Business Goals vs. Strategic Intuition

Read the first two paragraphs of this Wall Street Journal book review:

Set big goals. Do whatever it takes to reach them.
These muscular sentences form the core of commencement addresses,
business-advice books, political movements and even the United Nations
approach to global poverty. In "Strategic Intuition," a concise and
entertaining treatise on human achievement, William Duggan says that
such pronouncements are not only banal but wrong.

Mr. Duggan, who teaches strategy at Columbia Business
School, argues that the commonplace formula has it backward. Instead of
setting goals first, he says, it is better to watch for opportunities
with large payoffs at low costs and only then set your goals. That is
what innovators throughout history have done, as Mr. Duggan shows in a
deliriously fast-paced tour of history.

(The full review is available here; subscription required.)

This message strikes home in two ways.  First, I’ve been blogging about the trial and error economy, in which companies adjust their actions as they get feedback on what’s working and what’s not.  That seems to be the essence of Duggan’s book, which I have not yet read. (A couple of my key posts about the Trial and Error economy are here and here.

The second way this strikes home is that I’ve been working on a new business venture.  I’ll post more about it here as it gets started, but it’s a web-based information service.  As we talk to angel investors, they want to see our plans and goals.  Fine, I understand that.  But I have a forecast that three years into the project, at least half of our content will be driven by customer reaction rather than our own plans.

You could well ask if we should be starting a business if we don’t know what to provide our customers.  But as we look around, hardly anybody is really doing a good job at monitoring customers to see what they want.  Here’s an example:  suppose a supermarket manager noticed that customers were spending a lot of time in one aisle looking for something, and that half of those customers left the aisle without having placed anything in their shopping carts.  A smart manager would figure out that they are looking for something that isn’t there.  Even the ones who buy something from that aisle may have been settling for second best; their time in the aisle indicates that they were looking for something rather than just grabbing their old-time favorite.

It’s hard for the old-time supermarket manager to spot this behavior, identify the specific section of the aisle where this is happening, and bring in additional offerings to tempt the shoppers.  But it’s pretty easy to do that on the web.  The biggest surprise is how little it’s being done right now.

For the business leader or investor, I recommend: think less about plans and goals, and think more about how to identify opportunities and quickly exploit them.