Page 28 - The Resilient Organization

Fallen Eagles: Bet on Resilience, Not on Strategy 15

is the so-called Icarus Paradox identified by Danny Miller (1990).
Resilience—in this sense, tenacity—may help a company to survive far
beyond when its strategy has lost all vitality. It would take a long time, for
example, for Microsoft—a very asset rich company—to burn down all of
its accumulated billion-dollar wealth during times of its great success as a
PC software powerhouse, even if the company stopped producing new suc-
cess stories. Companies like Microsoft may be “permanently failing” for a
long time before they go bankrupt (Meyer & Zucker, 1989). The hard ques-
tion is—as Jim Collins poses in his book How the Mighty Fall: how would
we know (or rather, be convinced) we are failing when our performance is
still technically acceptable?

THE DEMISE OF STRATEGY AND ITS
DELAYED SUCCESS

In addition to the difficulty of being flexible in strategy implementation
once it is formulated or giving up a strategy when it’s no longer working,
there are two conceptual strikes that can be made against strategy.
First, we don’t have a very accurate model of how the world (generally,
on a normal day) works. The recent fall of financial economics is a perfect
illustration of this point. The reality did not follow theoretical predictions,
nor risk assessments. Triana (2008: 20), in a spirited critique, has stated
that Bear Stearns’ Value-at-Risk, a common measure in the financial indus-
try of a company’s possible loss at the end of the trading day, was $60 mil-
lion just a few days prior to failure (with declared assets worth $8 billion).
Further, Gillian Tett, in the Financial Times (July 24, 2009: 18), has suggested
that not only are there uncertain expectations as to whether inflation or
deflation is to result from the “quantitative easing” practices by the Federal
Reserve in the United States in 2009, but there is also confusion as to the
very intellectual framework that would help answer the question. “The old
economic models . . . no longer look reliable.”
Furthermore, Nassim Nicholas Taleb (2007: xx) persuades us forcefully
that we do not even know that we do not know (or conversely, what we
know does not really help us much): “The inability to predict outliers
implies the inability to predict the course of history. . . . What is surprising