Strategic Dissonance
Key Takeaways:
a term used to describe a phenomenon that happens to a business after the point of maximum success.
the difference between the actions of a company and its intent.
suggests that the incumbent strategy no longer works as the underlying market and competitive dynamics have shifted enough to require a new strategy.
Introduction
Strategic dissonance is a term you may hear squeezed into a sentence to provide a shorthand description of what the speaker is trying to explain. Or, indeed, it may be thrown into a sentence to bamboozle the recipient or even to skim over a complex situation that the speaker doesn't really understand. So what does it mean? Let's quickly look at the word "dissonance".
Dissonance can be described as the disagreement level or the degree of inconsistency. The disagreement or inconsistency could be between:
thoughts and actions, or
reality and perception
Strategic dissonance is a term used to describe a phenomenon that happens to a business after the point of maximum success.
Strategic dissonance is the difference between the actions of a company (its employees and in particular, those of its senior leadership) and its intent after profitable growth begins to decline.
Challenges
Operating in a world where the competitive landscape seems to evolve faster and faster and new threats emerging from ever-surprising corners of the industry, the life of a successful business model is becoming ever shorter.
Aligning your company’s strategic intent and its strategic action becomes ever more critical. The more dynamic the industry, the shorter the duration such alignment is likely to be. As intent and action become misaligned, that divergence creates what Andy Grove termed “strategic dissonance” in a California Management Review article he co-authored as well as his 1996 book Only the Paranoid Survive.
Arriving at a point of strategic dissonance suggests that the incumbent strategy no longer works as the underlying market and competitive dynamics have shifted enough to require a new strategy. Grove termed these “strategic inflexion points” to describe the giving way of one type of industry dynamics for another. Strategic inflexion points signal a fundamental change in a business and require a new strategy, a modified business model, and a change in the way business is conducted. The driver might be new technology, new regulations, emergent competition, or any structural dynamic that obviates the current environment.
The challenge for anyone, management or otherwise, is to recognise the strategic dissonance and, more importantly, to perceive the opportunity being created by the strategic inflexion point and requisite new strategy.