My good colleague at the London Business School, Professor Don Sull – master of the analogy – often shows his classroom a picture of a sailor looking through his binoculars, saying “this is our traditional view of how we regard making strategy”: someone who is able to look into the future, and make a detailed plan of how to proceed towards a chosen destination.
I like and agree with his analogy. In pretty much all businesses, although you may know where you’re headed, the route is fraught with uncertainties and unexpected events. Technological developments, market demand, competitor actions, entrants, changing consumer preferences, the macro economy, etc.; nobody can discern with any certainty what lies ahead of us.
I’d like to extend Don’s analogy, of driving in heavy fog. Because we’re likely not alone on this road. We have competitors. And what do most of us do, when we’re sharing the road with other users in heavy fog? We concentrate on the lights of the car ahead of us, because it gives us some guidance, and we can rely a bit on the faith of the fella in front of us.
That’s often how it goes in business as well. Competition is a race, but it’s also a race in the mist. Often, everybody ends up following the quickest competitor, bidding for 3G licenses, entering China, merging with IT companies, etc. But sometimes, everybody ends up with a big bump on the head.
However, of course, if you slow down, you might lose the race. So, what do you do, confronted with fast-moving competition? Well, do what you do when you’re driving in the mist. First of all, keep a healthy distance between you and the car in front of you. If he crashes, you still want to have time to stop. Secondly, if that car is driving faster than you’re comfortable with; slow down. He may get there faster than you, but he may also not get there at all. And sometimes that’s just not worth the risk.
Finally, don’t use binoculars. They will blind you. Rigidly executing a detailed long-term strategy won’t allow you to see anything unexpected in your way. You won’t be able to navigate around – let alone take advantage of – the opportunities and obstacles that suddenly appear on the road ahead.