Good things come to those who actively wait
In highly volatile markets, a company’s success or failure is often attributed to luck. Turbulent markets throw out opportunities whose timing, nature and magnitude managers can neither predict nor control. The same holds true for threats. In such a competitive casino, you place your bets and hope for the best. It is better to be lucky than good.
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For the past six years I have studied more than 20 pairs of comparable companies in unpredictable industries such as telecommunications, airlines and enterprise software and in countries such as China and Brazil. By pairing similar companies, I showed how they responded differently to the same unforeseen threats and opportunities.
I found the more successful companies were luckier, in the sense that time and again they responded more effectively to unexpected shifts in regulation, technology, competition, macroeconomics or other volatile factors. Such luck is too important to leave to chance. The most successful companies exemplified “active waiting”, an approach to strategy in highly unpredictable markets that consists of anticipating and preparing for opportunities and threats that executives can neither fully predict nor control.
A chief executive is sometimes likened to a ship’s captain, peering into the distant horizon and setting a course. In many markets that future is foggy and finding a clear view nearly impossible. In the telecommunications industry, for example, shifting regulations, continuous technological change, entry by non-traditional rivals such as Skype, and shifts in consumer preferences throw out a steady stream of unforeseen opportunities and threats. Demand for cars in China, for example, arose from the confluence of increased disposable income, government investment in infrastructure, rising middle-class aspirations, easy credit and the demise of employer-provided housing near the workplace.
Don Sull is providing a free five-day online executive education this week on FT.com
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But all opportunities are not equal. In volatile markets, companies face countless small and mid-sized opportunities and the periodic golden opportunity
