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A few hours ago I had a great discussion with Charles Conn the Board Chair of Patagonia and founding CEO of Ticketmaster-Citysearch. That conversation will be made public in the coming weeks but I was inspired to write something based on that discussion.
Charles and I were talking about some of the parallels between chess and business (my favorite) and he asked me how many moves ahead I can calculate during a game. I told him that it depended on if there’s a forced sequence of moves or if there is a lot of variation. For example if there is a checkmate in 4 then I should easily be able to calculate that series of four forced moves.
I work with a chess coach and oftentimes he will ask me to calculate as many moves ahead as I can while telling me that there is a forced sequence leading to something like a checkmate. In these situations I’ve been able to visually calculate (not touching the pieces) 8+ moves ahead. This is because there isn’t a lot of variation in terms of what I or my opponent can do.
However, when there is a lot of variation in terms of possibilities and forced moves are absent, then I can maybe see 3-4 moves ahead. The point is that forced moves allow you to see further whereas variation limits your ability to do so.
What does this have to do with business?
Historically, businesses operated under the strategy of “forced moves,” where the future was more predictable, and the path to success more structured. Today, however, the business world more closely resembles a complex game of chess with more variation and unpredictable outcomes.
Consider the assembly line production methodology championed by Henry Ford in the early 20th century. Ford’s strategy was a series of “forced moves” that relied on highly standardized processes and minimal variation. At the time it was a predictable business model with clear objectives: produce as many automobiles as possible as efficiently as possible.
Or take a look at early Microsoft which dominated the PC industry with the Windows operating system and Office software suite. Microsoft was very much playing “forced moves.” The company’s strategy was straightforward and predictable – develop an operating system, encourage third-party manufacturers to build hardware, and control the market.
This approach to business success worked in the past but it’s a recipe for failure today. Businesses are no longer able to calculate 10 moves ahead but are now playing a dynamic game with a shorter-time horizon and more variation.
How do you lead in a world like this when the game has changed and when there are no more forced moves?
There are 10 strategies you can implement.
Let’s consider the example of Netflix. In its early days, Netflix was a simple DVD-by-mail service. However, as the digital streaming era dawned, Netflix had no choice but to drop its one-track strategy and adjust to a more volatile market environment. It took a significant risk and put a lot of money into creating its own streaming service, eventually branching out into producing its own content. Each decision was like a move in a complex and unpredictable game, but each one paid off, pushing Netflix to become the global entertainment giant it is today.
Amazon is another brilliant example of this. Initially, it was merely a place to purchase books but look at what the company has become today. Amazon has made its mark in every sphere of our lives, from cloud computing and business services to an all-encompassing marketplace, a grocery chain, a healthcare corporation, smart home products, and everything else you can imagine. Each strategic step Amazon takes is like playing a complicated game of chess, navigating through an unpredictable market teeming with endless opportunities.
Here are a 10 things you can do inside of your organization to lead successfully in this new game of chess.
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Embrace Uncertainty: The only thing that leaders can be certain of today, is that future is all about uncertainty. This means embracing change instead of fearing and running from it. Leaders must view challenges and unexpected changes as opportunities for learning and growth, rather than threats to stability. Today, we call this having a growth mindset.
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Foster Innovation: Something we have heard about for many years that has never been more crucial to focusing on. Organizations like LikedIn, AT&T, Adobe, and others have all developed their own internal incubation hubs where employee are encouraged to test and develop ideas. Employees should be given the freedom and in fact encouraged to take calculated risks.
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Leverage Data and Analytics: Business decisions cannot and should not be made purely based on gut feeling and instinct. AI and technology is a leader’s best friend especially when it comes to decision making. Data and analytics can be used to predict trends, identify new opportunities, and uncover insights. This in turn allows leaders to make decisions based on combining data and evidence along with human feel.
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Adopt Agile Methodologies: If you’re in software you have probably heard of “agile.” It’s an approach to development which focuses on flexibility, customer feedback, and the ability to respond to change quickly…hence the name “agile.” By adopting these methodologies, companies can better navigate variation and uncertainty while moving quickly.
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Invest in Continuous Learning: As the business environment becomes more complex, the skills and knowledge needed to navigate it have evolved rapidly. Businesses should invest in ongoing training and professional development for their teams, creating a culture of continuous learning.
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Invest in Scenario Planning: Leaders can prepare for various future scenarios by engaging in regular scenario planning exercises. This involves imagining a range of possible futures, then developing strategies and contingency plans for each one. I’ll do a separate post on this in the future but it’s analogous to chess.
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Strengthen Stakeholder Relationships: Building strong relationships with stakeholders (customers, employees, suppliers, etc) – can help businesses remain resilient amidst change. By maintaining open lines of communication, companies can better understand the needs and expectations of their stakeholders, and respond effectively to shifts in these areas.
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Promote a Culture of Adaptability: A culture that embraces change and rewards adaptability is key to navigating high variation environments. Leaders should model this adaptability and encourage it in their teams as opposed to penalizing failure. This might involve celebrating failures as learning opportunities, rewarding innovative thinking, and promoting flexible working practices.
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Diversify Products and Services: In a rapidly changing world, businesses that offer a diversified portfolio are often better positioned to weather market fluctuations. Look at a company like Apple, once predominantly a computer manufacturer, they diversified its portfolio to include smartphones, tablets, wearable tech, and digital services, which now make up a significant portion of its revenue.
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Lead With Vulnerability: This is the subject of my new book which looks at how leaders can tap into vulnerability as a way to lead through change. In a world filled with variation it’s going to be critical for leaders to admit that they don’t have all of the answers or the best ideas while simultaneously demonstrating confidence and competence.
The evolution of business strategy from the “forced moves” of the past to the high variation of the present is something every leader needs to be aware of. As markets become more interconnected, technology advances at an unprecedented pace, and consumer expectations shift, leaders are increasingly faced with an intricate game of business strategy that resembles a grandmaster-level chess match.
Just as grandmasters thrive in complex chess matches (something I’m working on!), so too can today’s business leaders thrive amidst the variation and unpredictability of the modern business world. Complexity and variation breeds opportunity if it’s acknowledged and approached in the right way.
The future of business belongs to those who can master this new game.
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