Deliberate versus Emergent Strategy
This chapter deals with the strategy formulation and execution process. Core of strategy is about what you choose to invest money on. This book talks of two approaches to do that and how each must complement the other. The first is top driven driven and with longer term focus - this is called deliberate strategy. The other is a driven at an operational level and are more an immediate response to opportunities and threats on the ground - this is called emergent strategy. The key to success is balancing between the two strategies.
The approach to both strategies are different as deliberate strategy is more predictable and can show immediate results while emergent strategies may not always show huge value or huge margins. Also many of these may fail. So often companies give up opportunities for emergent strategies and choose to pursue the more predictable big opportunities. This will bring immediate success but eventually as stable businesses dry up, they may find they have missed the bus on the next big thing. On the other hand companies may miss opportunities to scale by not converting an emergent strategy into a deliberate strategy in the right time. The deliberate strategy approach is to come up with assumptions, and then come up with a projection of value, decide on investment and steps to achieve and execute. The emergent strategy approach on the other hand is decide on target, identify assumptions that need to be true to achieve the target and create a plan to test out the assumptions. Big investment in the idea will only happen once the assumptions have been tested.
A non business personal example comes to my mind - my business as a fiction writer. Say I decide to write a campus romance or a crime thriller that are known to have good markets and I also have demonstrated competence in writing these well as demonstrated through sales of my earlier books in this genres, then I can confidently decide to spend 6 months writing the book and then put my money in editing, cover design, printing of copies and promotions. On the other hand, if I want to try something new such as horror, then I don't know if Indian will like it or not. I also wouldn't know about my own competence in writing the same. So I would first like to first come up with a hypothesis as to who will read horror - maybe college students or middle aged home makers or retirees. Also me being able to write horror itself is an assumption. As is me being able to write horror of required length. I should design strategies to test whether I can write horror without exposing me to readership targets and in parallel test the interest of the identified segments in horror genre maybe by checking their reception of more established horror authors. If the identified segment say college students show no interest I would try again with another segment says middle aged home makers. Similarly if I find I am not writing competently enough, I change what I write from say paranormal horror to psychological horror. Once the match is found between my abilities and the reader preferences, then I need to move at speed to capture the market by investing my time and money shifting to deliberate strategy. And then over time reader preferences may shift or I may run out of newer themes in the genre. So, I have to be on the look out for other emergent themes such as say mythological fantasy and do the whole emergent strategy testing again.
That is the key to success - shifting between deliberate and emergent strategies to cash in on existing markets and quickly identifying what the next market is going to be and moving quickly to capture it.