Strategy & Screwdrivers
A new theorem
Friends,
Now that we have concluded (albeit temporarily) the chapter on coherence, we are going to move on to pace layering; the notion that different parts and levels of a system (e.g., an individual, a household, a city, a nation and so on) move at different speeds. As we shall see, it provides a few crucial insights for the ABCDE framework, not least in matters of decision-making and performance measurement, but also explains why some people (none mentioned, none forgotten) appear obsessed with shiny new things with little-to-zero longevity.
But before we do, I would like to throw something different out there. I am working on a metaphor of sorts and would love your feedback on, well, whether it makes sense.
As a child of the (very, ahem) early 1980s, I vividly remember watching the eminently likable Richard Dean Anderson portray the protagonist and title character of the iconic tv-series MacGyver. Unlike the run-of-the-mill action hero, he detested violence, much preferring to use his intellect, language proficiency, engineering skills and knowledge of applied physics to solve problems. Instead of carrying a gun, he always had his trusted Swiss Army knife by his side – ready to create all kinds of tools out of whatever he could find inside the rooms in which he inevitably got locked.
Now, if you would indulge me, I would like for you to channel your inner MacGyver and try to think of as many uses of a screwdriver as possible.
Go on. Give it a couple of seconds at least.
Given that my subscribers make for an exceptionally smart community (in addition to their astonishing good looks and unrivaled sexual prowess), I would imagine that you could come up with quite a few; screwing in screws, of course. Perhaps too scratching one’s back, opening a can of paint or providing an example in a newsletter. Maybe you even considered that it could be tied tightly to a stick and used for spearing fish – and that it could therefore also be used to set up a business: fishing spear rentals.
The point of the exercise – which originally comes from Stuart Kauffman, an American medical doctor, theoretical biologist and complex systems researcher at the Santa Fe Institute – is partly to make the audience think creatively, but also to realize that the number of potential uses of a screwdriver is not infinite but indefinite. Put differently, it is not unlimited, but without a specified limit. As every new use is also different from the previous, it would be impossible to put the various uses on any kind of scale other than nominal (i.e., one that does not require the use of numeric values or categories ranked by class but simply unique identifiers).
Those two premises – (a) the number of uses is indefinite and (b) can only be put on a nominal scale – mean that no algorithm can calculate all the uses of a screwdriver, nor the next use of a screwdriver. The number is non-algorithmic.
But we, as individuals, have no problems coming up with new uses of a screwdriver, provided we are encouraged to.
This leads to two rather important conclusions, as Kauffman notes.
While the human mind can be algorithmic (we can do long division, for example), it need not be.
As computers are algorithmic, the human mind is not reducible to a computer.
Obviously, the implications are rather profound for topics such as artificial intelligence. But leaving that aside, they are for the present conversation as well.
In traditional strategic doctrine, we are taught to bet big on one use of the screwdriver and devote all our time, effort and resource to master said use. This, as we know from previous newsletters, is called building robustness. The problem, as we also know from previous newsletters, is that it is mathematically guaranteed to fail over time. Sooner or later, a situation will arise in which the use is no longer relevant and, somewhat ironically, we will be screwed.
If we want to create sustainable business advantages, robustness is not enough; it may generate an advantage, but it will not be sustainable. In order to produce sustainability, we need resilience. Thus, the point of strategy should not be to achieve mastery of one exclusive use, but to enable as many coherent uses of the metaphorical screwdriver as possible.
I call this the MacGyver Theorem.
Importantly, for any new subscribers who have not followed the months of reasoning preceding this point, the theorem does not imply an all-in on agile, free-for-all experimentation or treating all revenue streams as equals. Rather, what it means is that we have to balance the present with the future, proactivity with reactivity, the short and the long. Although the idea is hardly revolutionary, the practical method is as it requires a different approach from the current data-first modus operandi; since the number of screwdriver uses is non-algorithmic, we cannot calculate, model or predict what people may come up with. The only pragmatic solution is therefore to strategically design the ability to reconsider, readjust, adapt and evolve in ways that make sense to the context and increase the positive adjacent possible (valuable new uses of the screwdriver). This is what the ABCDE framework is designed to do.
Although my approach is novel, there is historical evidence to back up my point.
For example, research by Andersen and Nielsen (2009) showed that adaptive strategy led to higher performance outcomes in a randomized sample of 185 business units. However, the performance was enhanced further when the adaptive initiatives were integrated through deliberate strategizing. This demonstrates that while responsiveness and dynamic capabilities are essential sources of competitive advantage, the most effective organizations are able to put them into a broader perspective. Merely coming up with new uses for a screwdriver is, in and of itself, as insufficient as focusing on the one use is; they have to be coherent to the strategic boundaries, aspirational direction and organizational facts. In turn, this allows them to easily be integrated into existing business efforts and across organizational entities.
Pace layering, which I alluded to in the beginning, further explains why and how. I cannot wait to tell you about it next week.
Until then, I look forward to your comments on the MacGyver Theorem and hope you have a lovely weekend.
Onwards and upwards,
JP