Irrational change is good for strategy

Stagnant… stagnant never changes.

If I were to play you in a game of naughts and crosses, and I always played the same moves over and over again. If I never changed my strategy or way of thinking, how easy would it be for you to beat me? How easy would it be for you to take advantage of me? It is a very simple example, but conveys the point quite effectively.

Now in business, if I were to always make the same play or respond in the same way to any action my competitor makes… is that really strategy? Game theory tries to make sense of the actions we might take in the future. It gets very interesting when you start to look at what is rational vs. what actually happens. We are not rational thinkers, no matter how much we think we are. How would you divide your treasure if you were a pirate, abiding by pirate laws?

Similar to being stagnant, if we were completely rational it would also be easy to determine the strategy of our competitors, as is the case with the pirates. However, where is the fun in that and would we have something like strategy as a concept if this were the case.

For strategy to work effectively we should be irrational, maybe it would be better to phrase that as rationally irrational. What makes a good strategy is that it constantly adapts to the changing climate. Next time you want stability or are trying to get an edge over your competitors by trying to get stability… think of what you are opening yourself up to. Operational management likes to have clean cut procedures that can be repeated, sure a good strategy should be repeatable to be a winner… but there needs to be an element of irrational change for it to not become predictable. Baring a good strategy… the corporate make-up should be such that it is difficult to replicate and thus becomes the firm’s edge.