Innocence As Competitive Advantage

Conventional wisdom says that information is power. Moreover, the more information you can muster the better your final decisions. This is probably still true in a few areas but one wonders whether some people are taking the idea too far.

First, there is the issue that information is now almost infinite so trying to apprise oneself of everything that exists is surely a recipe for prevarication and inaction. You can see this in some large firms that research ideas and opportunities to death. A successful model these days is to keep research to a minimum and not to prototype at all. If something looks and feels like a winner just launch it and see what happens. If it’s nearly right adjust it and it if doesn’t work at all kill it as fast as you can.

Second, digitalisation plus global connectivity means that the flow of information has speeded up to the point where little or no competitive advantage can be gained from knowing something first. Moreover, it is becoming very hard indeed to find out something that nobody else knows and then keep this information secret. These days you need to find out what you need to know and discard or ignore everything else.

Fourth, traditional strategic planning relies upon a single prediction about the future. Unfortunately these predictions rarely if ever come true. Twenty or thirty years ago things were easier because change was slower and essentially linear. These days uncertainty is endemic and the speed of change takes your breath away. Furthermore, in many instances opportunities and threats come from left field and it is extremely difficult to anticipate or plan for these events.

Lastly there is the relatively new idea of using innocence as a form of competitive advantage. It probably comes as no coincidence that most major breakthroughs tend to come from young people or from non-incumbents. In both cases knowledge is severely limited, which means that assumptions are few and far between and thinking is therefore less rigid. Established firms, in contrast, tend to be disabled by their own experience and a kind of strategic gridlock can build up because of the sheer number of vested interests competing with each other for a specific outcome.

Knowing less rather than more also tends to create agility in the sense that strategies that are built up using less data can be made to be more flexible in the face of changed circumstances. This is not to say that strategy should ignore ‘the facts’ altogether but that firms should recognise that ‘facts’ are necessarily historical. Strategic decisions should therefore be fact informed rather than fact based and strategies should always be allowed to change in the face of changed information.

The analogy here is probably that of a super-tanker sailing a regular course compared to a small yacht. The tanker must more or less follow a pre-determined route regardless of the weather. When large ships run into trouble it is usually not because of bad navigation but because of inflexibility. The smaller yacht, which also, usually, has a fixed view of its final destination, decides where it goes each day based upon local conditions and events. One is fast and quick to change course, the other isn’t.

So perhaps instead of thinking in terms of fixed strategies firms should think more about fluid and flexible starting strategies that embrace uncertainty rather than ignoring it. One way of doing this is to use scenarios. First of all identify the known drivers of change and then map out a series of possible scenarios with early warning indicators for each. For each scenario then create an optimal strategy but be aware that each strategy will have to be changed as soon as circumstances change.

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