Solving the strategy paradox: how to reach for the fruit without going out on a limb

Purpose – The author points out that the same strategic behaviors that are associated with great success are also associated with failure. That is, the greatest rewards pose the greatest risks. He explains how corporations should manage risk differently at different levels of responsibility using the concepts of Requisite Uncertainty and strategic flexibility. Design/methodology/approach – The author reexamines two classic examples of marketing innovation, Betamax and Microsoft, and suggests that the cases actually offer an unconventional lesson about risk/reward. To illustrate best practice he examines the case of the Johnson & Johnson Development Corporation. Findings – Companies that have achieved greatness have typically done so only at the cost of increased risk – something that has been ignored in much of established strategic thinking. The new frontier of value creation is therefore the management of risk through a portfolio of business models. Practical implications – This article describes a new method for managing strategic risk. It explains how to place critical strategic unknowns at the center of the strategic conversation. Originality/value – The author introduces the concepts of Requisite Uncertainty and strategic flexibility as new ways of managing risk and suggests they be added to the management toolkit. Together, they represent a departure from how management has traditionally tackled the future's irreducible uncertainty.