“There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.” William Shakespeare, Hamlet

“What does his lucid explanation amount to but this, that in theory there is no difference between theory and practice, while in practice there is?” Benjamin Brewster, The Yale Literary Magazine

Strategy first?

In the original Rouser Manifesto, the opening chapter was rather fittingly — or at least so we imagined at the time — titled “Strategy First”. It seemed apparent to the point of being a given; an action plan must per definition come before the action is taken. However, the question of whether strategies must be defined in advance, and therefore in all cases come first, is not as crystal clear as one might initially be led to believe. Though it is very much the reigning theoretic and therefore standard rule, there are practical circumstances that doubtlessly may warrant an exception.

For the traditionally trained strategist, this may come as a surprise. After all, we are taught that strategy is the proactive roadmap for any organization, brand or campaign. Without one in place, things have a tendency to become reactive and tactical. This remains largely true. Nevertheless, there are things that demonstrably work in modern practice, even if they do not necessarily hold up well in classical theory. And if something consistently does deliver a desired result, it becomes irrelevant whether it is supposed to.

As our understanding of market complexities and dynamics improve, so does our library of potential exceptions to previously established rules. Yet it is worth remembering that while they may enable a player to master the game, such insights can only come out of prior understanding of the rules themselves. Ergo, in order to unearth what practical exceptions may exist to traditional strategic doctrine, it is necessary to first define the lay of the land. Without a thorough grasp not merely of what strategy is, but what it is supposed to do, one risks losing sight of the bigger picture and instead zooming in on minutiae that may or may not be of much use to the business.

Outlining strategy

Many a prominent business thinker (and, in all honesty, rank amateur alike) have to tried to define, either directly or indirectly, what strategy is. As a result, as Henry Mintzberg points out in The Rise and Fall of Strategic Planning, the word is used in a myriad of different ways. Most commonly, a strategy is considered

a) a plan, a “how,” a means of getting from here to there,

b) a pattern in actions over time,

c) a position that reflects decisions to offer certain products or services in certain markets, or

d) a perspective, i.e., a vision and direction.

Notably, as the attentive reader will realize, these uses are different almost to the point of being each other’s counterparts. A plan is the result of direct control and deliberateness before the event, whereas a revealed pattern is the outcome of indirect control and emergence after the fact. Similarly, a position is where one is, while a direction is indicative of where one wants to be (and therefore per definition is not).

These tensions, to use the term coined by Bob de Wit in Strategy Synthesis, mean that things are looking bleak for anyone searching for simplicity, certainty or the style of binary advice likely to stem from so-called experts who would prefer to paint the world in monochrome. In reality, the sprawling diversity of practical circumstance blatantly renders universal matrices, flow diagrams and one-size-fits-all solutions moot. Consequently, in the interest of intellectual honesty and integrity, this Manifesto will contain none.

Having said that, as much as one should combat oversimplification or reductionism, one must also, to paraphrase Christopher Hitchens in Letters to a Young Contrarian, be aware of how often intricacy is used as a means of obfuscation or needlessly inserted to challenge principles. And there are, clearly, principles of note in strategy that at least will allow practitioners to weigh different approaches against one another given key contextual factors. Though they may initially come across as rather business-strategically derived for the marketing-oriented reader, it is worth emphasizing that the principles do apply to strategy in general. As such, they are as important for marketing managers as any other business manager to know, as will become clear in subsequent chapters.

So, with that throat clearing over and done with, let us outline strategy and remind ourselves of the fundamentals: admittedly broadly speaking, there are two main approaches to strategy, deliberate strategy and emergent strategy, that sit on opposite ends of a strategic spectrum.

Deliberate strategy

Deliberate strategy is the top-bottom approach with which most strategists will be familiar, albeit the terms itself may not be. It puts the strategist firmly in the realm of classic strategic planning where one carefully considers what to do and then does it. As an intended course of action, the inherently aspirational strategic plan will detail how to get from a present point A to a sought-after point B and thereby include both ends and means. In essence, it sets a clear and often relatively long-term direction, creates commitment to that direction, and manages alignment along the way (not least through programming, viz. activities planned in advance).

Such strategic arrangement, or rudimentary versions thereof, has long been one of the cornerstones of business in general and management in particular. Henri Fayol’s Administration Industrielle et Générale established five primary functions of management — planning, organizing, commanding, coordinating and controlling — more than 100 years ago. Peter Drucker further polished the approach by introducing Management by Objectives in his seminal piece The Practice of Management, which became the height of corporate fashion in the late 1950s. What many believe to be the first book explicitly on business strategy was published a couple of years later: Alfred D. Chandler Jr’s Strategy and Structure — Chapters in the History of the American Industrial Enterprise, which came outin 1962. Some 20,000 books on the topic have been written in English alone since.

By some distance, the majority deal with deliberate strategy in one form or another. However, while much of what is commonly put forward is possible in theory, it is crucial to recognize that no strategy will be purely deliberate in practice. This is because, inherently, deliberate strategy makes a series of presumptions that inevitably fail to hold up against reality. Henry Mintzberg and James Waters have consistently highlighted this weakness, not least in Of Strategies, Deliberate and Emergent. In their view, three conditions that rarely — if ever — exist at the same time would have to be met for deliberate strategies to be flawlessly realized.

· Firstly, there must exist precise intentions in the organization, articulated in such a concrete level of detail that no doubt would exist about what to do.

· Secondly, these intentions must be common to all relevant actors, either shared as if their own or wholly accepted from management.

· Thirdly, these collective intentions must be realized exactly as intended, which would presume zero external (e.g., competitor or wider market) interference. That is to say, the environment must have been either perfectly predictable, totally benign or under the full control of the organization.

None of this is, of course, very likely.

Things in the real world go wrong. If the strategist has failed to correctly diagnose the problem, the strategy will inevitably fail to solve it. If the strategist has managed to correctly diagnose the problem, they might fail to convince others to agree with the proposed solution, and the strategy will inevitably fail to be executed as intended. If the strategist has managed to correctly diagnose the problem and to convince others to agree with the proposed solution, there will still be external interference, and the strategy will inevitably fail to be realized as intended.

There is also the ignorance factor. An unspoken truth about business is that many companies make it not because of their competencies, but despite their incompetencies. Strategists are not exempt, as much as we would like to believe otherwise, and the popular excuse that failure comes down to the execution of our work is logically flawed. Every failure of implementation is, by definition, also a failure of formulation as the strategist has to take into account the capability to act.(1)

Emergent strategy

Strategic plans are regularly diverted from or completely ignored, be it out of necessity, incomprehension or ignorance. A set of actions instead emanate as the organization learns what works in practice. Practitioners will know this only too well. Theorists need but look at their own analyses. More likely than not, they will describe consistency in past behavior — a pattern in action over time. This should not come as a surprise. If strategies can be planned and intended, it follows that they can also be pursued and realized (or not realized, as the case may be). A strategy realized as intended will per definition be deliberate. If it is realized despite, or in the absence of, intentions, it is considered emergent.

The concept of emergence is recognized and established in philosophy, systems theory, science and even art. In short, it occurs when a whole is observed to have properties its parts individually do not. These properties, importantly, emerge only when the parts interact in the larger whole — e.g., an individual ant’s behavior does not tell the observer much about the behavior of a colony.

Emergence plays a central role in complex adaptive systems.(2) Markets, no doubt, fall into this category. Much like how an ant colony must be observed as an ant colony, in and of itself, and not as a collection of ants, markets should be viewed as markets, in and of themselves, and not as a collection of companies. Another way of defining emergent strategy is therefore as a pattern of strategic behavior observed within the larger whole context of markets. The pattern emerges due to a plethora of interactions between companies, customers, environments etc. and despite intention, i.e., by accident or external, uncontrollable action. Although it may appear coherent in retrospect, it is impossible to precisely predict in prospect.

Naturally, business journalists, columnists and second-rate analysts will nonetheless attribute this coherence to a supposed deliberate strategy. Such is humanity — we tend to judge ourselves based on our intentions and everyone else on their behavior. But one must only for a second consider all the complexity, confusion and chance underlying the assumption to realize that it is utter folly. Clearly, not all intended strategies are realized, and not all realized strategies were intended. Strategies can form as well as be formulated. They can emerge, as it were.

Emergent strategy is a bottom-top approach likely to be a novel concept for many.(3) Unlike deliberate strategy, which plots a specific course, emergent strategy follows a direction but discovers the path along the way, arising in response to unexpected opportunities and challenges as the competitive reality in which the company acts changes over time. Or, to put it more colloquially: the strategist adapts to what is found to work in practice, unintended consequences and all, by creating a strategy in response to it, instead of stubbornly staying with what “ought to” have worked based on theory or forecasts. Though projections may not be so poor as to only serve to make astrology look respectable (as Ezra Solomon once famously put it), they are by obvious necessity built on historical data. Consequently, they tend to assume that the future will bear a strong resemblance to the past — something that may or may not turn out to be true, as Lucas critique also tells us.(4) Emergent strategy solves that problem.

It makes sense, of course. If one discovers emerging but unexpected patterns in how a strategy works in practice, clearly, the correct thing to do is to change the strategy to match reality, not to try to change reality to match the strategy.

Alas, one cannot simply “pivot to emergence” either. The reasons, again, are plenty. For one, different decisions carry different feedback loops, some of which are so long that they render emergent strategy practically useless.

There is also the matter of risk.

To bastardize a couple of lines from Mark Spitznagel originally about Nietzschean investment approaches, the expected return of a strategic effort is a highly subjective, probability-weighted average of all possible “what-if” paths during a given time period. Risk is a similar weighting of the possible bad paths. While the reactive nature of emergent strategy clearly makes it easier to seize opportunity, one might think it would also make it better suited to handle risk — the longer the perspective, the larger the uncertainty, at least on a micro level — but that is not entirely true. Trial and error cannot, as Nicholas Taleb has noted, be unconditionally effective. It causes planes to crash, buildings to collapse and knowledge to regress. This adds a crucial second dimension to strategizing that many fail to recognize: in certain contexts, it may be essential to not merely consider the likelihood of a favorable outcome, but also the potential cost of an error.(5) In other words, as much as deliberate strategy may fail to materialize in practical reality, it can nonetheless be a practical necessity.

Likewise, if an organization or (marketing) department lacks a sense of direction, its future may end up entirely controlled by external actors and events, resulting in a future neither planned for nor wanted.(6) Hence, in practice, strategy requires both foresight and insight, and can as impossibly be fully emergent as it could ever be wholly deliberate. It should instead be a contextually determined balance of optionality and obligation between the two.

And weighing them against one another, which we will discuss in the next chapter, is why strategy can be sacrifice.

But its true essence is, as we will discover, to move from equiprobability.

(1) Mintzberg has highlighted this issue in the form of a hypothetical but colorful conversation between the higher-ups and the lower-downs: “If only you dumbbells appreciated the brilliance of the strategy we formulated…” “If you’re so smart, why didn’t you take into account the fact that we are dumbbells?”.

(2) These can be, at least partly, defined as systems in which a perfect understanding of individual parts’ behavior does not aggregate to a perfect understanding of the system’s (more meaningful) behavior. We will find reason to expound upon this in subsequent chapters.

(3) In a study conducted specifically for the purposes of this Manifesto, more than three quarters of marketer respondents (206 out of 271) were unaware of the term. A mere 4% (11 respondents) used it in practice.

(4) Lucas critique, named after Robert Lucas’s work in macroeconomic policymaking, argues that it is naïve to attempt to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, particularly highly aggregated historical data.

(5) This gained increased importance during the 2020 Covid outbreak, as I have highlighted in columns for MarketingWeek. See, for example, my piece in MarketingWeek titled Businesses need to ensure they can survive today before they look long-term.

(6) Being unable to predict the future is not equivalent to being unable to affect it.

Consultancy exec turned independent strategy and complexity management type. As seen on stage, on TV, in newspapers, in columns for @MarketingWeekEd etc.