Theory & Reality
On the necessity of praxis
Friends,
I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.
Now accepting keynotes for 23Q3-24Q1
Every year, I create three main presentations. For 2023, they are:
Delusions of determinism: Why planning for success leads to failure
Regression toward the meme: Why modern leadership continues to fall into old traps
Under pressure: Retail in a new financial era
If you want to book me for your event, workshop, or guest speaking slot, just send me an email. To make sure I am available, however, please do so at your earliest convenience; my schedule is filling up fast. More information can be found here.
A couple of updates before we go-go
The new router is installed and working a treat. In the immortal words of George Costanza, I am back, baby. I am back.
I was recently interviewed by Rob Estreitinho, who runs the brilliant newsletter Salmon Theory (to which you must subscribe). Should you be interested, you may find the interview here.
Like last year, I will be heading to the WPP Stream event in Marathon, just outside of Athens, Greece, in October. If you are also going, do reach out and let me know.
Not much more to say, so let us get straight into today’s dealings.
Item of the week
I habitually criticize metropolitan marketers for what some would call a lack of market orientation (and others might consider displays of narcissism). In their world, anyone who thinks differently is either unimaginable or uninteresting; it is only by upholding their (typically liberal) values that everyone else’s lives may improve.
I am not saying that they are entirely wrong, but it is a near-neocolonialist view to take, and now a pushback has begun to materialize. Conservative groups are challenging firms that have taken steps to improve corporate diversity, using many of the same arguments that boosted minority representation in the workforce.
As Theo Francis and Lauren Weber write for WSJ:
Comcast settled a case accusing it of illegally favoring minority-owned small-business customers with grants and marketing advice. Amazon has been sued in Texas over a program offering an extra $10,000 to Black- or Latino-owned delivery-service contractors. Starbucks directors and executives are being sued by a shareholder arguing they violated their duty to investors by supporting diversity policies.
Regardless of what one thinks of the trend (my own views ought to be obvious given what I have written in the past), it is important to acknowledge that it exists. Not every client will want to take part in a perceived culture war. Will you march into one anyway?
(Nota bene, there are business performance arguments for diversity that go far beyond the standard ESG fare. If you want me to tell you about them, send me an email.)
Moving on.
Strategy in theory, practice, and praxis
A<B<C
Once every blue moon, I am brought in by a client to perform what us strategic management types call a strategy audit. In practice, it can mean almost anything, but more often than not, it translates into precisely what you think it does – either a second opinion on a strategy about to be introduced, or an analysis of why the current strategy is not working as hoped. It is usually a blame game of sorts. If I am asked to offer a second opinion, an executive wants to know that someone who they have hired (be it a consultant or employee) has not fucked up. If the client wants me to figure out why the implemented approach is failing, someone has already fucked up and the executive wants to know who.
Second opinion work is highly sought-after as the effort-to-remuneration ratio is immense, particularly if one merely smiles, nods, and signs one’s name wherever and whenever asked to (which has become standard practice; people are careful not to bite the hand that feeds them). Evaluative analysis requires significantly more work, but can become an exercise in retrospective coherence with all the benefits of hindsight. I write can, not should (and wish, in full understanding of its futility, that a big brand consultancy would listen; they excel at pointing out what became obvious only after the fact).
If I am to be completely honest, though, both audit types hinge on only a handful of questions that establish counterfactuals. For second opinions, you want to consider what would have to be true for the strategy to work – and whether the opposite of the proposed strategy would be a complete nonsense (in which case it is not a strategy). For evaluations, beyond trying to understand how the problem manifests, you should seek to ascertain what decision-makers knew, or could have known, at the time, including, again, what would have to have been true for the strategy to have worked.
From my experience, when strategies do fail, it is typically because they neglect to account for the messy reality in which they are intended to be executed. This is hardly surprising; strategy is usually taught under the implicit assumption that there is no difference between theory and practice. In practice, as we know, there is. Contrary to what academics and consultants alike appear to believe, real-world employees do not actually spend their days pondering matters such as differentiation (are there similar products from other suppliers?), positioning (will our competitors be able to imitate our approach?), or focus (what is our big bet?). They have to deal with significantly more pressing and concrete issues, be it quarterly results, stakeholder expectations, exchange rate changes leading to higher supply costs, merger requests, emergent patterns in ever more uncertain environments, or whatever else.
In the world of theory, the strategy is what you say you will do. In the world of practice, the strategy is what you actually do. It is for this reason that people such as myself and Roger Martin (whose work I admire from afar) care less about the distinction between strategy and tactics than we do about the difference between strategy and planning. That is not to say that either of us adhere to the purely emergent school of strategic thought, but if the words on the page do not materialize in firm behavior, they amount to no more than a purely academic exercise. Quite literally.
Crucially, however, this is not to say that theory would be irrelevant. Any form of innovation is recombination; knowledge begets insight. Praxis, which I consider so fundamental to strategy that I have devoted an entire newsletter to it, can be defined as thoughtful doing with the goal of action. It relies on theory. But if said theory fails to match reality, praxis requires that you change the theory accordingly; it is context specific. Most strategic management and neoclassical economic theory, by contrast, conversely attempts to change reality; it claims to be context independent.
As a result, the disconnect between the doers and the thinkers grows daily. Employees fail to see the forest for the trees; business leaders fail to see the trees for the forest. Firms make it not because of their competencies but despite their incompetencies; strategies succeed not because they were flawless but despite their flaws.
A rudimentary audit of strategy itself illustrates the point. What would have to be true for strategic plans to work flawlessly as intended?
Analysis would have to lead to clarity. The more analysis, the more clarity.
The environment would have to be predictable.
The environment would have to be controllable.
There would have to exist precise intentions in the organization; no ambiguity could exist about what to do.
The intentions would have to be shared, fully, among all relevant stakeholders.
There would have to be zero external interference.
Does this appear to hold true to you? Have you ever seen it in practice? No?
So why do we still believe in strategic approaches that hold it to be?
Until next time, have the loveliest of weekends.
Onwards and upwards,
JP
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