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Why Your Five-Year Plan Is Obsolete: The Case for Emergent Strategy in a Complex World | Pete Compo

• Mark Blackwell • Episode 52

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Why do sophisticated five-year plans so often fail the moment they hit real-world complexity? In this conversation, Pete Compo—author of The Emergent Approach to Strategy and former corporate director at DuPont—argues that traditional planning isn't just ineffective in today's world, it's actively dangerous.

Most leadership teams operate with LAMO tools (linear, anthropocentric, mechanistic, ordered) whilst the world demands VUCA fluency (volatile, uncertain, complex, ambiguous). The arrival of AI has made this mismatch impossible to ignore.

In this episode, Pete and Mark explore:

  • Why five-year plans were never useful—but we can say with certainty they're useless today
  • The LAMO trap: why we treat organisations like high-precision clocks when they behave like murmurations of starlings
  • The five disqualifiers of flabby strategy: how to test whether you've got real strategy or just goals masquerading as one
  • Nested strategy frameworks: cascading logic and interaction, not goals
  • The central rule: a rigorous, simple rule designed to bust through your organisation's primary bottleneck
  • Distal CEOs: empowering people at the edge to develop strategies based on simple rules
  • Why cascading goals create silos: manufacturing optimises for efficiency, marketing for revenue—everyone hits their numbers whilst the organisation fails
  • The four-station dashboard: foundational feedback, adherence, progress, and bottom line
  • Why AI makes the emergent approach urgent: traditional planning is like flying a modern aircraft using steam-age instruments

Key Quote: "It's not somebody's job to just have a piece of the goal. It's everybody's job to have a strategy framework on how they're going to do their part of the whole."

About Pete Compo: Pete Compo is the author of The Emergent Approach to Strategy and a former corporate director at DuPont, where he spent decades witnessing firsthand why traditional strategy and planning often collapse the moment they hit real-world complexity. His work focuses on helping organisations develop strategy frameworks that actually function in complex, uncertain environments.

Resources mentioned:

  • emergentapproach.com – free downloadable resources, examples, and task sets
  • PeterCompo.com – Pete's personal website
  • Pete Compo on LinkedIn – regular posts on strategy, complexity, and adaptive systems

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Why Five-Year Plans Fail

Peter Compo

For example, why five years? It's totally arbitrary. Is a software company have the same time horizon as an oil company? How are we linking the time horizon of our strategy work to the aspiration that's required or to the decisions that are required? Um it's very arbitrary. And we so and we certainly know why the one-year strategy deal uh is so so famous.

Introducing Pete Compo’s Emergent Strategy

AI As Inflection Point For Strategy

Mark Blackwell

Welcome back to Arkaro Insights. I'm your host, Mark Blackwell. We're told more and more that we live in a VUCA world. That's a world that's volatile, uncertain, complex, and ambiguous. But when you look inside many business leadership teams or in team leadership teams and nonprofit organizations as well, the tools being used to navigate this chaos are surprisingly well LAMO. What is it we mean by LAMO? They're linear, anthropocentric, mechanistic, and far too ordered for a reality that refuses to follow a script. We treat our organizations like high pressure, high precision clocks that just need a better plan, when in reality they behave more like living organisms. Today we're joined by an expert once again who has spent his career building alternatives to the strategy theatre that many leaders unknowingly perform. Pete Compo is the author of The Emergent Approach to Strategy and a former corporate director at DuPont, where he spent decades witnessing firsthand why traditional strategy and planning often collapses the moment it hits real world complexity. Pete's work is a master class in precision. He argues that most of what we call strategy, our 10% growth trap targets and our customer first slogans, actually fail the basic tests of strategy. Instead, he proposes a framework of a nested strategy frameworks with a central rule designed to bust through the bottlenecks of an organization. So in today's conversation, we're going to explore why the plan, command, control is really dangerous in today's world where we recognize we have complex adaptive systems for organizations. We'll likely dive into science on what you can see in your organization that may be necessary to change and adapt. And we'll probably discuss Pete's famous five disqualifiers of a flabby strategy to learn how to really test whether you've got something that works. And we'll maybe discuss the concept of distal CEOs at the edge of your organization that can start adapt recognizing what's happening in the world and having their own strategies based on and starting with simple, rigorous rules. Leet, it's a pleasure to have you here again. I think this is your third time on the show. Is that right? Number three?

Peter Compo

This is number three.

Mark Blackwell

Welcome.

Peter Compo

Great. Great. Thanks for having me for number three. I appreciate it.

Mark Blackwell

I think the timing is is fabulous as we're really seeing what's happening in the world of AI and the challenges this brings some of our businesses. So I hope we can explore today why we really do need a different approach to strategy when we recognize that the old methods aren't fit for purpose. And maybe we need a new operating system or upgrade on our on our way we run our businesses. So, question first of all. So I still see in the consulting world, you know, many leadership teams operating on a five-year plan, perhaps more than likely an annual budgeting process with that five-year plan. And they view the world as predictable where expertise can predict the future. Why is that such a dangerous thing to have in the boat in today's business world?

From Plan‑Command‑Control To Mission Command

Peter Compo

Yeah, I and you know, can we can I throw in there, Mark, right from the beginning? We've been in in whatever we want to call them, you know, truly volatile situations and in uh inflection points before in the world. We're certainly in one now. I don't know that these traditional five-year strategic plans, quote, strategic plans were ever useful. But we can say with certainty they're useless today. And, you know, there's so many, so many things that it brings up. For example, why five years? It's totally arbitrary. Is a software company have the same time horizon as an oil company? How are we linking the time horizon of our strategy work to the aspiration that's required or to the decisions that are required? Um, it's very arbitrary. And we so and we certainly know why the one-year strategy deal uh is so so famous. It's because it's budgeting and it's because it's goal setting for uh for for the year. Not usually, I think so many people agree, is usually not strategy uh strategy, strategy at all. It's a tragedy. It's a tragedy strategy, exactly. What do you end up doing in these programs? You end up writing down what you already think, and then it goes on the shelf. And I'm not saying you don't need long-term strategy. And I think often you need long-term along with short-term. You need different horizons, but they shouldn't be arbitrary and they shouldn't be this forms filling out exercise that these types of quote strategy planning processes result in.

Strategy As Testable Theory

Mark Blackwell

My personal reflection is that you you know, the reality is we cannot plan the future. Yet we like to believe that we're living in some sort of communist world where five-year, ten-year plans are feasible, and we like to believe that we can predict exactly which customers are going to order when. It's bonkers. It doesn't help us make choices when we need to execute.

Peter Compo

No, and and you know, it I wonder if I think about this often. I wonder if part of the reason for these kinds of plans, these strict plans of the future. I wonder if the if the people who impose them know that they're nonsense, but they feel like if they let go of them, they'll let the organization go crazy. And that there'll be no discipline, there'll be no rigor, there'll be just everybody doing what the hell they want. I wonder sometimes whether that's really behind the continued existence of these filling out the forms exercises.

Mark Blackwell

I mean, it's neurosciences, we love certainty. That's what our brains craze certainty and plans give us that sense of certainty because enough intellectual effort makes it happen.

Peter Compo

Yeah, so we yeah, we we fool ourselves into believing it's there.

Mark Blackwell

Yeah. So so maybe we can we've thrown these terms around and lamo and VUCA and other things and trying to compare the two different worlds. Maybe just take a few step-by-step compare and contrast of these ways of understanding or believing the world works, and that might give us some hints as to why you need a different way of approaching strategy and what that might look like.

Peter Compo

Sure, sure.

Building A Real Strategy Framework

Mark Blackwell

So I suppose often we think of LAMO, you know, the one of the the M stands for m mechanistic. We like to think of organizations like machines, which are complicated but predictable. Whereas the standard metaphor for the VUCA world is more like a flock. In other words, I think of a murmuration of starlings that create all these wonderful patterns in the sky from three simple rules. Does that give you any hints about what we should be thinking about strategy in in the new VUCA world?

Concrete Strategy Rules And Trade‑Offs

Peter Compo

Well, absolutely. Emergent approach comes is is inspired by a long history of thinking that you cannot directly you can you cannot directly choose and force a system to be what it you want to be. And that uh we know that real systems change by changing the rules at lower levels, by changing the interactions of the agents in the system. And when you give the example of the murmuration of crows, that's flocks of birds. One of the inspiring examples that complex adaptive systems came up with to show this. Of course, the one I love the most is ants. Ants have these incredible systems, complicated, sophisticated all kinds of features, yet not one ant in the whole thing, including the queen, knows the first bloody thing about what's going on. It's only responding to its rules and executing by adhering to the rules of its engagement. Now, we're not anthills in an organization, but the spirit of that is what is what we need. And so instead of six uh fixed plans and goals laid out in a painted picture of what the future is going to be, we create instead a theory of what we think. If we follow these these frameworks that include rules and principles and diagnosis and goals, of course, and metrics and plans too. If we follow this overall strategy framework, we think it raises the probability of getting where we think we want to go, because half the time we don't even know where it ends up going and just think we know where it's going. So, you know, the murmuration of crows is one of those great simple examples that show the difference between every crow knows exactly where it's going to go and you can tell in it in advance versus three rules. Fly towards the middle of the flock. If you smack into something, get up and keep going. And I forget, oh, keep a certain distance between your neighbor. Three rules like that. And I might not have gotten them exact, but it's no no worse than that. No different than that. And you can see a beautiful flock simulation with just those three rules.

The Five Disqualifiers Of Flabby Strategy

Mark Blackwell

Got it. So we'll see. Rules from Pearl, important. How leaderships behave, I think, is another interesting compare and contrast if we call it the old way and the new way. Yeah, I'm not sure if you use the same terminology, but in the old way, people talk about PCCU, plan, command, control, utilize. So it's a top-down approach to designing your strategy and implementing it through control of the central leadership team. Whereas other scholars talk about it's much more about setting a high-level vision and a mission for the organization, but putting more emphasis on building capacity and having a learning organization that enables the organization. We can think about another analogy is the military's mission command, where the leaders talk about this is the why and the what, but leaving the how to the next level down in the organization. Does that resonate with the your how you think about the emergent approach to strategy?

Diagnosis Over Data Hoarding

Peter Compo

I think there's a lot to unpack there. And clearly a lot of that does resonate. Uh a few things. First of all, the idea that the CEO can know what everybody should do is usually ridiculous. Of course, the larger the organization and the more specialized the people's jobs get, the more difficult it is to do that. I think in terms of the capability building, that is a key element. And a key element of it is that it's not really other people's job to implement the leader's strategy. Now that sounds wrong, but it isn't. The leader has to implement their part of the strategy, they do their part of the job, and everybody else has to do their part that will get to the overall goals of the company. But they have to have a strategy for doing their part. They're not just executing, implementing the CEO's goals and tactics and so forth. Um, that's another piece of that that makes that top-down model uh, you know, fallacy. But I want to say a counter thing, and that is sometimes you'll hear people talking about the modern organization and that a true complex adaptive system emergent result is that it's bottoms up versus tops down, top down. And I think that gives the impression that the leaders are not as important as we think they are. It almost makes the leaders sound secondary, but I think that's nonsense. I think to work in an emergent way, an adaptive way, is even harder on the leaders because they don't get to just tell you what to do and then sit back. They have to make sure everybody is thinking in the themselves about what they have to do, and that it's not bottoms up versus top-down. It's everybody, any direction, until we get the whole system looking right. So it's sideways, upside down, whatever. It's a puzzle, as I say, and everybody's got a piece of it.

Mark Blackwell

Intrigue, we spoke earlier that AI is an inflection point that's going to create a lot of differences. And it's really not a technology difference, it's the way we get work done, the way we behave. We've had this often said on the podcast that AI brings out the best in us and it brings out the worst in us. Increasingly, as I've listened to people like Steve and Wonker talking about the AI and the octopus organization, if leaders are not absolutely clear and inspiring with what is the vision and the mission of the organization, and make sure that everyone has clarity on that, it's a recipe for chaos in an AI-enabled world. So, you know, you're absolutely right. It's it's this is a leaders have really got to bring this direction to the strategy, which I think has been lost in so many buzzwords and platitudes of old school strategy that I think you can talk about later, that really do not inspire and can mean anything to anyone.

Strategy Is Not Bound By Time

Peter Compo

Yeah, true. Um, I mean, I I like what you're saying about AI. You know, to make use of AI, the power of AI, you need a place to put it. You still need a system. Our colleague uh Angus Grundy came up with this idea of thinking of AI. AI creates abundance. In fact, overabundance, it's just kind of like Darwinian system where there's constant variation and constant abundance. But how do you winnow that down? How do you get it down to what you really need? And that's where strategy frameworks are even more important now, I would argue. To take all that noise, potential noise, and bring it into a disciplined, rigorous way of thinking. And AI could be your best friend in this or your worst enemy.

Speaker 2

Absolutely. Absolutely.

Mark Blackwell

Another compare and contrast is how we think about decisions and what we can do. So, and coming back lame, the first L is linear, and then we think, you know, if A happens, then B, because we have a really good understanding of cause and effect, and we believed that we had, but in a complex adaptive world, that's not necessarily the case. Indeed, it isn't the case. So we mean typically we only know in hindsight what was the consequence of it, what is the relationship between cause and effect. If this is the case, what does that mean for strategy design and strategy implementation in a complex adaptive world?

Nested Systems Beat Cascading Goals

Peter Compo

I think I think that what this really gets to is something that many good writers on strategy are recognizing that your strategy is just a theory. Your strategy is just a belief system that you believe that if you follow it, you have a higher chance of achieving what you think your goals are, your aspirations are. And because you know it's just a theory, that means you become more vigilant. It means that you design the system such that you you have the ability to be triggered as soon as there's indicators, strong enough indicators. You can't react to everything, of course, strong enough indicators that your theory isn't exactly right. And it might mean a small tweak to improve it, or it might be an overhaul to improve it or make it right. And you know, maybe on some level, I don't know what you think. It's this idea that strategy, and when I say strategy, I'm encompassing all of a strategy framework, your goals, your diagnosis, your central strategy rule, your tactical rules, your plans, your metrics, your initiatives. That's collectively a hypothesis. It sounds like something that maybe everybody says, oh yeah, sure, we know that. But do we really take it to heart? And do we design the strategy framework with trick triggers and so forth that makes us sensitive to whether it's coming out the way we thought, whether the world is evolving the way we thought, both internally and externally, people we don't control.

unknown

Yeah.

Rethinking Metrics And Leading Signals

Mark Blackwell

So again, let's just clarify for the for the listener the components of what is a strategy framework that you've got, because as I say it, you know, you've got to have an aspiration to move your organization to a new place. And that can be the high-level vision that we have for the organization, the mission, which is the general rule we're going to get there, but some more specific aspirations and goals or where we've got. So those are common. And I think, you know, were the old way or the new way, they haven't changed. Diagnosis, you know, what's going on here? What is it that I need to do? And I think we can talk about that in a minute. Just how much heavy lifting we need to be doing in order to understand what we're doing. Um I think what you we also plans exist that, you know, um, that we have to have some level of planning to coordinate actions, to pressure test what we're doing to make sense and provide feedback with some metrics.

Peter Compo

Absolutely, absolutely.

Mark Blackwell

But the one thing that so-called strategy plans, inverted commas, Mark, here, miss is actually what's the rule I'm going to follow? So tomorrow morning I'm with my team and we've got to make some decisions. What are my guard guardrails? What are my policies? What are my rules that I'm going to do so that I know I'm in acting in coherence with the strategy? Fair summary of what you think of as a framework.

Peter Compo

No, absolutely. Aspiration and diagnosis, of course, values may be important there. We like you said, we can unpack diagnosis a little bit. The rules, both the central strategy rule and then tactical rules, like, for example, segmentation rules, policies, our tactical rules, plans, initiatives, and metrics. This is what I call a strategy framework and what is traditionally called, like you said, a strategic plan. And 99% of every strategic plan. Plan I've ever seen, and 99% of the strategic plans I've ever seen are missing at least one thing: a strategy. They've got everything else.

Mark Blackwell

Absolutely. So can you give me, and for the benefit of the listeners, just some couple of examples of strategy rules that might be in a business organization so they get a feel for them?

Execution As Adherence And Adaptation

Peter Compo

Okay, so let's just start with some of the most classic strategy rule that the corporation has decided they are not going to any longer produce or sell to a given region, a given market, a given type of technology. And that choice has to be a heavy one because it means you have to be giving something up. But once you make that choice, now everybody in the company can have a way of going after that. Another example would be: what if a software company has gotten way beyond themselves in terms of features? And they're drunk on features, and the customers are starting to get confused and not even know which ones are best. And it's agreed and developed through a lot of effort that our strategy ought to be that we start focusing for at least a period on utility and usability and stop adding features. And you know, again, that strategy can't be trivial. It can't be that everybody sees it right away, because then it wouldn't be a strategy. You wouldn't even need it. It has to be that you got some people saying, How could you say we're going to stop working on features? How can you possibly say that? Look at these beautiful features and look at the pipeline we've got. You know?

Speaker 2

It has to be personal examples.

From Silos To Shared Logic

Peter Compo

Music example. I give this one. I write, I write music and I write uh chamber music. So that that means for a few instruments, piano and flute. I've just finished the flute sonata, uh, piano and flute. And um, my problem is that I make the piano parts too hard, which now makes it difficult for the flute players to go find accompanists, and it makes everything hard for everybody. My strategy has to be to find a way to simplify the piano parts. We could go on with more examples, but those are just a few.

Speaker 2

Yeah.

Mark Blackwell

I'm just going back to you said that 99% of the strategy plans, or probably, as we better say, strategy frameworks that you've seen, don't contain the word strategy. And all too often, my reflection is that we mistake goals and aspirations for strategy.

What Changes For Employees Day To Day

Peter Compo

And more, can we add, Mark? First of all, the word strategy is there. It's the whole thing. They call the whole thing the strategy. But there's a much more insidious word in there that shows up all over the place. And that's the word strategic, which is a word that if the people listening to the pot this podcast right now would like to do one thing that would improve them immediately, it would be to eradicate the word strategic. Because it shows up strategic goals, strategic vision, strategic initiatives, strategic plans. Tell me, is there such a thing as a non-strategic initiative? Is there such a thing as a non-strategic priority? This is just hiding behind buzzwords and have no meaning. And these strategic plans are filled with this, and it gives people the illusion that they're saying something.

Speaker 2

Yeah.

Mark Blackwell

So you've Absolutely, absolutely, you've come up with this list of disqualifiers, which I find helpful to make just as a sanity check, to see to stop people falling to the track of having a list of goals, amongst other things, masquerading a strategy. And indeed, we've done a whole podcast on this, but can you just quickly remind, or to Newless has just introduced them to the disqualifiers?

Better Comms, Better Strategy Fit

Where To Learn More And Closing

Peter Compo

Sure. So the five disqualifiers, number one is the most famous, and one that other people use and have uh uh you know written about including Roger Martin and others, the um the opposite test. If the opposite of your strategy is absurd, then it's not a strategy. So in that example I gave of if everybody knows that utility is the problem and that we shouldn't be adding more features, then it's not a strategy because the opposite would be absurd. But that's a sophisticated example. How about the usual examples? Our strategy is to grow faster than the competition in ASEAN while maintaining our profitability in the US or in Europe. Uh, what's the opposite of that? Of course it's absurd. Our goal is to maximize financial return and so on. They they actually get silly after a while and and uh ridiculous. So the opposite number one. But then there's many goals that you can't uh evaluate with the opposite test because they have numbers. And 99% of the time, the numbers test says if there's a number or a date in the statement, it's probably a plan. It might be a tactic. So, for example, grow 10% in another region. You can't rule that out with the opposite test because there's no opposite to 10%. But it's clearly a goal, an aspiration. So you must pass the numbers test. Number three is the duplicate test. And this really follows from what we were talking about the uh octopus organization and nested organizations. If you're the boss says our strategy is to focus on utility versus new features for this next time period, whatever that horizon might be. And then you say, as let's say development leader or marketing leader, you say, my strategy is to focus on utility versus features. That's not your strategy because you're already constrained to follow that strategy. And until you negotiate out of it, you have to follow it. Your strategy is going to be how do you do your part in making that happen? Solving the bottlenecks in your part. The third is the excluded. And this one is tricky because people hear it sometimes the wrong way. Excluded means the strategy statement must apply to all dimensions of the system, of the business. So say the uh CEOs, this company that we've been talking about, has two product lines, two software lines. And he says or she says that the utility applies to product line A, but not to B, but that's his only strategy. Well, then it doesn't, it doesn't. He needs to break it into a nested system with a strategy for each one, because the strategy for A excludes product line B. Last one. Is it a list? The opposite test might be the best, but the list test isn't far behind. It is a very, very rare time that a list, that a strategy is ever going to be a list. Because a list, a bullet point list, a list of almost anything is not showing trade-offs. Even a list of good choices are not going to be a strategy because there's no sensual rule to help bring them together as a unified concept. So anytime you see a list, you can be almost sure it's at best a list of tactics or plans, but more likely a set of platitudes, and everybody gets their bullet point, and everybody's happy because it's a nice list of good things to do. So those are the five opposite numbers, excluded, duplicate, and list.

Mark Blackwell

Thank you. So the disqualifiers helps us just see, you know, identifies the possibility that we're living in the old lame world of a command and control five-year plan of goals and aspirations. But I think so that's very powerful in its own right. I'd like to start moving the conversation on to what you might be seeing in your organization, which suggests that the culture and the behaviors and the way work gets done really is not prime time for a complex adaptive world. And earlier on, I did mention about the diagnosis, I want to come back to it. I know you think that one of the science behaviors might be analysis-paralysis. And the belief is the more data you gather, the more information you have will give you a better answer. Maybe you can comment on that.

Peter Compo

Absolutely. And I think um I think I think it's analysis-paralysis is a cliche that is misused sometimes. It's misused when people use it as it a way to avoid doing the hard stuff. It's used properly in the illusion that if we just collect enough information, we'll we'll be okay. I'm so amused by the statement, you know, people say this with such seriousness, you know, as if they're really bringing something. They say, you know, sometimes you just have to make a decision without all the data. Well, what the hell? There's no such thing as all the data. You would spend an infinite amount of time to collect it all. And ten times worse, there is no data from the future. So what you give a damn about, the future, you can't have data from, only theories. So in the emergent approach, it's paralysis by bad analysis. And that means just collecting a bunch of data and writing down a bunch of bullet points, making a bunch of choices. How about instead finding out a true diagnosis of what the bottleneck is, what's in the way of achieving the aspiration, what are scenarios, and digging into those. And until you're sure that you have some theory that makes sense there, then you can move on.

Mark Blackwell

I mean, it's I've just read a book by Stephen Bunkey, who uh really brings to life the whole concept of mission command. And he talks about in a in the world of uncertainty, the knowledge gap. And it is fundamentally confusing information with understanding. And you know, in the in the do not fall for the trap in an uncertain world of just trying to gather more information, spend that time understanding the problem. And that's a different, different method, which you absolutely picked on right from the word go on that one. Another distinction that was made in the book that I think you would agree with is that strategy is not bound by time. Or is it here all people all the time, people think that strategy relates to the long term and tactics relate to the short term? Can you just really go through this again so that we've got this nailed?

Peter Compo

Now, this is I'm glad you're you're you're bringing this up. This idea that strategy is for the long term, and let's add, Mark, that there's also other strategy quote definitions that are thrown in there. It's not only long-term, but it's important, right? That's my definition of what strategy is. But that's a definition much more important, is a much greater definition of your aspiration. And long-term depends on your aspiration.

Speaker 2

Let me say it this way.

Peter Compo

The horizon of your strategy is not given by some arbitrary long-term view, five years, 20 years, one year, whatever you choose. It's given by your aspiration. What are you trying to achieve? If you're desperate to fix a problem in three months, and it's uncertain how to get there, and it's uncertain who you need and what asset sets and what you have to change, then you need a three-month strategy. If you're trying to build, you know, if you're trying to develop a new oil field, you need a 25-year strategy and everything in between. We have a good friend Francis Wade who teaches people you better have that long-term view in mind. But that doesn't mean that you just do a 20-year strategy and then sit around creating initiatives for reality in the short term. It means have a long-term view and have a short-term view at the same time.

Mark Blackwell

Yeah, my favorite example of this is when Steve Jobs went back to Apple. He had 100 days of cash. Did he do that without a strategy?

Peter Compo

I love it. I think that's a perfect example of where, you know, if you don't do something and you and it's not guaranteed what you should do, and you need a strategy to guide you, but and if you don't do it, lights are out in four months, then your horizon is. Then I argue four months is long term. Right?

Mark Blackwell

Yeah, exactly. So some some other signs that leaders might be clinging to old ways of doing things and not adopting the new ways. Classic example may be that teams keep coming back to leaders saying, What do I do, boss? What do I do, boss? What's really going on there?

Peter Compo

If it's what do I do, boss, I guess we could probably imagine a few things that are going on there. The one that I'm most interested in is that the boss hasn't trained or demanded of the people that they create a strategy framework for their own work. And that there's not an interplay between the boss's strategy framework and the subordinates' strategy framework. And they have to talk to each other. The two frameworks are connected. They have to be seen, they have to be visualized. And we put this as nested systems. And as you know, we're developing an app right now for the emergent approach, and the nested system view is uh a crucial part of that. So that's my number one issue. The boss is, if that's happening, the boss isn't doing their job. You know, it may be that the subordinates aren't capable of it, and the boss has to recognize that. But if this is the case, to me, it's just the boss. Now, you might want to add that the boss created a bunch of goals, and that can't be a possible way to help people know what to do, unless it doesn't matter if they're connected with each other. Unless everybody doing their own thing is fine.

Speaker 2

Yeah.

Mark Blackwell

Gotcha. Let's talk about another symptom between old ways and new ways. What would you expect to see if in an organization which is still in the command and control approach to strategy regarding metrics? Whereas how would that differ with an organization which is more attuned to being complex and adaptive in an uncertain world?

Peter Compo

No, that's uh that's great. Um we have what we call the four-station dashboard. And all that's to say is that we think of metrics or the broader concept of feedback, of which metrics are in a strategy framework. They're the feedback part of it. We feel as though there's way too much focus on results, and that we need deeper leading indicators. We need to know earlier when things aren't right, when the theory's not right. And with things moving so fast, and whenever things are moving very fast, this is even more critical. Do you really want to wait till the end of a new product development to know that it sucks? If you have a real strategy and a real full framework for it, then you would have things like are our assumptions still valid? Are our scenarios of what other people are doing still valid? Are our scenarios of government regulation and macroeconomics still valid? And another one, are people doing what we said they would do? And I don't mean about getting results, I mean following the rules that we said we would follow. I think this is a part that's often missing. And it's because strategy is written in goals, so you don't have a way to ask, are we following the rules that we said we would follow? For example, for example, segmentation rules. We have to change the way we're treating our customers, we have to change the way we're using our product lines and our assets. Is everybody doing it? You would have to know this well before you would ever know that a segmentation system was changed, moving the needle. You would have to know this. Or the sales guys calling the factory and saying, hey, look, we know we said we wouldn't make special cuts for this customer or special packaging for this customer, but you know, we got to be customer focused. And and, you know, I'm I'm gonna tell people you guys don't get it, and you don't get it, the customers pay the bills. So just do it, you know? Is that happening? Or are you following the rules?

Speaker 2

Yeah.

Peter Compo

So we call it the four-station dashboard where you have foundational feedback metric, adherence, progress, and bottom line.

Mark Blackwell

I mean, I just want to expand on the foundational ones because let's go back. The difference is in the old way of thinking, we think that we can predict the world. In the new way of thinking, we know that we can't because we're living in an uncertainty. So let's say that our assumption was the market's going to grow 4% this year when we put our first strategy framework together. We're in six months in, and we just, you know, what happens? How does the team respond if there has been no growth in the market? And how does the team respond if there's been 10% in growth in the market? And that's a likely to be happening if you're living in an uncertain world where you can't predict the future, right? Yeah, I'm sure the sales team will be shouting pretty hard if we're now in the 0% reality. But how many organizations really change their strategy framework when it becomes apparent that the market is growing at 10%? Are they visible to it?

Peter Compo

You know, that's a it's tough to answer that with data and and all that, but I don't think it's designed into the system to look back and see whether that whether that's happening, you know. I think that's why for me it's so important to design a strategy framework where that's inherently part of it. And this gets to a quick point around, I don't I think we misuse the word execution. I think I think most people use the word execution to mean nothing more than like get good results, or other people who have theories. I somewhere I think Roger Martin is off the mark. He says, you can't distinguish execution from strategy design. I I guess it's because his ideas strategy is making. Choices, therefore, if you're executing, you're making choices as you walk down the road. No, um I I think there's strategy design and there's a strategy implementing, that you're following what you said you were going to do. And what execution is, is a quality of implementing. That's saying, are we adhering to what we said we would do? And the second part, and if it looks like our theory was wrong, we're changing it. That's execution to me.

Speaker 2

Got ya.

Mark Blackwell

So it's one just final comment I'd like to get from you on what we might see in an organization that is adopting the old way when it needs to do the old way. And that's how, you know, you've got your 200 slide PowerPoint with for the far last slide will be the great big initiatives that the organization got to implement or execute. And then there's a process that somehow this gets filtered down to all across the organization, some sort of flow down of cascading goals that can generate silos and conflicts. Why does that happen and what's your recommendation to fix it?

Peter Compo

Yeah, the cascading of goals is really old school. And we've touched on it. It's not somebody's job to just have a piece of the goal. It's everybody's job to have a strategy framework on how they're gonna do their part of the whole of the whole. And what happens when you flow down goals is you end up having people encouraging silos. And you don't have a theory, you get a number. And you wake up and you say, Am I hitting my number? Well, if you're in, I don't know, if you're in manufacturing, the way to hit your number is to not do things special for customers. And if you're in marketing, a way to hit your number is to not worry about what the cost is to manufacturing. This is no way to run a business, yet the balanced scorecard and other methods that teach this goal flow down encourage it dramatically. And uh it's something that really has to stop. Nested systems is not a flowdown of goals, it's a flowdown of logic and interaction, both peer-to-peer and vertically.

Mark Blackwell

Yeah. I mean, the great analogy for me is how the military and mission command use the back brief, which reminds me of one of your rules. You've got to go back to your immediate commands and say, is my approach, is my understanding correct? And it helps understanding that your strategy forms within the greater nested of the of that level above. And there needs to be that two-way communication to avoid manufacturing going for low cost and sales going for complexity and high price, other because they're inconsistent.

Peter Compo

I think that, you know, I think the military example is great to illustrate the fact that leaders, and and I know that we've talked about this before, the famous uh general Moltke in in Germany in uh in the 19th century, an order should only contain the minimum amount of information and direction. But that depends on the circumstance. Sometimes, if there's coordination needed between military organizations, you have to be specific. And in other cases, you have to give people freedom because you're not there at the front. And finding that balance is a big part of the diagnosis.

Mark Blackwell

Yeah. So Pete, thanks for this. It's been a really interesting conversation. So if the emergent approach becomes the standard for the next generation of leaders and business executives, how does that change the day-to-day life of the average employee in a complex organization?

Peter Compo

I think it makes them feel not only more uh connected, but more responsible. More responsible for their part of the whole in a way that is not selfish, that's not siloed, that's not, hey, I got my job, I know what I'm supposed to do, which is a good, you know, that's that's a good thing to say. I know my job, but how do you know what your job was? How did you find out what your job was and how it made sense in the whole? I think the other thing is it makes everybody in their various places, especially out on the front lines, more connected to when things change, that they can say something, that they're part of the solution to letting everybody know when things aren't the way they thought it would be.

Mark Blackwell

Excellent. Thank that's inspiring. And I, you know, it would be a great way if we could work like that in the future. Thank you. It's got to happen. I think the time is now. I think the reality is we have always been in a complex adaptive world. But with the approaching challenges of AI and other things happening in the world, I think it's pretty much we realize that we need a new operating system to thrive. And the emergent approach for me is a key component of that new way of working in the world.

Peter Compo

Well, I appreciate that, but I think we also, you know, we talk about this, right? We can go back in history to many periods that were as crazy as this one that we're living in now. It's easy to forget what the Great Depression was like and whether they thought capitalism would never survive it, or of course, the the terrible two great wars, or the industrial revolution that was going to eliminate all jobs and so forth and so on. I think in some ways, and I don't I'm not suggesting I think a lot of people have made these big improvements in strategy. Of course, Roger Martin, Richard Rummel, Mintzburg started us on the path of let's stop fooling ourselves and others. What's happening, it's not just that the world's getting more VUCA, it's that we're getting better at dealing with VUCA, that we're more aware of what it takes to deal with VUCA as well.

Mark Blackwell

Definitely. Now, that's one part that I think is missing in our understanding. Stephen Wonka talks about it in his book, AI and the Octopus Organization. When the American Railroad first hit town, and your only communication methodology was the telegraph and Morse code. That constrained the way you could manage an organization. It had to be command and control because it did not allow for feedback and communication. Now that we have much freer information, much better communications, that enables us and forces us to have a different operating model.

Peter Compo

Absolutely. And I think we, if we're going to be honest and put away our, you know, our marketing caps where we want to scare the shit out of people so that they'll use our methods and say it's so VUCA and the world's changing faster, we have to be honest that our skills and our communication are also better and faster. And that it's the ratio of the change and the timescale of change to our ability to react to it and understand it. And it wasn't that long ago, you know, that you know, that you you couldn't possibly connect with people in a deep way in a few days like we can today. And you brought up an example of when it was sending a telegraph. And what about before that, you know? I I think um we have to be honest about the ratio of change to our ability to react to it.

Speaker 2

Totally.

Peter Compo

Both the numerator and the denominator are changing. And the good work of people who are trying to bring strategy, method, and theory into the modern world are part of that.

Mark Blackwell

So, Pete, on the Arkaro website, they'll find a lot of references to the your work. But if they want to go to the core, how do people find out more about you and your website and your resources?

Peter Compo

They can go to emergenceaproach.com, which has a uh a bunch of stuff there available free to download, extra examples and a series of task sets that help people go through the process. I have a personal website, petercompo.com, talks a little bit about the other things I do, my work in creativity and uh Darwinism and uh music. And then the last thing I'll mention, I'm fairly active on LinkedIn, and you can find a lot of posts there as well. And I'll throw in the last thing, and we nowhere to go to see it just yet, but we are developing an app and very excited about it that we think will help people use the techniques that we've talked about today in a really great collaborative and visible way where AI can be a help and not the hurt that we talked about, that we talked about earlier.

Mark Blackwell

Thank you very much, Pete. Wonderful to have your show again. Let's see if we can make it a fourth sometime. Bye bye.

Peter Compo

Thanks. Thanks.

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Mark Blackwell

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Pete Compo

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