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Risky strategy

By Fran Brosan, Chairman

What is strategy? It’s a question we all battle with, and at the latest Omobono Business Breakfast strategy was on the menu.

We use it as a euphemism for something that is in turn important, complex or long term. But we also use it for things which are general, not specific and for things that are immediate and tactical. Strategy for some people means a general direction. I’ve long thought for instance that when people talk about a high level strategy, you could substitute the word high level for ‘vague’. For others however it means a specific course of action, a plan.

The new book by Jamie MacAlister ‘Risky Strategy’ attempts to help us get our heads round both what strategy is, and what it should be. MacAlister joined us for breakfast to discuss what it actually was and why, in his view, successful strategy should incorporate, not avoid, risk.

We started by asking what strategy is. ‘The commitment to resource to achieve something in the future’ was MacAlister’s definition and his book explores both where the term came from (military terminology) and how it’s been approached by strategic thinkers over the years. But MacAlister’s premise, based on sources as diverse as Napoleon’s tactics at the siege of Toulon, Game Theory and winning at tennis, is that a strategy isn’t really a strategy if there’s no risk involved. Why? As we discussed, a strategy aims to achieve something and in changing the status quo there is always risk. Even if your strategy is to stay where you are, there’s a risk. Often more than you might anticipate, according to MacAlister. For him, strategy also means you must have assessed alternative approaches to arrive at your decision. This consideration might be based on gut feel, or on lengthy research depending on whether you (or indeed your organisation) are a Tiger wanting to tackle it at once or an Elephant wanting to analyse it in depth before acting.

As MacAlister pointed out, Napoleon actually did an enormous amount of research before making his recommendations at Toulon, he knew he could get the guns up the hill, he’d been up there to view the vantage point himself. But his plan was nevertheless bold, he had a moment of inspirational intuition, and knew that the less bold choices up to that point had been ineffective. On the side of his superiors, they were risk averse, until forced to listen by the lack of success of their other ‘strategies’. So perhaps, as one of the attendees commented, strategy is about making a choice between two or more viables and deciding which one to go for. MacAlister agreed, but warned that although Tigers are good at making bold decisions, good decisions should involve left and right brain thinking. ‘Avoid fast thinking as much as possible’ he warned.

There were some entertaining and educational anecdotes along with the bacon and eggs, like the time when he and his colleagues at PWC realised they were overusing the word ‘strategy’ and replaced it with the word ‘cake’. The result? Confused clients and hungry consultants. One individual shared an example of how brainstorming with recent joiners had been used to produce a bolder strategy to engage employees, reminding us that people were at the heart of delivering strategy, but that boldness in removing the underperforming 10% was probably key to doing it successfully.

In the book there are also some very good challenges which force you to think about the way you might yourself predict outcomes incorrectly (probability modelling is not something that human brains are naturally good at, it turns out). And there is also MacAlister’s own thinking about approaches to risk – leading him to the concept of Creative Tension. In the end he enjoins us to welcome that tension – believing that it will lead to better strategic decisions which include risk. In his view, that is what business leaders should be doing, rather than trying to mitigate risks at all costs, and hiving the process of doing so off to a specialist team.

Part of the problem, is that we think of risk as a taboo subject and we don’t like to talk about it but it needs to be addressed. An Oxford study apparently identified that 93% see risk as a danger, only 7% see it as opportunity. In this context, perhaps risk needs to be rebranded. After all, as MacAlister points out in his book, the Chinese character for risk is the same as for opportunity. Maybe we should call it ‘chance’.

MacAlister ended by pointing out the irony of his role as a Business School Professor (Ashridge and Hult). ‘When we work with Leaders, we encourage them to take risks’ he said, ‘but business schools teach how to minimise risk’. Time for a bit of Creative Tension to rationalise that perhaps?

I’d recommend the book both to those who are just starting to think about strategy and to those for whom it is part of their daily lives. It enjoins us to make bolder decisions but grounded in robust thinking. Sounds like strategy to me.

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