Why Being Unpredictable Is a Bad Strategy
13 January, 2017 / Articles
Keeping secrets can protect competitive advantage. Imagine the D-Day invasion of Normandy if the Allies had announced dates and locations. Ask Coca-Cola for its secret recipe and listen to a whole corporation laugh.
But secrecy is not the same thing as unpredictability. Secrecy creates an incentive to invest in assets, especially intellectual ones. Unpredictability bluffs, postures, and palters to gain advantage through uncertainty and misdirection. Unpredictability can put another party off-balance. It can confuse them, cloud their thinking, cause them to waste time and effort, and trick them into making a mistake.
There are times when, at least in theory, the potential benefits of unpredictability can exceed its costs. But in my experience with competitive strategy in the real world, they aren’t common.
Unpredictability in competitive strategy is expensive. You don’t build a fake factory or release a fake product. You don’t suddenly pop out of one market and pop into another. (Guess what your shareholders would say.) Moreover, you don’t implement competitive strategy behind closed doors. Everyone else sees and hears what you’re doing and promising. Behaving unpredictably with one group — customers, employees, competitors, suppliers, etc. — means exposing your unpredictability to all. That doesn’t build trust.
A strategy can backfire if it’s perceived as suspiciously unpredictable, as a client and I discovered in a business war game I facilitated. The company wanted to test an innovative, revenue-neutral plan to simplify industry pricing. The plan should have been as competitively harmless as changing the color of its corporate logo. It found instead that the plan would panic its competitors into starting a price war.
In business, the opposite of unpredictable isn’t predictable. The opposite of unpredictable is strategic.
Consider head-to-head competition taken to an extreme in a game of chicken, the ultimate test of witless testosterone. In that game, two would-be alpha humans race their cars straight at each other. Whoever swerves is a chicken, a coward. How to win? With conspicuous, irrevocable, strategic commitment: Remove your steering wheel and make sure the other driver sees you throw it out of your car just before impact.
Some people think unpredictability works in competitive strategy. I’ve seen it in my Top Pricer Tournament, a simulation I’ve run with over 1,000 people that allows participants to try different pricing strategies in three generic industries. (You, too, can try it.) In the tournament, participants who selected “be unpredictable” as their pricing strategy caused their prices to randomly rise, hold, or fall in each simulated quarter.
“Be unpredictable” clearly underperformed other tournament strategies. It also had a broader range of results in millions of what-if scenarios. Occasionally, unpredictability led to joy, but usually it led to woe.
But why did unpredictability underperform? Because becoming unpredictable required abandoning a major opportunity: the opportunity to lead.
I don’t mean “lead” in the follow-me sense, especially because I doubt many people would flock to a leadership message of “Keep ‘Em Guessing!” (“I’m with you! Maybe.”) Plus, unpredictability is ride-the-tiger uneasy: How do I know you won’t later do to me what you do now to others? And when you believe in unpredictability, what exactly do you believe in?
Rather, I mean “lead” in the sense of shaping events, of taking initiative, of showing not-a-chicken commitment. You lead by influencing others, even, maybe especially, if they are not your friends. You may lead well or you may lead badly, but unpredictability does not lead at all.
Think back to the chicken game and throwing your steering wheel out the window. That’s a good strategy, but it’s not foolproof. What if the other driver does the same thing at the same time? Bet neither you nor the other driver predicted that. The leader — the strategist — installs the world’s best air bags, or an ejector seat, or top-secret foot-controlled steering. They propose a race rather than a duel. They define success as something other than making the other driver swerve first. They choose not to play chicken in the first place.
Leadership lets you choose the game to play and shape how you play it. If you don’t, someone else will.
The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.
