Highly differentiated strategies, either low cost or product leadership, offer the promise of high returns, but only because they run higher strategic risk. Staking a defensible claim to a unique competitive position demands bold commitments over long periods of time to assets and capabilities that few others feel will be valuable in the future. In other words, greatness requires that companies make a significant, and largely irreversible, strategic bet. And like all bets, even when the odds are with you, you can end up losing (nearly) everything.
It is this kinship between success and failure that defines the “strategy paradox”: precisely the same behaviors that maximize an organization’s possibility of great success also maximize its likelihood of total catastrophe.
Author: Michael E. Raynor
Source: Ivey Business Journal
Subjects: Risk Management, Strategy
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