Combining Deliberate and Emergent Strategy

Author: Alessandro Raschellà Alessandro Raschellà (CEO & Founder)

A solid strategy isn't just a blueprint; it's the foundation of a business's long-term vision, guiding critical decisions around operations and resource allocation. Firms can manage challenges more effectively by crafting a strategy that fosters competitive advantage and promotes agility in a shifting market. A clear strategy is fundamental for bringing the entire organization together, ensuring everyone works toward common goals, ultimately leading to sustainable, long-term success.

Being concrete and measurable in a firm's moves to achieve its long-term goals is as necessary as being flexible enough to change the firm's strategic path as an answer to today's fast-changing business environment. That's why having a deliberate and emergent strategy coexisting in the firm is fundamental.

The deliberate strategy approach is rigorous. It involves establishing objectives, plans, and actions and following up to ensure that specific outcomes are reached.

An emergent strategy develops over time in response to unexpected changes in the executed's internal or external environment, adapting to circumstances rather than following a preset plan.

Both strategies coexist effectively when the emergent strategy adjusts the deliberate strategy in response to the internal or external environment.

The deliberate strategy must add the necessary discipline and control to the firm, while the emergent strategy maintains flexibility that helps a firm survive in the long term. To successfully achieve the firm's goals, firms must integrate both approaches.

The strategy starts with a firm's vision.

The strategy must start with a constant element: the firm's vision, which is the ultimate purpose guiding its existence.

The vision must be engaging, motivating, and inspiring. Sometimes, it can even be 'too much,' such as SpaceX's original goal of "making humanity a multi-planetary species" by colonizing Mars.

Even if SpaceX's vision is highly ambitious and seemingly out of reach in the short term, it has served its purpose, inspiring significant innovations and immense dedication both within and outside the firm. It has also helped SpaceX achieve concrete successes, such as reducing space launch costs and rocket reusability and forming strategic partnerships with NASA. The grand vision has thus motivated a revolutionary change in the space industry.

The vision is the fundament of every successful strategy. However, a highly inspiring vision without a strategy will remain a dream.

That's why a deliberate strategy that involves senior leadership and gathers input from across the organization is necessary.

The deliberate strategy must be based on thoroughly assessing the company's strengths, weaknesses, resources, and external market conditions and serve as a guide in identifying a competitive position where it can leverage its unique capabilities to meet customer needs in ways that competitors cannot easily replicate.

How Strategy Can Help Entrepreneurs:

A solid strategy is essential to every firm's success. It provides the framework for making informed decisions, balancing innovation with discipline, and effectively managing resource constraints and comprises three fundamental elements: objective, scope, and competitive advantage.  

1. Objective.

The objective articulates the firm's goals and defines success in the eyes of its leader; whether it's building a sustainable company that remains under the founder's control or selling to a strategic buyer, the objective influences every strategic decision.  

For example, if the goal is an IPO, the strategy must focus on metrics like acquiring a certain number of customers, capturing a specific market share, and securing key contracts, as it will drive the firm's actions and resource allocation toward maximizing market value.

2. Scope.

Scope defines the firm's boundaries—what it will and will not do. It is the most critical element for guiding strategic decisions. A clear scope helps entrepreneurs avoid spreading resources too thin by pursuing opportunities outside the company's expertise or capabilities.  

Let's consider IKEA's strategy. From the start, IKEA focused on low-cost, easy-to-assemble furniture sold directly to customers in large self-service warehouses. IKEA deliberately avoided entering the luxury furniture market or providing standard assembly and delivery services in areas that did not fit its core competencies. This choice allowed the company to optimize operations, keep costs low, and offer unique value, strengthening its position as a global leader in affordable furniture.

3. Competitive Advantage.  

This element defines how the company will win and why customers will choose its offerings over competitors. Competitive advantage not only addresses a specific customer need and, ideally, solves an immediate problem but also recognizes the areas where the firm's product or service may deliberately underperform in favor of strengthening its core capabilities.  

For Netflix, a key advantage was global access to on-demand content, available anytime, anywhere.  Unlike competitors like Blockbuster, Netflix initially focused on DVD rentals by mail, avoiding the high costs and logistical complications of running physical stores. Later, with the shift to streaming, Netflix chose to forgo the traditional linear programming model and broadcast live events, instead focusing on creating a vast library of on-demand content accessible anywhere at any time. Those strategic decisions involved deliberately sacrificing areas that weren't central to its core business model, which helped Netflix scale quickly and strengthen its leadership in digital entertainment.

Emergent Strategy: Adapting in Real Time

While deliberate strategy charts a clear path, entrepreneurial reality often requires flexibility, and that's where emergent strategy plays a crucial role.  

As managers at all levels implement the strategy, they make countless decisions daily. Each independent choice collectively shapes the company's position and gradually defines the strategy's shape over time. This process reflects the emergent aspect of strategy.

Many frontline decisions are routine and require little or no thought. Others involve more judgment and should be guided by the company's strategy. And some decisions are conscious variations aimed at improving an existing product or process.

One incremental innovation was when Amazon introduced Prime, created by Amazon's leadership and product teams as part of broader discussions about enhancing customer loyalty and improving the shopping experience. Since it didn't compromise logistics efficiency, Amazon launched this service, allowing customers to pay a small extra fee for priority services, such as one-day delivery. This move enhanced sales and increased customer loyalty. Later, Prime expanded to include streaming services, further increasing its value for customers.

Experimentation and feedback loops allow companies to test hypotheses about improving their strategic positioning. The company's approach to innovation exemplifies how bottom-up entrepreneurial activity can align with top-down strategic priorities.

Learning from Experiments: Strategy as a Framework

Strategy also provides the necessary framework for interpreting the results of market experiments to prevent the firm from drawing the wrong conclusions.

When experiments don't yield the desired results, a strategic lens helps companies identify where they went wrong, which hypotheses were validated or disproven, and what adjustments must be made to the overall strategy. This iterative process ensures that even "failed" experiments offer valuable insights.

YouTube's initial concept was to create a dating platform where users could upload videos to introduce themselves, but the idea needed to gain traction. The founders noticed that users primarily uploaded general and entertainment videos, so they shifted their focus to sharing all kinds of video content. This strategic pivot turned YouTube into the world's largest video-sharing platform.  

Combining Strategy and Entrepreneurship

In resource-constrained environments, a clear strategy helps companies prioritize the most promising opportunities and focus experimentation within strategic limits.

A deliberate strategy is crucial for defining the boundaries and ensuring experimentation is focused rather than chaotic. However, innovation methods characterized by local experimentation and rapid adaptability driven by emergent strategy are also essential. Those two approaches are not in conflict; their coexistence allows firms to innovate with discipline. 

Integrating deliberate and emergent strategies helps firms define potential markets' long-term attractiveness and test their feasibility through experimentation. Firms can find the right balance between structure and agility, ensuring lasting growth and competitive advantage.