Author Archives: Philippe Silberzahn

Crafting Non Predictive Strategy, Part III: Acknowledge the Nature of the Problem

Despite formidable developments in business strategy over the last fifty years, organizations keep being disrupted by events they should have seen coming, but didn’t, or by events they saw coming but were unable to avoid or take advantage of. In 1971, NCR was surprised by the rapid rise of electronic cash registers and lost its leadership of the market. In 2007, Nokia was unable to react to the launch of the iPhone, an event the Finnish firm dismissed as minor, and is now struggling to survive. In 2011, the Arab uprising came as a complete surprise to everybody, not just business and governments but the people involved as well. And the list goes on:  if strategy is about addressing the key challenges an organization face, then the general lack of preparedness (if not prevention of) the economic and political crises that the world has been facing since 2008 is a massive failure of strategy. Hence it’s no surprise that in a survey conducted in 2011 by consulting firm Booz, fully 53% of senior executives did not think their company’s strategy would be successful. Houston, we have a problem…with strategy. Continue reading

Crafting Non-Predictive Strategy, Part II: Start with who you are

In the first part of this series, Milo and I examined the complexity of nonlinear environments and tried to show how, when confronted with such an environment, energy spent on a deep understanding of the present beats attempts at predicting the future.  Hence our call for a non-predictive approach to strategy.

Nonlinear systems can be found in nature, but they are particularly common and problematic when they involve human issues.  While such human nonlinear systems can display regularities over long time periods, most major political, economic and business issues are essentially nonlinear and permeated by social facts.  What such human-centered, nonlinear systems have in common but which is often overlooked is that one cannot deal with them as if they were natural science problems.  For one thing, and as we have argued in a recent Forbes article with the example of Usama bin Ladin, how you define the issue you’re dealing with depends on who you are.  This is also the reason that “genius” fails.

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Our Latest Forbes Piece: What a Caveman Can Teach You About Strategy

I have a strategy lesson for you

Read our latest piece on Forbes here.

In it, we argue that how an organization perceives competition or reacts to a disruption in its environment depends on its identity. Hence, before you start trying to understand them, try to understand yourself first.

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Brace yourselves for the next banking crash — it’s coming soon

Time to address the culture, Tim

Read our latest piece on Forbes here.

In it, we argue that bank crashes are not random accident or bad luck, but that they are systemic. They are the result of a banking culture. Unless this culture is changed, crashes will continue.

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Milo Jones to talk at the upcoming Institutional Investor Conference on unpredictable issues

Milo will be talking at the upcoming Family Office Wealth Conference on Predictable Unpredictability. The conference is organized by the Institutional Investor Forums. “Predictable Unpredictability: Issues, Options, Views and Roadmaps for Affluent Families”, will bring together representatives from some of the nation’s wealthiest families to explore the latest trends and issues related to managing family assets. It will take place on September 12-14, 2012, at the Montage Resort & Spa, Laguna Beach, CA.

Milo will argue that what appears in the news media, as well as what much of what is reported about the macroeconomic scene, represents the “weather” of business: transient or cyclical phenomena that strategists can safely ignore. The “climate” of business, recurring patterns of activity to deep systemic factors, is geopolitical and to a far greater degree determines the ability to create value over the long-term. Milo will outline how families with the assumed knowledge of current events and common business strategies can harness a diverse range of disciplines, especially methods of basic intelligence analysis, to become better informed about the world and the forces at play in the 21st Century that will have a continuing impact on business and business formation.

More information on the conference here.  For regular updates, why not subscribe to our blog?

Crafting Non-Predictive Strategy, Part I: Deep Understanding Beats Prediction

As Milo and I have argued before, the environments and issues businesses deal with are more complex than traditional strategy models admit.   Business issues today display high levels of uncertainty, they can behave non-linearly, and they can be vulnerable to “Black swans”, i.e. low-probability but high impact events that disrupt even the best formulated strategies.  The added difficulty for strategists and managers is that nonlinear environments often appear linear for an extended time period (think US house prices).  As a result, some conclude that what seems to be an essentially linear pattern (prices fluctuate a bit around a ‘long term trend’ but always rise), are linear in reality – before a radical change occurs that completely disrupts previously assumed patterns (e.g. prices fall dramatically).  In short, people often assume an environment is linear and predictable when in fact the continuity we observe is only a particular case of limited duration.  To make matters worse, with many nonlinear systems change is not nicely spread over the years:  most of the cumulative change occurs in one, single – often dramatic – occurrence.  In the language of engineering, some things don’t “fail gracefully” (e.g. a bridge that breaks suddenly instead of bending slowly).

Not a “graceful failure”.

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That’s All Folks: Why the Writing Is on the Wall at Microsoft

Read our latest piece on Forbes here. Our previous piece was on how the lack of diversity can cripple your company. Read it here.

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A control expert preparing for the eventual collapse.