice-versa. The optimal strategy of any firm is to accept these epistemological constraints and to put money into possible strategies that are more likely than not to fail, but have a chance to lead the firm to overwhelming success when they do hit. He cites Johnson & Johnson and Microsoft as successes to this strategy.

Rayner expresses superlative advice to any business leader who feels he can predict consumer demand or the profitability of its strategy. So long as it can afford it, firms should diversify its position in the market such that it can respond to it. These actions may be costly, but they are the most effective way of maximizing profit in the long run. As much as business leaders would like to believe that there are easy answers or accurate projections to what consumers will value, there exists uncertainty to any such discovery. The only real option is to develop opportunities for profit, and not arrogantly to commit the firm to an intuitive guess of what may be most effective.
Profile Image for Frans Saxén.
79 reviews1 follower
January 27, 2016
For a management/strategy book, this takes a refreshingly humble starting point: A company doing all the "right" things can still fail. Thus the book does away with the laundry list type of literature, where the author has looked at what successful companies do, and from there concluded that doing this causes success. The first half of the book illustrates how doing the right things nevertheless have lead to failure (for example Sony and the MiniDisc). This part of the book is quite interesting. The second part then deals with what can be done to avoid this type of failure. The big idea in the book is that companies should construct Real options, that is options, not commitment on possible future businesses. This can for example take the form of joint ventures, or small scale experimenting that can later be expanded. Key here is not to commit (otherwise it is a commitment, not an option) too early. While the company as a whole should seek these options, the middle management responsible for these options should be committed.
The book is a pretty good management book, reasonably short and to the point.
620 reviews44 followers
December 21, 2009
Forecasting the future and developing strategies

Have you spent hours creating forecasts you knew didn’t mean much? Have you wasted time in painful meetings where second-guessers judged your efforts harshly because your original decision was not perfect in light of the way reality later unfolded? Michael E. Raynor explains why developing a strategy that would work moderately well under a variety of circumstances is likely to lead to mediocre results. Instead, he teaches you to match the appropriate level of management to the “requisite uncertainties” your organization faces. Raynor discusses how to use “strategic options” to put your company in a position to capitalize on a range of contingent scenarios without having to make firm commitments. getAbstract recommends this intelligent approach to business strategy to executives in any industry. It is clearly written and well-illustrated with new takes on familiar business sagas.

To learn more about this book, check out the following Web page: http://www.getabstract.com/summary/82...
Profile Image for Ocean G.
Author 6 books55 followers
April 21, 2018
Someone needs to write an adaptation of this book for Entrepreneurs, or at least for people in business who don't work for Fortune 500 companies. The ideas are excellent and, as far as I know, not discussed in any other business book, but it would be great if they could be made more actionable for your average person (who doesn't respond to shareholders, have multiple departments under them, or can afford to allocate Microsoft-style resources to different strategies).

Some quotes I liked:

"If diversification efforts lower the performance of the firm overall, but the performance of each new business venture is still above the firm's average cost of capital, then diversification will 'create' value." (p. 161)

"...nothing big starts big, and tomorrow's whale is today's minnow. The problem is that most of today's minnows are tomorrow's meals, and knowing which is which remains a challenge." (p. 184)

"And when it comes to strategy and the long term, uncertainty is the only constant, and choosing options over commitment is the most reasonable response to that uncertainty." (p. 271)

12 reviews1 follower
June 6, 2007
Central thesis is that strategies that make companies successful are the same strategies that make them failures. All that differentiates successful from unsuccessful companies is chance. He proposes strategic flexibility as a way forward to hedge the bets against failure. He is regarded as superstar at work. From what I have read, exercising strategic flexibility is a costly activity for any firm and would lead to indecisive leadership.
Profile Image for Tac Anderson.
Author 2 books91 followers
September 1, 2013
We learn more from failures, we fail far more than we succeed and yet we talk about our failures far less than our successes and this is even more true in business. But it doesn't have to be that way and it shouldn't. The best organizations (and I would argue the most successful people) learn from their mistakes and in an organization that means talking about them not trying to hide them and assigning fault.
Profile Image for Harry Lee.
428 reviews2 followers
January 4, 2021
First introduced to this book years ago by Ryan Holiday. Recently came across it again when the author was interviewed in the podcast The Art of Manliness.

As you should know by now, I like things which look at the two sides.

Overall, a good read ... I am not convinced though on the argument that adaptability is not the answer but strategic flexibility is.
34 reviews1 follower
July 12, 2014
I like Michael Raynor and this is a great premise. But like so many business books, it's a powerful single idea stretched into a 300-page book. Better for corporate strategists rather than small or mid-sized businesses.
5 reviews
November 10, 2014
Clear book on strategy with practical examples of how to structure a company given the unpredictability of most markets. The book provides an interesting view on strategy and is a must read to anyone in business.

14 reviews
February 18, 2008
meski belom kelar bacanya tapi cukup menambah pengetahuan khususnya what strategy in uncertainty.....
Profile Image for Bryce.
31 reviews
February 9, 2012
All around excellent book. Seems like it could have been written in 1/3 the length but Raynor is an excellent writer so I didn't mind all the extra detail and analysis.
Profile Image for Jose Papo.
260 reviews133 followers
October 7, 2013
In this book Raynor explains why even the best strategy can go wrong. He shows how companies should use growth options and strategic options to minimize risk and enhance their survivality.
Profile Image for Nick.
Author 2 books39 followers
June 29, 2015
Important contribution to the literature on corporate innovation and real option strategy. Although it's somewhat academic, it has helpful frameworks that can be applied in practice. 3.5 stars
1 review
Want to read
August 4, 2015
someone kindly tell me how I can get to read these books
257 reviews54 followers
October 4, 2016
An accountant takes a whitepaper with three good ideas and turns it into a full-length book . . .
Displaying 1 - 26 of 26 reviews

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