The Strategy Paradox: Why Committing To Success Leads To Failure and What To Do About It.

The Strategy Paradox: Why Committing To Success Leads To Failure and What To Do About It; Michael E. Raynor; Currency Books; 2007; 303pp., $27.50.

Michael Raynor, of Deloitte Consulting LLP, and coauthor of the best-selling The Innovator's Solution, makes a compelling case in his book why well-thought-out plans fail utterly even when executed flawlessly, due to the inability of managers to predict the future despite their strategic plans. He questions the role of conventional strategic planning methodologies in committing the resources today to a specific outcome based on a future that is unknown and highly unpredictable. Raynor has researched the core issues and the unpredictable outcomes of business strategies in an intelligent and robust way and provides several frameworks and approaches to manage the risk and successfully plan for the future.

In a nut shell, Raynor's book is "lessons from failures" because the strategies designed for great success lead to major failures by some of the most successful firms--The Strategy Paradox. It is an authoritative text with hundreds of resources drawn from business, mathematics, anthropology, psychology and social sciences. The references at the end of each chapter are a great resource for any strategic thinker, business student or strategic planner.

The Strategy Paradox is organized into two broad sections, with five chapters in each. Chapter 1 discusses the broad concept of strategy paradox and the underlying reasons, with a synopsis of the rest of the chapters. Chapter 2 is the most fascinating account of the evolution of consumer preferences around electronic formats (VHS vs Sony Betamax) and the commitments made by major firms to dominate the emerging market in the 1970s and 1980s. This chapter alone should suffice to convince the reader of the "strategy paradox" and why firms tend to commit major resources to succeed in an unpredictable market place. The author has done an outstanding job of analyzing the complex set of market factors, competitive threats and consumer preferences in detailing why large rational commitments made on particular outcomes could indeed become major failures.

The strategy paradox is eleborated in Chapter 3 and Raynor discusses how the extreme positions of product differentiation and cost reduction allow companies to become highly profitable and undertake high-risk ventures. The strategies based on either product differentiation or cost reduction require huge commitments and increase the probability of success (when customers favor their strategy) and failure (when the market conditions shift in an unpredictable way).