Myths of Strategy

Not all advice on strategy is created equal. What if the strategies you’ve been told to follow are based on myths rather than evidence?

1. Success Isn’t Always Carefully Planned

Many believe that success stems from meticulous planning, but real-world examples show otherwise. IKEA, for instance, didn’t achieve global success through a premeditated strategy. Instead, its defining features—self-assembly furniture, Scandinavian design, and low-cost production—emerged from challenges. When Swedish furniture producers boycotted IKEA, the company was forced to design its own furniture, which ultimately became its hallmark.

Research supports the idea that while deliberate strategies are important, they should remain flexible. Companies that empower mid-level leaders to adapt to changing circumstances often fare better. This approach, known as emergent strategy, allows businesses to respond to external pressures and seize unexpected opportunities.

Rigid planning can limit adaptability. By keeping strategies high-level and empowering teams to adjust as needed, businesses can navigate uncertainty and thrive in dynamic environments.

Examples

• IKEA’s boycott led to its unique furniture design and functionality.
• Netflix pivoted from DVD rentals to streaming when technology evolved.
• Post-it Notes were invented accidentally when 3M employees experimented with adhesives.

2. Talent Alone Doesn’t Guarantee Success

Talent is often seen as the key to success, but luck and social influence play a much larger role than we think. A study called Music Lab demonstrated this. Participants rated songs, but their choices were heavily influenced by visible ratings from others. The same song could rank first in one group and last in another, showing how unpredictable success can be.

The Matthew Effect explains this phenomenon: success breeds more success, often independent of talent. The Mona Lisa, for example, was relatively obscure until it was stolen in 1911. The theft turned it into a global sensation, not because of its artistic merit but due to the attention it received.

This doesn’t mean talent is irrelevant, but it highlights the importance of timing, perception, and external factors. Businesses and individuals should focus on creating opportunities for visibility and leveraging social dynamics.

Examples

• The Mona Lisa’s fame skyrocketed after its theft, not its artistic value.
• Harry Potter was rejected by multiple publishers before becoming a phenomenon.
• TikTok influencers often gain fame through algorithmic boosts rather than pure talent.

3. Firm Goals Can Backfire

Setting rigid goals might seem like a good idea, but it can lead to unintended consequences. General Motors, for example, aimed to increase market share by offering heavy discounts. While they hit their target, they lost money on every sale, harming the company’s long-term health.

Similarly, Wells Fargo’s goal to upsell eight services per customer led to unethical practices. Employees opened accounts without customer consent, damaging the company’s reputation. These examples show that focusing solely on short-term goals can undermine broader objectives.

Instead, businesses should aim indirectly. Obliquity, or achieving goals through indirect means, often works better. For instance, prioritizing employee satisfaction can lead to happier customers, as seen in some successful companies.

Examples

• GM’s discounts increased market share but hurt profitability.
• Wells Fargo’s aggressive sales goals led to unethical behavior.
• An Indian IT company improved customer satisfaction by focusing on employee well-being.

4. Competing on Price or Quality Is Risky

Many entrepreneurs believe they must either offer the cheapest or the best product to succeed. However, both strategies come with risks. High-quality products may fail during economic downturns, while low-cost options might lose appeal when consumers seek premium experiences.

Instead of trying to dominate competitive markets, businesses should consider entering less crowded spaces. This reduces risk and allows for more sustainable growth. Additionally, understanding your product’s identity and targeting the right audience is crucial.

For example, the movie The English Patient used different trailers to appeal to various audiences, boosting its market share. While this worked for a film, products often need a more focused approach to succeed.

Examples

• High-end brands struggle during recessions when consumers cut spending.
• Budget airlines lose customers when travelers prioritize comfort.
• The English Patient used diverse marketing to attract a broad audience.

5. Being the Best or Cheapest Isn’t Enough

In today’s digital world, having the best or cheapest product isn’t sufficient. Apple’s success with the iPhone wasn’t just about the device—it was about the App Store, which created a platform for developers. This ecosystem made the iPhone indispensable.

Amazon followed a similar path by becoming a marketplace for other sellers. Critics initially thought this would hurt Amazon’s sales, but it allowed the company to identify and compete with top-performing products, strengthening its position.

Platforms and complementary offerings are now essential for success. Businesses should think beyond their core products and consider how to create ecosystems that add value for customers.

Examples

• Apple’s App Store turned the iPhone into a dominant platform.
• Amazon’s marketplace strategy boosted its market share.
• Microsoft’s Xbox Live created a community that kept gamers loyal.

6. Visionary Leaders Aren’t Always the Best

Visionary leaders are often celebrated, but research shows that adaptability matters more. A study found that CEOs who stuck to a single strategy and succeeded were rated higher than those who adapted and succeeded. However, sticking to one strategy often leads to failure in dynamic environments.

Randomly chosen leaders in a survival game outperformed those selected for their qualifications, suggesting that leadership success often depends on group dynamics and circumstances rather than vision alone. Andy Grove, former CEO of Intel, emphasized the importance of making decisions with incomplete information and being ready to pivot.

The best leaders are those who can act decisively and adapt to changing conditions, rather than rigidly adhering to a single vision.

Examples

• Andy Grove’s leadership at Intel focused on adaptability over vision.
• Kodak’s failure to adapt to digital photography despite its visionary roots.
• Randomly chosen leaders in experiments often outperformed “qualified” ones.

7. Luck and Timing Often Trump Strategy

Even the best strategies can fail without the right timing or luck. The success of products like the iPhone or platforms like YouTube often depended on being in the right place at the right time. Conversely, many innovative products failed because they were ahead of their time.

Luck isn’t something businesses can control, but they can create conditions to capitalize on it. This includes staying flexible, experimenting, and being ready to pivot when opportunities arise.

Examples

• YouTube succeeded because of increasing internet speeds and video demand.
• Google Glass failed because it was too early for wearable tech.
• The iPhone launched at a time when mobile internet was becoming mainstream.

8. Stretch Goals Only Work in Strong Companies

Stretch goals can inspire teams, but they’re risky for struggling companies. Yahoo’s attempt to implement a stretch goal in 2012 nearly led to bankruptcy. In contrast, Southwest Airlines successfully implemented a ten-minute turnaround goal because the company was already performing well.

Stretch goals should only be used when a company has the resources and morale to support them. Otherwise, they can lead to burnout and failure.

Examples

• Yahoo’s stretch goal worsened its financial troubles.
• Southwest Airlines thrived with a stretch goal due to its strong foundation.
• Tesla’s ambitious goals succeeded because of its innovative culture.

9. Market Position Matters More Than Strategy

Entering a competitive market without a clear advantage is a recipe for failure. Businesses should focus on markets where they can stand out, rather than trying to beat established players.

For example, niche products often succeed by targeting specific audiences rather than competing with mass-market offerings. This approach reduces risk and allows for more sustainable growth.

Examples

• Tesla focused on electric cars, a niche market, before expanding.
• Airbnb targeted budget travelers before appealing to luxury markets.
• Spotify succeeded by focusing on music streaming rather than competing with iTunes.

Takeaways

1. Keep strategies flexible and empower teams to adapt to changing circumstances.
2. Focus on creating ecosystems and complementary offerings rather than just products.
3. Avoid rigid goals and stretch targets unless your company is in a strong position.