2012-05-24

Co.Exist

Employing Not-So-Good Strategy To Get To The Right Strategy

Ancient Buddhists had a word for a concept of "adaptive strategy" that is just as relevant now. Instead of ignoring all but one way forward, we should pragmatically pick from the best of all strategies, whether in politics, economics, or social innovation.

In December of 2008, the U.S. government financed the rescue of General Motors to the tune of almost $55 billion. Conservatives cried "socialism!"—accusing Bush and then Obama of interfering with the creative destruction of capitalism. Both presidents understood they were radically departing from the norm, but decided that the alternative—allowing GM and its suppliers to collapse, millions of jobs to be lost, and credit markets to freeze—would be too damaging to our economy. So, the government intervened temporarily in what was deemed a socialist way. I say temporarily because the government has since stepped out: In 2009, GM emerged from Chapter 11 with an IPO of $20.1 billion, and in mid-February of this year reported an annual profit of $4.7 billion.

Throughout history, humans have created many types of economic systems: not only capitalist and socialist, but also protectionist, barter, and mixed economy. Each system was designed to solve a specific problem, and today, with the benefit of hindsight, we can draw from this diverse portfolio. When free markets fail, for instance, we can temporarily nationalize key industries in order to restore homeostasis. This is not a rigid adherence to capitalism nor a blanket shift to socialism, but an approach of adaptive strategy.

It is this approach that Bush and Obama took with GM. It’s Obama’s "All of the Above" energy strategy, but with a twist: It’s not about using all energy sources in a purely pragmatic way. Some sources are better aligned with our values than others; we prefer renewable sources for environmental and geopolitical reasons. But, we’ll use fossil fuels to the extent that they help us get to renewables, and in turn to energy resilience.

Ancient Buddhists had a word for this concept of adaptive—you might say strategic—strategy: upaya. Upaya literally translates as expedient means, the pragmatic use of various means, always opting for more desirable ones, in order to achieve enlightenment. As with economic crises and energy sources, we use less desirable strategies to get to an end result with more desirable ones. With upaya, a strategy is only as good as its ability to get us to a better one.

Nationalizing key industries and burning petroleum are unsustainable in the long term, but they embody upaya if they facilitate the transition to free(er) markets and renewable sources. The concept of upaya inoculates us from false trade-offs that pit viable strategies against each other. These seemingly opposed strategies are actually part of a comprehensive portfolio, to be mixed and matched as needs arise, while moving towards strategies that are aligned with our values.

Upaya is applicable to any situation in which there are multiple strategies for achieving a goal. Within the context of social innovation strategy, much contemporary thinking shares an implicit claim that in order to be innovative, businesses must decentralize power. For businesses to perpetually improve their offering in the face of changing market conditions, the thinking goes, executive leadership must distribute power more equitably to internal and external stakeholders, including frontline staff, consumers, and suppliers. Many high-profile business cases support this claim: Zappos’ innovative customer-service model gives reps the power to choose how they field questions; the innovation model of Spanish conglomerate Mondragon is a set of 12 democratic principles, like one person, one vote; and the poster child of open innovation, T-shirt retailer Threadless, empowers its customers to design and vote on the shirts it manufactures.

Meanwhile, two of the most innovative companies in the world, Apple and Google are notorious for their centralized grip on innovation. Apple innovates successfully not in spite of, but because of its command-and-control structure. Former exemplar of democracy-based innovation, Google has recently dissolved its much-talked-about Google Labs and 20% Innovation Time Off initiatives, opting for a more top-down approach.

Instead of pitting bottom-up against top-down and vouching for one or the other, upaya asks which types of organizational structure are most effective for which types of innovation. It begs analyzing the qualitative difference between innovations that emerged from Google’s 20% free time versus those that are emerging from its more centralized model. And beyond pure pragmatism, it asks how different structures positively or negatively affect the overall organizational climate. Per upaya, innovation strategy that ignores organizational structure, singles out only one, or does so in a value-neutral way omits critical tools from its toolkit.

[quote=pullThe concept of upaya inoculates us from false trade-offs that pit viable strategies against each other.[/quote]

Upaya is also applicable to economic policy discussions. It helps illuminate the changing roles of different economic sectors, a topic of major political contention. Social democrats believe the public sector should be a medium-sized purveyor of universal programs and public services, while libertarians favor a small state limited to protecting property rights, creating and enforcing laws, and settling disputes. Each side essentially attacks a strategy for economic well-being—framed in terms of the size of the public sector—without a comparative analysis of the effectiveness and justness of each strategy.

Imagine a Venn diagram of the economic sectors. What are the public, private, and third sectors uniquely capable of? What can social businesses do that the private and third sectors independently cannot? And in an age of DIY peer production, what does it mean for the state to be the sector of last resort? A upayan policymaker would think not ideologically about what size each sector should be, but strategically about what each sector is able to do, and design socially just policies accordingly. If Grover Norquist can prove that non-public sectors will more reliably steward our environment, provide law enforcement, and fulfill other duties currently under purview of the state, I’ll join him in shrinking government to the size where it can be drowned in a bathtub.

The concept of upaya can even enlighten monetary policy by eliciting currency’s original purpose: to facilitate trade. Despite this broad purpose, we’ve largely narrowed our means of facilitating trade to the dangerous quantity of one: centralized currency. Centralized currency is money established and regulated by a central state. Centralization is what makes money powerful, fungible, and also incredibly vulnerable; when it performs well, we can engage in economic trade worldwide, but when it performs poorly, our ability to trade—to fulfill our needs through the exchange of value—diminishes. By limiting ourselves to one type of currency, we compromise its original goal.

Upaya points to the need for adaptively using multiple currencies to build a resilient economy. Currency expert Bernard Lietaer argues against a “monoculture of currency” like the dollar, euro, or yuan, instead favoring a multiplicity of currencies like the more local Swiss WIR and Lithuanian Doraland economy. In practice, the Italian commune Damanhur plays this out in its own economy, which uses both Euros and "Creditos," its local currency. "The Damanhurian economic system,” reads the commune’s website, “blends free enterprise with solidarity and communal sharing, with the objective of creating the most advantages and wealth possible at an individual and collective level."

You don’t have to be a currency expert to understand that strict adherence to one strategy doesn’t work in the long term. The shift upaya inspires is not towards a new kind of strategy, but towards a new relationship with strategy. The shift is from a mono-cultural relationship with a singular "best" strategy to a poly-cultural, adaptive, and value-based relationship with a portfolio of strategies.

When you see the latest strategy fad becoming doctrine—be it revolutionary change over evolutionary, networked forms of organization over hierarchies, or even transformational leadership over transactional—wield upaya: practice adaptive strategy. Even advocating a wholesale shift from reductionism to systems thinking is reductionist in itself, because it promotes the same mono-cultural relationship with the new paradigm as its predecessor.

We have a way to transcend partisan rhetoric by naming an alternative. It’s not flip-flopping. It’s not soft on satan. It’s upaya. Buddhists have been getting strategic about strategy for centuries; now it’s our turn.

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3 Comments

  • Karla Schwarz

    Thanks guys - truly enlightening comments.

    Oh wait, it's actually Stephanie's article that's enlightening.

    =]

  • Kevin Hotaling

    An economics article in which the author fails to recognize that bankruptcy / liquidation doesn't mean total destruction, but rather a necessary reallocation of resources to more effective uses? Is this the New York Times?

  • DarkTrader

    If Western governments have no CV showing successful top-down "central planning" (i.e., cannot utilize the one tool they have in the toolbox), why would you expect that they could utilize multiple tools and do any better.

    Capitalism doesn't fail, companies and people fail. Problems start when central planners get involved.