The Emergent Approach to Strategy: A book review by Bob Morris

July 9, 2022

The Emergent Approach to Strategy
Peter Compo
Business Expert Press (July 2022)

“The essence of strategy is choosing what NOT to do.” Michael Porter

As Peter Compo explains in this book, “Strategy testing is a time-honored practice. Well-known tests include those offered by Michael Porter and McKinsey consulting. Most traditional tests, however, are not actually tests of strategy; they are tests of entire frameworks and can be of limited use when they require a lot of prediction.”

“The Five Disqualifiers are a new set of strategy tests. They ask,

  1. Is the opposite of the statement absurd?
  2. Does the statement include numbers?
  3. Is the statement a duplicate of the parent?
  4. Does the statement exclude anything or anyone?
  5. Is the statement a list?

“If you can answer yes to any of these questions, then what you have is most likely not a strategy, but instead, a goal, plan, or no more than a cliché or truism that you must revise. The Five disqualifiers are introduced in Chapter 8 of the Emergent Approach to Strategy.”

According to Compo, “despite how much is written about strategy and how much money is spent on it, academics and consultants continue to report strategy practice failures as shown in Figure 1.1.  [See Page xii.] Adaptive systems are the basis for the concepts of not only self-organization and emergence, but also agile design, resiliency, creative tension, and obviously adaptability (and antifragility, which is another term for adaptability). Adaptive systems reveal why managing by results leads to unremarkable results.”

What specifically does Compo recommend? Why? “The emergent approach embraces the difficulty [of constant adjustment] with practical techniques and principles to ensure that the frustration is worth it. As other good methods do, it eliminates collecting the usual suspects of strategy development approaches — financial reviews, technology reviews, growth rates, environment scans, market forces, and market share –until, and only if, there is a need for them.” Think in terms of solving a puzzle by getting each piece into its proper place. “The output of the process is an implementation package containing the final framework with its strategy, but it is fully assumed that you will return to the design phase often to adapt to what is learned in implementation.”
Richard Rumelt offers much of substantial value in his latest book, The Crux: How Leaders Become Strategists. What is Rumelt’s approach? “I explore four themes in the pages that follow. First, the best way to deal with strategic issues is by squarely facing the challenge…Second, understand the sources of power and leverage that are relevant to our situation…Third, avoid the bright, shiny distractions that abound…Fourth, there are multiple pitfalls when executives work in a group or workshop, to formulate strategy.”Some of the most serious mistakes in business are the result of conscious or unconscious biases that corrupt decision-making. For example, here is what Rumelt has to say about a familiar troublemaker:  Optimism bias “means that people tend to overestimate benefits and underestimate the costs of a plan or set of actions. This seems to be the inevitable outcome of basic ‘animal spirits.’ I recall asking then futurist Herman Kahn about how to get unbiased forecasts. He advised: ‘Hire forecasters who are clinically depressed.'” 

How can the emergent approach to the design and execution of business strategy be of greatest value? Peter Compo provides a detailed answer to that question in his book. He identifies the most important Dos and Don’ts. Only to an extent that is realistic, he suggests degrees of probability rather than assumptions of dubious relevance. Specifics are best revealed within his lively and eloquent narrative. However, it would not be a “spoiler” to reveal here that the approach he recommends — and brilliantly explains — can be used by leaders in almost any organization, whatever its size and nature may be. The approach is empirical in that the given business strategy is designed and executed based on real-world issues and considerations. It is adaptive rather than arbitrary in that modifications can be made to accommodate unforeseen developments that emerge.

I view it as “an approach for all seasons” in a business world that is more volatile, more uncertain, complex, and more ambiguous today than it was at any prior time that I can recall.

 

 

 

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