Corporate strategies that have the greatest chances of success also have the greatest chance of failure. This explains why successful companies have more in common with failed businesses than they have with the average companies. The underlying reason is that the future is uncertain, and even the best of strategies can go wrong due to change. So a corporation that has the courage to try a new strategy with considerable commitment will either succeed and beat the competition or fail.

The paradox of corporate strategy is that no one can predict the future correctly, and developing a long-term corporate strategy is based on the predictions of executives. But at the same time, creating a long-term strategy with considerable commitment and going wrong can lead to devastating consequences. 

Strategy Commitment

Though predicting the future is difficult, success depends on a future-focused strategy. According to Mckinsey, the corporate lifespan of an S&P 500 company in 1935 was 90 years, but in 2010, it was only 14 years. This shows a fast-changing world due to disruptive innovation. A corporation can be innovative, but if it does not have a long-term strategy, it can fail. Kodak was innovative and invented the digital camera, but its executives did not see digital cameras as part of its long-term strategy, which eventually led to the company's downfall. Continuing the way a corporation operates and avoiding high risks and high returns is good to merely survive, but disruptive innovation can bring an end to it. 

At the same time, a company can choose to be bold and make a strong commitment to change strategy. For a corporation to create value, strategic assets and a long-term strategy are needed so that the competitors cannot easily imitate it. It should also be what customers want. Over time, the competition will catch up, but often competitors will wait and see if what the corporation does is a success, and only if it is will they move on it. The corporation can use this time to get a head start and make profits. Tesla made a long-term strategic commitment toward electric cars, and by the time Tesla’s competitors realized electric cars could be successful and moved in, Tesla already had a first-mover advantage and currently has built a powerful brand.

Strategy Adaptation

Adapting corporate strategy with a wait-and-see approach can also be complex as the organizational change has to match the industry change. If the company changes faster than the industry, it will have products that may not have the supporting technology, infrastructure or consumer need. For example, Netflix started streaming in 2007, but if Netflix had moved into streaming a decade earlier, the internet infrastructure would not have supported it. If a company changes too slowly to adapt, it will also fail. Nokia, which once dominated the mobile phone industry, decided to go with Windows software not realizing that Apple’s App Store and Google’s Play Store were ecosystems consumers had already bought into. Windows was behind in this, and being slow to adapt led to the eventual downfall of Nokia. 

Managing Strategic Uncertainty

Creating a corporate strategy that is hard to reverse always faces the issue of our inability to predict the future in detail through patterns. A lot of change is happening in technology, regulations, demographics and consumer tastes. Although you cannot fully predict the future, you can create a process to make the accuracy of your predictions better. 

1. Prioritizing corporate strategy at the board level: One way is to let the divisional leadership handle the day-to-day operations of the business and for the corporate board to fully focus on strategy. According to Mckinsey, in 2017, corporate boards only spent 27% of their time on strategy, though strategy took up the most amount of time, with performance management being second and taking up 20% of the time. More time can be focused on strategy building to get through the uncertainty. 

2. Increasing the number of tech experts on corporate boards: According to a Deloitte 2017 study, less than 5% of S&P 500 companies appointed technologists to their newly opened board seats. People with knowledge in technology who can help predict the digital future more accurately are underrepresented in the corporate boards. This can explain why the report said only 18% of tech budgets are spent on new business capabilities.

3. Diversifying the corporate board: Gender diversity on corporate boards can lead to smarter decision-making and power innovation. Having younger people on the corporate board can also bring in new skills and perspectives, and they can relate more to Millennials who are the largest generation in the workforce. 

Managing the paradox of corporate strategy can be very difficult, and the disruptive innovation taking place is making predictions even harder. But businesses have to make decisions based on this unpredictability. Corporate strategies that have the greatest possibilities of success also have the greatest possibilities of failure. To succeed, a business corporation has to have a bold strategy, and as the saying goes, fortune favors the brave.