Strategic Stuckness

Overcoming Sticky Inertia

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I am struck by the phenomenon of strategic stuckness, that is, when a company is experiencing unsatisfactory, frustrating and/or painful results, but its management does little or nothing meaningful to change course. I have gotten increasingly curious about it, so I thought I would write a Playing to Win/Practitioner Insights (PTW/PI) piece on Strategic Stuckness: Overcoming Sticky Inertia. As always, you can find all the previous PTW/PI here.

A Bit of Context

I have long argued that strategy is a problem-solving technique. Strategy is for overcoming a negative gap between the outcomes you are achieving and those you wish you were. That would include an entrepreneur feeling a gap between a business that does not yet exist and one that the entrepreneur dreams of building. I find this problem identification exercise is not difficult for managers. They have a ready sense for the fact that something is not working quite the way it should (or hasn’t even started).

The complex adaptive system (CAS) folks have a good way of describing this situation. And I thank former Steelcase and Ford CEO Jim Hackett for turning me on to the CAS theories and work. They would describe such a gap as a fitness problem. A company’s choices aren’t matched perfectly with the environment in which it operates. Dinosaurs developed a fitness problem when the ecology of their environment shifted – and the mismatch was sufficiently severe that they went extinct.

But that is an extreme case. In less extreme cases, a fitness mismatch drives adaptation designed to result in a better match with the fitness landscape – which of course was the fundamental insight of Charles Darwin: survival of the most adaptable. That is, survival of those most capable of achieving superior fitness through adaptation.

In the business world, fitness is manifested when a company’s choices are matched perfectly with its operating environment – its customers, competitors, regulatory framework, etc. When for whatever reason, those choices become mismatched with the operating environment, problems arise.

The Question?

What blocks the path of adaptation? That is, what produces the phenomenon of strategic stuckness that I observe?

One part of the answer is easy. Sometimes the adaptation challenge is just plain too much. The fitness landscape has shifted so dramatically that the company simply can’t adapt fast enough to survive – as with the dinosaurs. In business, it can be a massive customer shift – as with restaurant customers literally disappearing during COVID. It can be the arrival of an overwhelming new competitor – as with Walmart coming to the town of a small mom & pop hardware store. Or it can come from the arrival of a powerful new technology – sometimes in the hands of an overwhelming new competitor – as with Amazon armed with on-line shopping. Amazon wiped out countless small retailers, and some large ones – like Borders – but the very strongest competitor, Walmart, was able to become fit enough to survive.

Strategically, I am not too concerned with better understanding or reacting to extreme fitness problems. Literally, there just isn’t much productive to do. Stuckness isn’t the problem. Overwhelming force is. I don’t try to think hard about a productive managerial response because there isn’t one.

However, I am interested in situations in which there is the real possibility of restoring fitness – but only if management acts by making a new set of choices. But they won’t if they are stuck.

Why the Stuckness?

What promotes stuckness, the paralysis? I am not entirely sure. But let me give it a try. I think there are three interlocking, reinforcing characteristics.

The first characteristic is that a company is part of a CAS, as referred to above and as I have discussed earlier in this series (here and here). The hallmark of a CAS is that relationships between cause and effect are not linear and unidirectional but rather are characterized by complex loops of causality. That is where the famous line comes from about “a butterfly flapping its wings in Brazil causing a tornado in Texas.” Consequently, a CAS can never be fully analyzed or understood. It can only be interpreted and perturbated. Trial, error, and iteration are key in dealing with a CAS. That is why strategy is more of an art than a science.

However, as I have discussed before (here and here), managers are trained as technocrats who believe their job is to analyze until such time as they fully ‘know’ the right answer before deciding and acting. When facing a CAS, they will never really get to that point of certainty that will give them confidence to make a new choice, although sometimes new choices do get made when managers delusionally think they have analyzed their way to the ‘right’ answer.

But in the general case, even though they know something is not working the way they would wish, they can’t generate the confidence to act on the CAS that significantly befuddles them and doesn’t behave consistently with their managerial training and approach. As a result, they wait and see, hoping for clarity and certainty that never comes.

The second characteristic is that managers often have little sense of the eventual result of the fitness mismatch. It is the proverbial boiling-the-frog case. The frog understands that the water is a tad warm – a problem – but doesn’t see that the warmth is part of a potentially deadly mismatch between the conditions necessary for its survival and the emergent conditions. Hence, the urgency of acting is missing – maybe the fitness mismatch isn’t so bad and may fix itself!

I experienced that phenomenon last week. A client was pleading that it might just be too painful to take the action we were discussing. My response was to observe that they must not think that they are currently well down a path to extinction. That surprised them. So, I explained what I saw as a logical sequence of dynamics that would end with them no longer existing. I didn’t present it as a sure thing – just a reasonably likely eventuality. They were much more willing to contemplate the action we were discussing in the face of an existential threat.

That experience gave me a flashback to a dinner I had with (then) Motorola CEO Chris Galvin, the son of legendary founder Bob Galvin, in late summer 2003. It was set up by John Pepper, CEO of P&G who had been a long-running client of mine and was ‘presiding director’ (their term for lead director) of the Motorola board. He was worried about Motorola’s strategy, even though the company was one of the highest fliers in the business world at the time, in large part because of its burgeoning handset business in which it had #2 global market share.

I read the voluminous strategy materials that they had sent me to review before the dinner. I formed an opinion, which I shared at dinner, that its handset business strategy was deeply flawed and that if Motorola didn’t fix the strategy of its biggest business by far at the time, I doubted that it would even be in the handset business ten years hence. Galvin was gob smacked because that was unthinkable. But maybe it upon sober second thought and reflection on my reasoning, it didn’t seem quite so unthinkable because Galvin stepped down as CEO less than a month later – and I always blamed it on our dinner, rightly or wrongly. And I turned out to be prescient. Motorola exited the handset business nine years later by selling it to Google for a fraction of its 2003 worth.

The third characteristic driving stuckness is that making a choice to move off the status quo is often fraught with painful tradeoffs. It was for both the client last week and Galvin. In both cases, the most obvious fitness fixes involved a shift that would hurt in other ways. My observation, and I wrote a book about it and a piece in this series about the implications for strategy, is that when executives face what they see as a painful tradeoff, they often become paralyzed and don’t choose either/or. Rather, they stick with an unsatisfying status quo.

The three combined is arguably the case most of the time. Business life is a CAS in which it is hard to deduce cause and effect and therefore what would be a good idea and not. That generically makes it hard to see the long-term consequences of current problems. And taking action would involve a painful and/or scary tradeoff. So, sitting there and feeling stuck isn’t a surprising outcome.

What I Do

When I am helping a client that is stuck in an unappealing position, I follow a set of steps that seems to be productive most of the time – not always, but most of the time.

One, I start by having the client characterize the current problem as they see it and what makes it particularly painful for them.

Two, I have them reverse engineer their current choices using the Strategy Choice Cascade – and as always, I focus not on the choices they may have described in their documents, but what they actually do – because strategy is what you do not what you say.

Three, I help them understand that the current fitness mismatch is a product of their choices interacting with the competitive environment. It is not an accident, and it won’t go away by itself.

Four, I use my strategy logic – as expressed across the entire PTW/PI series – to help them see the contours of the CAS in which they operate. I reinforce over and over that they will never have perfect information about the future of that CAS.

Five, I work with them to paint a picture of where they are likely to be headed with their current choices – i.e. the problems are unlikely to just go away. If anything, they are likely to get worse.

That set of steps is designed to build their confidence that perturbating the CAS with a modified set of choices is worthwhile and may indeed make the problem go away.

Six, if that perturbation requires overcoming a painful tradeoff, I help them tackle it head on using Integrative Thinking to come up with a possibility that contains elements of the either/or options but is superior to each. On Integrative Thinking, maybe it is that I have a hammer and everything looks like a damn nail, but I can safely say that when I wrote The Opposable Mind back in 2007, I had no idea how central and important it would become in my strategy work with clients.

Practitioner Insights

If you have a queasy feeling that you are not producing the results you should be, start measuring. Establish control limits in advance to tell you whether you are experiencing a downward blip or a trend that is taking you below the lower bound of your limits. If you don’t set that structure up in advance, you will ex post-rationalize every downward trend as a transitory blip. If you go below control limits, then project forward. If you continue a trend that approximates the current direction, where will you end up? Be honest with yourself. Play out several steps. If it looks bad – and often it should and will – get yourself motivated for action.

Then launch into the six steps that I use when I help clients. Four and five are difficult because they require the pattern recognition that comes from strategy experience. But you can always test your thinking and ask for advice from friends and colleagues.

Imagine different sets of choices – not just one. You will hit inevitable painful tradeoffs. Don’t be daunted. That is why you felt stuck in the first place. Use Integrative Thinking to come up with a new and superior possibility. Then try it! With a CAS, you will never know with certainty that it will succeed. But try and see where it goes. It is better than staying stuck in a bad place.