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CHAPTER THREE The Balance of Calculation and Serendipity
ОглавлениеUnderstanding what makes us tick is a critical step on the path to fulfillment. But that’s only half the battle. You actually have to find a career that both motivates you and satisfies the hygiene factors. If it were that easy, however, wouldn’t each of us already have done that? Rarely is it so simple. You have to balance the pursuit of aspirations and goals with taking advantage of unanticipated opportunities. Managing this part of the strategy process is often the difference between success and failure for companies; it’s true for our careers, too.
Honda Takes America … by Accident
Back in the 1960s, Honda’s management decided to try to gain a toehold in the U.S. motorcycle market, which had historically been dominated by a small number of powerhouse motorcycle brands such as Harley-Davidson and some European imports, like Triumph. They strategized that by making motorcycles comparable to those made by these competitors, and selling them at significantly lower prices (at the time, Japanese labor was very inexpensive), they ought to be able to steal away 10 percent of the motorcycle import market from the Europeans.
Doing so almost killed Honda. In the first few years, it sold very few bikes—compared to a Harley, a Honda seemed like a poor man’s motorcycle. Worse, Honda discovered that its bikes leaked oil when subjected to the long drives at high speeds that were typical in America. This was a real problem; Honda’s dealers in America did not have the capability to repair such complicated problems and Honda had to spend what precious few resources it had in America to air-freight these faulty motorcycles back to Japan to fix them. In spite of the problems, Honda persisted with its original strategy—even as it was draining the U.S. division of virtually all its cash.
In addition to the large bikes it sold, Honda had initially shipped a few of its smaller motorcycles to Los Angeles; but no one really expected American customers to buy them. Known as the Super Cub, these bikes were used in Japan primarily for urban deliveries to shops along narrow roads that were crowded with people, cars, and bicycles. They were very different from the big motorcycles American enthusiasts valued. As Honda’s resources in Los Angeles got tighter and tighter, it began to allow its employees to use the Super Cubs to run errands around the city.
One Saturday, a member of Honda’s team took his Super Cub into the hills west of Los Angeles to ride up and down through the dirt. He really enjoyed it. In the twists and turns of those hills, he could work out the frustrations that had driven him to the hills in the first place—the failing big-bike strategy.
The next weekend, he invited his colleagues to join him. Seeing the Honda guys having so much fun, other people in the hills that day asked where they, too, could buy one of those “dirt bikes.” Though they were told that they were not available in America, one by one, they convinced the Honda team to order them from Japan.
Soon after, a buyer for Sears spotted a Honda employee riding around on a little Super Cub and asked whether Sears might sell it through its catalog. Honda’s team was cold to the idea, because it would divert them away from their strategy to sell the larger bikes—a strategy that was still not working. Little by little, however, they realized that selling the smaller bikes was keeping Honda’s venture in America alive.
No one had imagined that was how Honda’s entry in the U.S. market would play out. They had only planned to compete with the likes of Harley. But it was clear that a better opportunity had emerged. Ultimately, Honda’s management team recognized what had happened, and concluded that Honda should embrace small bikes as their official strategy. Priced at a quarter of the cost of a big Harley, the Super Cubs were sold not to classic-motorcycle customers, but to an entirely new group of users that came to be called “off-road bikers.”
The rest, as they say, is history. The chance idea of one employee releasing his frustration in the hills that day created a new pastime for millions of Americans who didn’t fit the profile of a traditional touring-bike owner. It led to Honda’s wildly successful strategy of selling the smaller motorcycles through power equipment and sporting-goods stores, instead of traditional motorbike dealers.
Honda’s experience in building a new motorcycle business in America highlights the process by which every strategy is formulated and subsequently evolves. As Professor Henry Mintzberg taught, options for your strategy spring from two very different sources. The first source is anticipated opportunities—the opportunities that you can see and choose to pursue. In Honda’s case, it was the big-bike market in the United States. When you put in place a plan focused on these anticipated opportunities, you are pursuing a deliberate strategy. The second source of options is unanticipated—usually a cocktail of problems and opportunities that emerges while you are trying to implement the deliberate plan or strategy that you have decided upon. At Honda, what was unanticipated were the problems with the big bikes, the costs associated with fixing them, and the opportunity to sell the little Super Cub motorbikes.
The unanticipated problems and opportunities then essentially fight the deliberate strategy for the attention, capital, and hearts of the management and employees. The company has to decide whether to stick with the original plan, modify it, or even replace it altogether with one of the alternatives that arises. The decision sometimes is an explicit decision; often, however, a modified strategy coalesces from myriad day-to-day decisions to pursue unanticipated opportunities and resolve unanticipated problems. When strategy forms in this way, it is known as emergent strategy. The managers of Honda’s beachhead in Los Angeles, for example, did not make an explicit decision to completely change strategy, to focus on the low-cost Super Cubs, in an all-day strategy meeting. Rather, they slowly realized that if they stopped selling the big bikes, it would stem the cash-bleed needed to cover the cost of the leaky-oil repairs. And, one by one, as employees ordered more Super Cub bikes from Japan, the path for profitable growth became clear.
When the company’s leaders made a clear decision to pursue the new direction, the emergent strategy became the new deliberate strategy.
But it doesn’t stop there. The process of strategy then reiterates through these steps over and over again, constantly evolving. In other words, strategy is not a discrete analytical event—something decided, say, in a meeting of top managers based on the best numbers and analysis available at the time. Rather, it is a continuous, diverse, and unruly process. Managing it is very hard—the deliberate strategy and the new emerging opportunities fight for resources. On the one hand, if you have a strategy that really is working, you need to deliberately focus to keep everyone working together in the right direction. At the same time, however, that focus can easily cause you to dismiss as a distraction what could actually turn out to be the next big thing.
It may be challenging and unruly, but this is the process by which almost all companies have developed a winning strategy. Walmart is another great example. Many people think of Sam Walton, Walmart’s legendary founder, as a visionary. They assume he started his company with a plan to change the world of retailing. But that’s not what really happened.
Walton originally intended to build his second store in Memphis, thinking that a larger city could support a larger store. But he ended up opting for the much smaller town of Bentonville, Arkansas, instead—for two reasons. Legend has it, his wife said in no uncertain terms that she would not move to Memphis. He also recognized that having his second store near his first would allow him to share shipments and deliveries more easily, and take advantage of other logistical efficiencies. That, ultimately, taught Walton the brilliant strategy of opening his large stores only in small towns—thereby preempting competition from other discount retailers.
This wasn’t how he imagined his business in the beginning. His strategy emerged.
Balancing Emergent and Deliberate
I’m always struck by how many of my students and the other young people I’ve worked with think they’re supposed to have their careers planned out, step by step, for the next five years. High-achievers, and aspiring high-achievers, too often put pressure on themselves to do exactly this. Starting as early as high school, they think that to be successful they need to have a concrete vision of exactly what it is they want to do with their lives. Underlying this belief is the implicit assumption that they should risk deviating from their vision only if things go horribly wrong.
But having such a focused plan really only makes sense in certain circumstances.
In our lives and in our careers, whether we are aware of it or not, we are constantly navigating a path by deciding between our deliberate strategies and the unanticipated alternatives that emerge. Each approach is vying for our minds and our hearts, making its best case to become our actual strategy. Neither is inherently better or worse; rather, which you should choose depends on where you are on the journey. Understanding this—that strategy is made up of these two disparate elements, and that your circumstances dictate which approach is best—will better enable you to sort through the choices that your career will constantly present.
If you have found an outlet in your career that provides both the requisite hygiene factors and motivators, then a deliberate approach makes sense. Your aspirations should be clear, and you know from your present experience that they are worth striving for. Rather than worrying about adjusting to unexpected opportunities, your frame of mind should be focused on how best to achieve the goals you have deliberately set.
But if you haven’t reached the point of finding a career that does this for you, then, like a new company finding its way, you need to be emergent. This is another way of saying that if you are in these circumstances, experiment in life. As you learn from each experience, adjust. Then iterate quickly. Keep going through this process until your strategy begins to click.
As you go through your career, you will begin to find the areas of work you love and in which you will shine; you will, hopefully, find a field where you can maximize the motivators and satisfy the hygiene factors. But it’s rarely a case of sitting in an ivory tower and thinking through the problem until the answer pops into your head. Strategy almost always emerges from a combination of deliberate and unanticipated opportunities. What’s important is to get out there and try stuff until you learn where your talents, interests, and priorities begin to pay off. When you find out what really works for you, then it’s time to flip from an emergent strategy to a deliberate one.
When the Wall Street Journal Didn’t Respond
I might not have had the right language to describe it at the time, but navigating between deliberate and emergent opportunities is essentially how I ended up being a professor, a job that I love. It took me years to get it right.
In fact, I’ve had three careers: first as a consultant, then as an entrepreneur and manager, and now as an academic—none of which I planned. When I was a freshman in college, I decided that I wanted to become the editor of the Wall Street Journal, a newspaper I deeply admired. This was my deliberate strategy. One of my professors told me that I was a good writer—but rather than majoring in journalism, I’d have a better chance of distinguishing myself in a field of thousands of job applicants if I knew the field of economics and business. So I studied economics as an undergraduate student at BYU and also at Oxford. Then I pursued my MBA at Harvard.
At the end of my first year in the MBA program, I applied for a summer position at the Wall Street Journal. I never got a reply. I was crushed, but an internship at a consulting firm emerged. It wasn’t the Wall Street Journal, but I knew that I could learn a lot by helping clients solve really interesting problems, and I hoped that would make me even more attractive to the Journal. Another consulting firm then offered to pay the full cost of my second MBA year if I would take a postgraduation job with them. We were so broke that I decided to accept it—thinking that I could keep learning about business, and then break loose to start my career with the Journal. This was my emergent strategy.
Unfortunately for my deliberate plan to be the Journal’s editor, I loved the consulting work I was doing. But after five years there, just as Christine and I were deciding it was time to start my real career as a journalist, a friend of mine knocked on my door and asked me to start a company with him. The prospect of starting my own business, facing the challenges myself I’d spent the last few years solving with my clients, really excited me. I just jumped at the chance. Besides, if I could tell the editors of the Journal that I had actually founded and run a company, I might be an even better pick for the path to editorship.
We took our company public in mid-1987, shortly before Black Monday. On one hand, we were lucky: we managed to raise capital before the stock market crashed. But from a different point of view, our timing was terrible. Our shares dropped from $10 to $2 in a single day. Our market capitalization became so low that no big institutions would put money into our company. We had planned on being able to raise another round of investment to fund our plan for growth. But without that funding, we became vulnerable. One of our initial investors sold his shares to another venture capitalist, and this sale gave the second venture capitalist enough shares to be in charge of our future. He wanted his own CEO in the top job—and I was fired.
I didn’t know it at the time, but this triggered stage three of my emergent strategy.
Several months before I got fired, I had talked with a couple of senior professors at Harvard Business School about another possibility that had been in the back of my mind: whether being a professor was something that I’d be good at. Both had said that I might. So I stood at a fork in the road. Was this the time when I should finally pursue my original deliberate strategy of becoming editor of the Wall Street Journal? Or should I try academia? I talked to an additional couple of professors about this, and on the Sunday evening of the very week I had lost my job, one of them called and asked if I would come in the next day. He announced that although the academic year had already started, they had gone out on a limb for me and made the highly unusual decision to admit me to their PhD program then and there. Less than a week after I had been fired, at age thirty-seven, I was a student once more. Emergent strategy again preempted my deliberate path.
Sometime after I finished my doctorate and started my job as a professor, I faced head-on the need to get tenure. At that point, I thought through the fact that although academia had come into my life through an emergent door, in my heart and mind I needed to make this new path my deliberate strategy. To succeed in this arena, I realized I needed to truly focus on it. So that’s what I did.
Now, at age fifty-nine and after a twenty-year career in academia, I still wonder occasionally whether it is finally time to try to become editor of the Wall Street Journal. Academia became my deliberate strategy—and will stay that way as long as I continue to enjoy what I’m doing. But I have not twisted shut the flow of emergent problems or opportunities. Just as I never imagined thirty years ago I’d end up here, who knows what might be just around the corner?
What Has to Prove True for This to Work?
Of course, it’s easy to say be open to opportunities as they emerge. It’s much harder to know which strategy you should actually pursue. Is the current deliberate strategy the best course to continue on, or is it time to adopt a different strategy that is emerging? What happens if ten opportunities present at once? Or if one of them requires a substantial investment on your part just to find out whether it’s something that you’re going to enjoy? Ideally, you don’t want to have to go through medical school to figure out you don’t want to be a doctor. So what can you do to figure out what has the best chance of working out for you?
There’s a tool that can help you test whether your deliberate strategy or a new emergent one will be a fruitful approach. It forces you to articulate what assumptions need to be proved true in order for the strategy to succeed. The academics who created this process, Ian MacMillan and Rita McGrath, called it “discovery-driven planning,” but it might be easier to think about it as “What has to prove true for this to work?”
As simple as it sounds, companies seldom think about whether to pursue new opportunities by asking this question. Instead, they often unintentionally stack the deck for failure from the beginning. They make decisions to go ahead with an investment based on what initial projections suggest will happen, but then they never actually test whether those initial projections are accurate. So, they can find themselves far down the line, adjusting projections and assumptions to fit what is actually happening, rather than making and testing thoughtful choices before they get too far in.
Here’s how the flawed process usually works.
An employee or a group of employees come up with an innovative idea for a new product or service; they’re enthusiastic about their idea, and they want their colleagues to be, too. But to convince senior management of the idea’s potential, they need to come up with a business plan. They are acutely aware that for management to approve the project, the numbers had better look good—but the team often won’t really know how customers will respond to the idea, what the true costs will turn out to be, and so on. So they guess—they make assumptions. Frequently, planners are sent back to the drawing board to change their guesses. But this is rarely because they have learned new information; instead, innovators and middle managers typically know how good the numbers have to look in order for their proposal to get funded, so they often need to cycle back and “improve” their guesses in order for the proposal to get the go-ahead.