In January, we introduced our 2023 Strategic Agenda based on in-depth conversations with top CSOs in our Outthinker Strategy Network. We will be expanding on one of these trends every week with the intention of supporting your organization’s strategy for the next year and beyond. This is our fifth installment.
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When Chinese appliance company Haier developed its consumer washing machine, the company expected the machine would be used for its intended purpose: washing clothes. Since their invention in the 1930s, domestic washing machines have been used by families for conveniently cleaning laundry at home. But what Haier did not foresee is that in 2009 the company would receive disgruntled customer calls that the machines had failed to perform at a different task.
Farmers called Haier to complain that the machines were breaking down.
“Well, what is happening when the machine breaks down?” asked curious customer service reps.
“You see, we’re trying to wash our potatoes in it, and it doesn’t seem to work,” explained the farmers.
The unexpected twist might have sent another company into course-correction through customer education, but as professor and author Dr. Christian Busch explained on the Outthinkers podcast, Haier employees decided to go with the flow. They realized other farmers in China might have the same problem, and they set about developing a machine that would be capable of washing both clothes and vegetables.
Embracing the unexpected
Traditional strategic planning has created companies that strive to command-and-control (“our washing machines were made for washing clothes and that’s it!”). Under stable conditions, planning over a six- or 12-month period can provide direction on where you’re going and a map for how you’re going to get there. In the past, those techniques have been extremely useful.
But under today’s tumultuous conditions—technological advancements, new competitors, geopolitical threats, and shifting customer preferences (“we want machines that wash our potatoes, for goodness’ sake!”)—many business leaders have found that their annual planning methods are falling short.
According to the International Monetary Fund, global uncertainty has increased steadily and significantly since 2012. Traditional six-month or annual planning cycles cannot keep up with current levels of disruption, and companies that attempt to plan and map the unexpected will quickly find themselves uprooted. Instead, organizations must learn to adopt dynamic strategies that can embrace uncertainty and respond to disruption with agility.
Busch explains, “It’s about saying, yes, let’s strategize as much as we can; let’s build our plans and maps. But at the same time, let’s build a muscle that allows us to see the unexpected, not as a threat, not as something that just kind of happens to us, but as something we can do something with.”
4 Eastern concepts that can help manage uncertainty
Old-school business mindsets, and Western thought in general, tend to favor linearity—one event impacts another, the past provides insight into predicting the future, and we seek to explain the beginning and ending of all things. But in today’s unstable environment, change is coming from all directions. What we once thought were the lines between industries are blurring. Upheaval can arise from the inside (a Great Resignation among employees) or the outside (war in Ukraine causing supply chain disruption). A map of the next 12 months may be rendered irrelevant by next week.
Eastern cultures have long known that change is cyclical. In Chinese philosophy, the fundamental elements wood, fire, earth, metal, and water and the continuous transition between them are the governors by which all interactions occur. Everything exists in a constantly evolving cycle of transformation, and those who can move dynamically—yielding and flowing like water—will be most prepared to thrive in an everchanging world.
There are four concepts from Eastern (or more precisely Taoist) thought that lend us insight on how to deal with uncertainty. I explore them in depth in my first book, The Art of the Advantage, but a brief introduction to each concept will help you shape your thinking when it comes to planning for uncertainty.
The four concepts are:
- Polarity: In the West, we believe you must choose one pole or the other—i.e., we want good without bad and health without sickness and growth without decline. Eastern thought says you cannot have one pole without the other. Instead of becoming stuck in a single perspective (like not expecting consumers to use our machines for a different purpose than we intended), consider if there might be another side to the story (our machines have multiple purposes that can help more customers than we intended).
- Go with the flow: In the West, and in traditional business, we strive to be tough and push against resistance to create change. Eastern cultures favor a softer approach, patiently reading the signs and patterns to identify the most opportune time and direction to advance, not against trends, but with them.
- Continuous change: Western business believes change to be linear—something happened in the past, it continues in the present, and it will impact the future. We look at the past to interpret where things are going. From an Eastern perspective, time is composed of both static moments and kinetic movements. There will always be periods of great change, followed by periods of stability. It’s not the past that determines the future but the present.
- Indirect action: Western games, such as chess, involve attacking your opponent head on. Similarly, traditional business competition has been one on one, firm vs. firm. In the Chinese strategy game Go, your goal is to surround your opponent rather than directly attack. The best strategy avoids direct conflict and allows you to indirectly influence the outcome. Today, we see many companies forming strategic alliances through ecosystems to help deal with unprecedented levels of change.
The story of Haier’s clothing and potato washing machine shows the importance of being flexible and adapting to unexpected situations. On a greater scale, for every company, planning for uncertainty is essential in today’s rapidly changing world.
Traditional strategic planning methods are no longer adequate for dealing with increasing levels of disruption. Eastern concepts, such as polarity, going with the flow, continuous change, and indirect action, can offer wisdom on how to strategically deal with uncertainty. By adopting these concepts, leaders can build resilient and agile strategies and organizations that can navigate challenges and capitalize on the unanticipated opportunities that come our way.