Strategy as Improvisational Theater

New technologies pose uncertainties for businesses, including the possibility of radical change. Some companies seize the opportunity to outpace competitors while others fall behind, as history clearly demonstrates. That in itself is unremarkable; the important question is, What distinguishes the pacesetters from the laggards?

In my research on how established companies have incorporated the Internet into their businesses, I found that laggard companies tended to be less open to new ideas, less willing to permit employee initiative, and more likely to wait for top management decisions. They appeared paralyzed in the face of uncertainty. Many laggards ignored the Internet at first and then spent heavily to catch up. They often spent more but reaped less, as their efforts were frequently isolated and disconnected from the mainstream business.

By contrast, pacesetter companies tended to act before they had a complete plan, to empower innovators to run experiments and prototype projects, to adjust rapidly to user or customer reactions and to connect projects to ongoing businesses. Pacesetters got more members of the organization involved, used their technology more effectively and creatively, and emerged from the experimentation period with a clear model indicating how the technology could help the company. They did not wait to act until they had a perfectly conceived plan; instead, they created the plan by acting. In short, they improvised.

Compare the improvisational model of strategy development with the more traditional scripted model. In the latter, the company seeks to craft the best possible plan so that it can be handed off for a predetermined course of execution involving a predictable set of events and a specific final goal. The scripted model resembles traditional theater: The play is painstakingly written. Parts are cast and rehearsals start. The actors practice their roles, repeating the words from the script until they meet expectations for quality and predictability; only then do they appear before an audience. The play’s action comes to an unvarying conclusion in each performance. After the play has had a good run, a new one, also tightly scripted and controlled, takes its place.

The improvisational model throws out the script, brings in the audience, and trusts the actors to be unpredictable — that is, to innovate. Innovation has an inherently improvisational aspect, and writers have long used the metaphor of improvisation in jazz or rock music to describe the actions of innovators on project teams.