Unpredictable Patterns #54: Optionality, commitment and preparation
The curse of optionality, the romcom problem, the value of the prepared mind
Thank you for all of the comments on the last note! They included noting that we need to make sure that we do not succumb to a new priesthood of knowers and suggesting that what we trust is determined by social agreement and so must be negotiated (but how do we even get people to the table?) — good questions that I will return to and mull over. This week’s note is about optionality. Usually hailed as an ultimate good, it often creates havoc in organizations - and I am interested in why, what we can do about it and how it could be resolved.
Hope you like it!
Optionality, commitment and preparation
There is a recurring conversation that I tend to end up in, when discussing policy issues with someone working in a company. The discussion goes something like this (I have been this policy person, to be clear):
Policy person: ”We should do what is most helpful to what the business wants, and ensure that we help the business accomplish its goals.”
Me: ”That sounds right, public policy is at its best when it aligns with and can support business goals, as well as technology roadmaps. So what does the business want?”
Policy person: ”It is not quite clear, we are, as a business, still weighing options, and we are following the way the market develops very closely.”
Me: ”So what will you do?”
Policy person: ”Whenever the business commits to a course of action, that is what we will support in our work.”
Me:”…but…what if they do not?”
Policy person: ”Well, that is quite understandable, and probably a good thing. You see, I think really smart entrepreneurs want to ensure that they have maximal optionality as they face a quickly changing, volatile environment.”
Me: ”So you do not expect them to commit to a focused course of action?”
Policy person: ”No, not as such. I think the best way to describe our current position is that we want to preserve optionality.”
Me: ”And so you do not know what the business will want or when it will want it?”
Policy person: ”No. But when we do we can really dig in.”
There is something interesting going on here, and it is worthwhile really exploring this dilemma. What we see here is a tension between a great ambition - the ambition to support the business in a committed strategy - and the business’ reluctance to commit to any strategy as it seeks to preserve maximum optionality.
The CEO, and leadership, wants to ensure that they are not locked into any specific course of action, but be able to change their minds as the world changes - a commendable stance - but it leaves a lot of other functions eager to help, but equally unable to do so.
And it can get worse - especially when the policy function, in quiet desperation, assumes that a decision has been made, and strategy is committed, and pour enormous amounts of energy and resources into a project just to be told that, well, the company is now taking another path. The result is not just a dent in general morale, but a learned hesitancy to act overall, and ask for certainty and commitment beyond what the leadership is ready to give or is even reasonable to demand!
If it sounds like a 90s sitcom dysfunctional romcom, it is because it is a lot like that. The romantic interest does not want to commit, the protagonist tries to force a decision, the decision is made, but then the romantic interest reneges on it and leaves the protagonist in tears - usually finding that the best friend was there all along.
<grim truth trigger> The only difference is that the policy person in my example has no best friend. </grim truth>
So how should we think about this?
The merits and challenges of optionality
Is optionality a good or a bad thing? Optionality - as it is often understood in modern companies - is ”the quality of being available to be chosen but not obligatory” (cue the jokes about romcoms - where the protagonist is essentially optional). It makes sense to want rich optionality at all stages in any scenario or game, since this means that you can shift and change in many different ways and hopefully find a move that really will respond to what your environment and opponents require.
Far too often, however, optionality is seen as costless. The reason for this is complex, but it has to do with leadership not respecting a fundamental quality in both established and fast-growing organizations: organizational inertia.
When you keep all your options open, you essentially are teaching the organization that there will never be commitment, and hence that they should be reluctant to commit - you are not teaching them to be nimble, available to be chosen and ready to jump — because they did that, and then you shifted course!
So optionality carries a cost in organizational inertia and morale.
But, you could argue, that is bonkers! Everyone in an organization should want the organization to be open to all options, and nimble, and ready to act - and yes, that is right in principle, but not in practice.
Organizations are loops. The more optionality you introduce, the looser the loops get, and the slower the organization gets.
An organization that has a single, clear, committed goal has tightly knit and fast loops that keep working towards that goal. The optional organization not only gets loose loops, it also ends up in a slow dissolving into islands of commitment. These small islands are driven by exceptional individuals who are able to keep commitment up even in the face of the demand for optionality, and steer their small island towards a clearly defined goal. They are usually celebrated in the organization, but ultimately their work fits uneasily with the rest of what the organization is doing - creating further disconnection and looser loops.
The islands of commitment usually are not synced either, and so you get different results from different islands, which, in turn, generates even looser loops as other parts of the organization are forced to figure out who to sync with.
This paints a clear, chaotic picture of organizational entropy - and it is easy to be cynical about it, but remember that the cause of this undesirable situation is that the organization is trying to keep its options open - a sound strategy under most analyses.
The ideal answer - hard to achieve - is to balance optionality with commitment. To have a solid commitment to a few organizational goals that help the entire organization synchronize in one rhythm, and then keep optionality at the edges - developing other alternatives to meet a changing environment and ensuring that the organization is prepared for that change.
And this is a key insight - preparation is better than optionality.
The etymology of preparation is simple - the word comes from Latin, and means ”a making ready” and focuses on the quality of being ready to receive a changing world. It is not about keeping all options open, and to be able to act in different ways - it is about ensuring that when the world changes you are ready, because you are prepared.
The quality of being prepared means that you have examined the options, committed, but ensured that you are ready if your commitment ends up being wrong.
The very idea of a plan B is at the heart of preparation, but opposite to optionality. Optionality is about having as large a set of plan As as possible.
Preparation is beautiful. When you see a prepared athlete meet her opponent, or a prepared chess player engage in the game, or a prepared musician play a piece of music they are not showing you the value of optionality, but the value of time spent in being ready to react to a vast set of possible outcomes. They have a plan - but they are prepared to act differently if the need arises.
Our examples also show that there are different kinds of preparation.
The preparation of the musician is found in practice, in understanding a piece of music in all its different dimensions and understanding the setting in which the piece is to be performed. It is preparation not just for the performance, but for the venue and the musicians own emotional response - nervousness and stage nerves. Deep preparation creates those wonderful moments when we can listen to a piece of music live and just marvel at how a human being so completely can be immersed in music - that immersion, that performance, owes everything to preparation and practice.
Practice, then, is a key part of preparation and something that is lost in optionality - the optional organization wants to have choices available but not obligatory - but it does not know how to handle those same choices when they have - by circumstance - become mandatory. The prepared organization has practiced and can perform when that happens.
The preparation of the chess player is both about the game and the opponent. Understanding the game is just one dimension of the prepared mind, here, and understanding the opponent is often just as important. When you read post-game commentary from great masters they invariably, and somewhat smugly, note that their opponent yet again succumbed to a particular weakness this opponent has shown many times.
Preparation is knowing the game and knowing the opponent. It is not waiting for the opponent to make their move and then try to preserve as many moves as possible for the next round. Anyone playing chess without commitment and preparation, focusing solely on retaining maximum optionality, would lose the game quickly.
The preparation of the athlete is similar, but even more focused on the individual’s own ability - their strengths and weaknesses. Knowing yourself is key, finding the boundaries you can push, and those you cannot, will help you excel. Preparation is about understanding ourselves.
Preparation is closely related to planning, but where planning is about finding out what is going on, finding a policy to address it and then ensure that there are consistent actions to accomplish that policy (to follow Rumelt), preparation is about being able to execute those tactics, embody that policy and internalize that diagnosis.
Preparation is planning in motion, the first step of execution and logistics, the necessary deep breath before the battle commences.
Ideally, then, an organization should aim to commit, and prepare. Commit to a course of action, and prepare and be ready for whatever else happens. To seek optionality is to try to shrug off both of these responsibilities.
But, you may argue, that is really of no help whatsoever - because that kind of organization is so incredibly rare. An organization that commits and prepares comes along once in century perhaps, and only under extreme external selection pressure. So why paint this idealistic picture of something that will not happen?
That is fair criticism. So, what can we do if we end up in an optional organization?
Under the assumption of optionality
Remember our policy person. They seemed stuck in a bind. They would know what to do, if only the company committed to a course or a technology roadmap or a business strategy that could be translated to a particular policy agenda - but the company seeks to preserve maximum optionality, so they end up running like hell on what looks like commitments to be disappointed again and again.
Are they doomed?
I would argue not. And furthermore: I would argue that if we share this diagnosis (that many tech organizations and other fast growing organizations will be light on commitment and heavy on optionality) we have a responsibility to view this as our problem, and not just sigh deeply and resign.
There has to be an answer to how we should act as policy people in an optional organization as well as in a committed one.
And maybe it is simpler than we think.
The trick - and it is partly a mental model shift, a trick - is to start to assume that the organization is seeking maximum optionality. This idea - that we often operate under the assumption of optionality - is surprisingly powerful.
I once had a conversation with a colleague in my professional past who lamented that they did not know what the company wanted to do with a certain kind of partner / competitor. Their preference was to seek clarity on this, but frustrated, after several months of seeking said clarity, they said that maybe the job was impossible. If the company does not know what it wants, how can we help it?
That is a reasonable question, but this is where the assumption of optionality comes in. If we assume that the company will not know for the next x years how it wants to act, we can ask the crucial question: what, then, can we do to best prepare the company for the possible scenarios that will come.
We take the uncertainty from optionality and react with an agenda of preparation, work that ensures that the company is as broadly ready as it can be no matter what course it ends up taking, or is forced to take.
For every plan, action or idea we explore we can then ask if it improves the company’s preparedness. If we want to support a policy proposal or engage a partner - will that taken individually or together ensure that the company is better prepared no matter what happens?
Instead of supporting a distinct commitment, we can ensure that the company is as ready as possible to take on any possible future scenario - aiming for general robustness and agility, rather than specific support.
This - a shift from a focus on commitment in the face of optionality to preparation - is the best response strategy we have, I think.
It also means that we need to shift our understanding of planning. If the committed organization can share objectives and work toward them, the optional organization is best served by building capabilities and long term strength.
The difference might not be immediately obvious, but it is major.
If you work with objectives, you will focus on certain things you want to achieve, assuming that those objectives flow from committed priorities set by the company. As the priorities change, your objectives will falter and fall. If you work with capabilities - things you can do routinely and well - a change in priorities will allow you to simply redirect your capabilities to these new challenges.
Think of a military force. It operates under the assumption of extreme optionality. It can be asked to all kinds of things, and in all kinds of environments - either as part of a commitment or as a consequence of choices not made suddenly becoming mandatory.
The way a military force trains and builds is by building basic capabilities that can be deployed across as many options as possible. A military force is prepared to receive the enemy as they come, and that is the key element in its make up.
That readiness may, as Sun Zi suggests, be the core element in military strategy: to be ready to meet the enemy as they come, and to become unassailable:
“The art of war teaches us to rely not on the likelihood of the enemy’s not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made *our* position unassailable.”
Under the assumption of optionality we prepare to receive and we build our position, and then we will be able to serve the organization well as it needs to act and is forced to give up its focus on optionality.
Well, you may say, but that is empowering a deep dysfunction: we should all have committed and prepared organizations, and not encourage the optionality seekers. I am not sure this is true. Sure, there are organizations where optionality is sought because the leadership is not strong enough to deal with the conflict commitment requires, but I also think there are organizations that have not yet found their commitment and so wallow in optionality a bit like a young person trying different courses at university, playing different roles, exploring different identities - these organizations are well served by preparing through capability building and positioning, and there is no dysfunction beyond that of the average teenager in that.
The moment of commitment will come, if the organization remains healthy.
The reason I think this is important is because of the disconnect between two great ambitions - the ambition from the side of any function in a company to support the leadership and the leaderships’ desire to seek optionality. Over time this shifts into commitment and preparation, if all goes well, but there is a lot of time lost as the organization matures.
That time can be better used.
First, in thinking in capabilities and position. What you can routinely do well, and your position in a political landscape can be built out under the assumption of optionality and will ultimately prove to be enormously valuable.
Second, acknowledge the frustration, but do not get stuck in it. Forcing commitment seems tempting, but it will be revoked as often as not and that has a deep detrimental effect on the organization. When there is commitment, real commitment, you will know and should support and strengthen that.
Third, study organizations around you. How are they indexing on optionality vs commitment and preparation? Are there organizations that are better prepared? More ready to receive change and challenges? Why and what can you copy from them?
Fourth, study how we prepare across crafts and arts - from chess and music to cooking and pottery - preparation is key - how does it work? What analogies can you draw to your own work? What is the mis-en-place of policy work?
Fifth, remember that luck favors the prepared, or as Eisenhower noted: luck exists at the conjunction of opportunity and preparation - so develop strong senses for opportunity as well - and this is hard - to ensure that you preparation can be used when needed.
As always, thank you for reading and let me know if you have other ideas on notes, subjects or themes you would like to discuss!